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.