Time Warner Cable Experiments With Tiered Pricing: Do Not Want

June 2nd, 2008

Time Warner cable is experimenting with metered Internet use, staring in one Texas town. This is a lame development for consumers, and at worst, an abuse of power by a cable company.

…tiers will range from $29.95 a month for relatively slow service at 768 kilobits per second and a 5-gigabyte monthly cap to $54.90 per month for fast downloads at 15 megabits per second and a 40-gigabyte cap. Those prices cover the Internet portion of subscription bundles that include video or phone services. Both downloads and uploads will count toward the monthly cap.

If tiered pricing becomes ubiquitous, I’d have a new worry - how much bandwidth have I used this month - applied to everything bandwidth-intense I do almost daily - backing up entire websites, downloading software (the latest OS X update was nearly half a GB), buying iTunes songs and movies, and watching streaming video via YouTube and Hulu. For digital content I pay for, overage charges could feel like an added “tax.”

Time Warner’s justification is it’s the “fairest way to finance the needed investment in the infrastructure.” I’d be willing to pay-as-I-go if the rules were reasonable - say something akin to a water bill - an affordable, flat rate with no monthly fee so if one month you went over, the next you could conserve and make up the difference. How about no monthly fee, no caps, and pay as you go at a nice, low price, say 20 cents per GB (that would be 20 bucks for 100 GB). I’d be all over that.

But the proposed tiered pricing reminds me of the cellphone industry (or video rental joints with their odious late fees) where the caps seemed placed at a particular location to trap people and reap enormous profits.

At worst, this move actually intended to dissuade people from using the Internet as an alternate source for video content, be it AppleTV, Hulu, Netflix, or illegal sources - basically all competitors to the entrenched, monopolistic cable industry.

Last week MG Siegler floated the idea of someday giving the finger to the cable companies for programming and relying on the Internet for video content instead. Surely, the cable companies are all too aware of this possible future - and are starting to set things up that even if one cancels cable for programming (say nuking all your premium channels), you’ll end up paying for video content one way or another if you rely on them for broadband.

That sucks.

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Viewing 2 Comments

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    • v
    Always beware "tiered" pricing of any kind. It's a ploy to get people to pay more. Same deal with variable pricing on iTunes. They market it as a savings: "Hey, look, thousands of albums will be cheaper than they are now." But in reality, all the things you actually want to buy will be four times as expensive. (Remember, NBC wanted to sell episodes of popular shows at $4.99 a pop, with the option to increase it further as the show grew in popularity.)

    Once your cable company got you used to paying per megabyte, the price would magically increase by tiny increments at alarming intervals. After all, raising your monthly unlimited Internet access rate from say $40 to $60 sounds radical, but raising the rate per megabyte by 20 cents or so, which could easily add up to the same increase per month, sounds a lot less scary.

    I, for one, have no interest in going back to the AOL days of paying as you go. We already get far less speed and bandwidth, and pay more for it, than any other developed nation. There's no excuse for that.
    • ^
    • v
    I proposed that tiered pricing scheme as compromise - a tiered pricing
    scheme I could live with. I would liken it to a utility such as gas or water
    where you pay depending on how much you use. I obviously much prefer the
    monthly-fee, unlimited bandwidth situation we have now, but there may be a
    time when we're SOL and have no choice but pay to play - the way the ISPs
    are moving.

    Meanwhile I hold out some hope that Google is up to something with the TV
    broadband to be freed up in 2009 - perhaps their own wireless ISP solution
    so we can bypass the usual ISP providers.
    http://www.techcrunch.com/2008/03/24/google-thr...

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