Why There's No TV Gauge In Your Cable Set-Top
I’ve seen this question pop up from cable customers in the debate over Time Warner Cable’s proposed usage-based billing plan for Internet access:
My cable company doesn’t charge me based on how much TV I watch. So why should it charge for how much I use the Internet?
The reason is technical.
In brief, a cable provider delivers live video programming in a broadcast fashion (meaning every household in a system gets the same channels at the same time) while Internet data is delivered in a unicast manner (meaning each household in a system is getting different stuff).
The cable company doesn’t care if you watch 24 hours of live TV per day or 5 seconds — the cost to deliver the service remains the same. How much TV you watch is a matter for you to discuss with your therapist (see Blue Tube).
The Internet side is different because every user in a given neighborhood is accessing something different online. So, a provider’s costs increase as broadband usage increases, and Internet usage is climbing rapidly in both frequency and amount (which is why TWC wants to establish byte-based pricing).
True, the cable industry is moving steadily toward a unicast, personalized TV model for on-demand content. Comcast, for example, is looking to dramatically boost its VOD selections with “Project Infinity.” (See Comcast Preps For VOD ‘Infinity’.)
But the core cable TV product today and for the foreseeable future will remain linear broadcast — because that’s a much more cost-effective architecture.
Dave Hancock commented:
\”The cable company doesn’t care if you watch 24 hours of live TV per day or 5 seconds — the cost to deliver the service remains the same.\” I understand what you are saying BUT, they do care. Many systems (at least TW does) use Switched Digital Video (SDV) to provide more channels in the same space. If too many folks watch too many DIFFERENT programs, there are system implications: For example, they may need to split nodes (meaning more capital $$$). Typical cable systems in place today deal with only 800 or so MHz. They have to find ways to divvy up that bandwidth for all the services.
Don\’t get me wrong, the particular caps TW is talking about are totally unrealistic. Further, their moves are clearly anti-competitive (from both a video and phone standpoint). But there are costs associated with how many folks watch TV.
cuvet commented:
just wait a few years. Cablevision will put in caps and/or usage pricing as well.
Paul commented:
@Ron
With regards to Comcast being the only provider with a reasonable cap, let\’s not forget that there are still broadband providers out there that don\’t cap at all. Multichannel has reported that Cablevision has no plans for usage caps and even quoted a senior executive as saying \”we don\’t want customers to think about byte caps so that\’s not on our horizon\” and \”we literally don\’t want consumers to think about how they\’re consuming high-speed services. It\’s a pretty powerful drug and we want people to use more and more of it.\” I suppose it\’s fair to give Comcast some credit for setting a higher threshold than everyone else…but in the end, they\’re still tightening their restrictions on broadband usage.
Ron commented:
Todd, I\’m sorry to say that this is 100% industry mumbo-jumbo at it\’s best. The cost associated with carrying data has substantially decreased. All of the major ISPs are posting MAJOR profits along the line of the Internet product at the same time. There is NO justification for metered billing other than a greedy cash grab by providers. To this date, Comcast is the ONLY provider with a reasonable cap. Providers are simply trying to protect their Video and Phone offerings by instigating caps and overage charges in the mix.
You\’re article is nothing more than astro-turfing for an industry that can not innovate. If it costs more to deliver content, then raise the rates. In the name of competition and keeping prices lower, they chose to pull these tactics.
This is no different that Government and taxes. States want to add mileage based taxes collecting based on the amount of miles driven. I\’m fine with that, in all honesty, HOWEVER, they first need to remove/revoke the vehicle tab fees. If an ISP wants to charge by the byte, then they need to remove the monthly service fee from the mix. Rent the modem, or the customer brings their own, and turn on a meter like a taxi. If a subscriber already has video, for example, then there should be no need for a base rate as the line is already there. If there are no other service subscribed, then I believe they deserve a monthly line maintenance fee of about $10 a month + usage.
This is a cash grab no matter how you try to simplify this and explain it in Mr. Rogers terms.
The consumer isn\’t stupid when it comes to these \”changes for the better\” being touted by industry execs crying for more money. If they\’d stop taking golden parachutes, and multi-million dollar salaries, maybe the consumer wouldn\’t notice so much.
Plain and simple, youtube, Amazon, iTunes, Hulu, Vonage, etc. all threaten the profit center of video and digital voice services.
For disclosure, I\’ve put in over 17 years in the cable industry so I do not really have it out for them. However, this issue is so transparent that it\’s sickening. The average cable bill these days is well over $130 a month… If it were my choice, the internet side of the business would be forced to split off like they did the bells back in the 80\’s.
Todd Spangler commented:
Paul - great question. I think managed IPTV is different from open Internet access in two respects: 1) it’s far more predictable in terms of bandwidth consumption and 2) it’s within the walled garden, so it doesn’t hit the backbone. Does IPTV potentially introduce contention for resources on the access network? Yep - which is why it’s better to broadcast live TV over dedicated video-delivery QAMs and will likely be the case for the foreseeable future.
PaulHikes2 commented:
Todd,
With the cable industry preparing an IP model for television as well, why do you not anticipate usage based billing? This certainly is something that is in the foreseeable future. Additionally, the video on demand model requires both additional upstream and downstream bandwidth for the request and the delivery of content.
One would think if the internet pricing model is considering moving towards usage based consumption, than based on the direction of the big players in the cable industry the climate will be ripe sooner rather then later for usage based pricing for television as well.
Regards,
Paul
