Does Cablevision's Uncapped 101-Meg Tier Mean Metered Billing Is Dead?
No, even if the folks at Free Press think it does.
Cablevision is getting up in FiOS’s face with a DOCSIS 3.0-based service that promises 101 Mbps downstream — letting the cable operator, for now anyway, brag about having the fastest broadband in the nation (albeit with a comparatively paltry 15 Mbps upstream).
Anyway, Cablevision is making this huge amount of bandwidth available for a flat rate of $99.95 per month, and without any kind of usage caps.
At the Cable Show earlier this month, Cablevision’s Jim Blackley said the MSO has no plans to implement consumption-based pricing: “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.” (See Broadband Junkies.)
Meanwhile, there’s the brouhaha over Time Warner Cable’s proposed usage caps and pay-per-gigabyte plans, which the company suspended April 16 after the issue was threatening to become a federal case.
Free Press, the consumer-advocacy group, links these events and suggests that Cablevision’s uncapped 101-Mbps tier “puts an end” to the “bandwidth bogeyman.”
Cablevision’s introduction of the service raises the question of “why Cablevision can offer fast access with reportedly no caps or overage fees, when others claim such a plan would cause the sky to fall and an exaflood to break the Internet,” Free Press’ S. Derek Turner said in a statement.
First off, it should be self-evident that different companies decide to price and package services differently, based on a number of different factors.
Cablevision is looking to hold on to subscribers in the face of the FiOS marketing machine, and it may be willing to (for now) absorb higher operating costs to retain/attract subscribers who might be tempted by the fiber-to-the-home pitch. Note that Verizon is hawking a triple-play for $99/mo. — aimed squarely at cable. (See Verizon Targets Cable Customers With $99 FiOS Promo.)
But, the all-you-can-eaters might wonder, isn’t the fact that Time Warner Cable was going to test these metered plans in four non-FiOS markets proof that usage-based pricing was anti-consumer price-gouging?
Well — no. The DSL services in those markets still would have (most likely) continued to offer unlimited, flat-rate plans. Slower than cable, but still unlimited.
My guess is that Cablevision recognizes that even talking about capping usage (again: for now, given its unusually competitive situation) is a third rail they don’t want to touch. This, I think, will change in the years ahead once the number of extremely heavy Internet users becomes big enough to make usage-based tiers the only fair and reasonable option. (And, of course, after other service providers in the U.S. successfully introduce the concept.)
Even Verizon, which has delighted in touting its uncapped FiOS Internet services, has not ruled out usage-based pricing.
Broadband “is a competitive market and pricing packages and offerings are an important part of the market,” Link Hoewing, the telco’s assistant VP of Internet and technology issues, wrote in a blog post last week. “Companies can try different pricing approaches and consumers will decide what they think. I can see ways that usage packages could be priced that could really help many segments of the market, such as low level users. I can’t predict what will happen in the future as the market evolves.”
In short, Cablevision’s current offer does nothing to change my suspicion that consumption-based pricing for Internet services is inevitable. This issue also came up at the American Cable Association conference today — see ACA Summit: Metered Bandwidth Pricing Is Coming.
Listen, as a consumer, I’m not thrilled to consider the possibility that my broadband access will be metered.
Just as I hate paying an extra $15 to check a bag with most airlines these days. Don’t even get me started on the Ticketmaster “convenience fees.”
But I understand that businesses need to recover their costs, in order to continue providing the services they do. How can anyone disagree that a person who uses more of a finite resource should have to pay more for the privilege?
Stew commented:
Todd you make the same mistake as others. Bandwidth is not he same as usage limits. TW may cll the limits bandwidth but ist is actually usage. If everyone uses the internet at the same tme you have the same problem no matter the usage limit put in effect. The only thing the usage cap does is lessen the chance of everyone using it at the same time because they are afraid of the overages. I will continue to shout no to usage caps (even though I rarely go over 80Gb most use is around 40GB) and have dropped all services with TW. I would like them to lose the franchise license to someone else more efficent at providing service.
Todd Spangler commented:
Phillip, obviously Time Warner Cable goofed here. As I’ve noted in previous posts, the company did not adequately inform customers of the specific plans and timing. I also personally think the tiers are too complex, and they have yet to provide a “gas gauge” to let people figure out how many gigabytes they actually use. The larger point is that given Internet usage trends moving to a usage-based pricing model will be the only fair and sensible approach in the years ahead.
Phillip Dampier commented:
Todd, I respectfully disagree. The results of survey after survey already illustrate the overwhelming majority of customers don't want ANY cap. More than 80% in a survey done just last fall. The Rochester Business Journal did one a few weeks ago with similar results.
Time Warner execs only listen to other Time Warner execs, and to legislators who have to threaten them to get them to pay attention. First we ended up with a slight increase in the amount of the caps, which only enraged people more (and proved my point they aren't listening), and then they had to shelve the entire mess when Sen. Schumer started hassling them.
The reason you guys think of caps as inevitable is that your friends in the industry think they are. I understand that. But that doesn't make it inevitable if customers walk. The wild card are organized consumers like ourselves which make it clear customers will cause all sorts of trouble for a company that does not respond to our wishes. Arguing over their numbers and what cap is "good" is playing their game. Not interested. And even lighter users are irritated to discover Road Runner Lite, a product barely marketed that could already fulfill their needs at a reduced cost.
I sat through today's conference call with TW execs speaking to investors. No crisis over exafloods, brownouts, bandwidth costs, or dissatisfaction over their current business model was heard at all. Instead, a sheepish sounding Glenn Britt just dismissed the whole affair as a marketing test gone bad. That's an understatement. Also heard: no hurry over those DOCSIS upgrades to protect Road Runner from collapse by 2012, as Corporate Communications was alluding to just two weeks ago. It's all very interesting.
As long as the company believes the problem isn't the caps and tiers, but "education" about them, the more organized resistance there will be. Our group doesn't need to e-mail realideas. Time Warner already reads what we have to say on our site, among others.
The answer, which Cablevision seems to agree with, is premium speed tiers at premium pricing that enhances revenue for capital investment for all customers, shareholder return, good customer relations, and positions the company to face down any future competitive threat.
What we have now is a limbo dance in the other direction - how low can the caps go, how backwards can we turn the clock, and how much angrier can we make our customers, and their elected representatives.
I just hope we never have to find out. They offer a great product and they should keep it that way. I'm ready to pony up more money myself for faster speeds, and I'm not even close to being among the "heaviest users." Let's make this a win-win!
Todd Spangler commented:
I think, in all honesty, Time Warner Cable is eager and interested in hearing any and all customer feedback on the caps and usage-based pricing plans. But shouting “Stop the cap!” is completely different from saying “We think your cap levels are too low.”
Javier commented:
Hello again Todd. I regret my previous post where I suggested you were bought out. After actually viewing the website your article came from, I can see that it is an industry driven site.I cannot blame you for doing your job, it is frustrating though as it seems you want internet prices to sky-rocket, come on admit it a 40 gig tier? That might be fine for now but in a few years it simply will not be enough for anyone.I am looking toward to future and I see an internet that my family will not be able to afford.What do I tell my kid's when they get older? Sorry you cannot look at the internet, we've already exceeded our 40 gigs. Either you can eat or access the net.
Javier commented:
It's obvious who has lobbied you Todd. I am really sick of looking at your bought out face. Change that picture why don't you, I am tired of looking at the dollar signs in your glasses.
Phillip Dampier commented:
Living in Rochester, ground zero for nonsense caps, I guarantee Time Warner will be back by fall with the dog and pony propaganda parade for outrageously low usage tiers and high overlimit fees. We'll have to beat them back yet again.
Every cable operator has an Acceptable Use Policy which lets them deal with the 1% of users that are sucking terabytes of data running servers, bit torrent 24/7, or resell access to someone else. That is how you deal with the real problem users. Cablevision discovered you can tier service based on speed, and will rake in a ton of money from those heavy users more than happy to pay $100 for 101Mbps service. That's extra money in your pocket without annoying your moderate and light users with caps and surcharges. Nobody is offended by speed based tiers. Usage based tiers are another matter, especially when it illustrates Time Warner's business model was based on Internet use in 1998 - the e-mail checkers and web page browsers. That's not how people use the net these days. Cablevision understands that. Time Warner only understands their desire for a fat payday in under competitive markets.
I had DSL installed here. It can barely pull 3Mbps and I'm in a nearby suburb. That's not competition at all, and I'm going to dump the service. Frontier was the company that inserted 5GB limits in their Acceptable Use Policy last summer.
Without a FTTH provider or a far more robust DSL solution, Time Warner will remain the only Internet provider capable of providing speeds relevant to those leveraging all the Internet has to offer.
Huh? commented:
@Bill Dollar: Bandwidth is "not finite"? Are you sure that's what you meant to type?
Bill Dollar commented:
Sir, bandwidth is not finite. I could go over TWC's 40GB cap by using my connection between the hours of 1am and 6am, when congestion is not an issue. Given that TWC themselves don't pay for bandwidth by the GB (they peer, and use 95% billing lines), my "excessive usage" during those off-peak hours has no financial impact on them.
Also, yes carriers should be able to recover costs. But TWC's is already over-recovering costs. Most of their sunk costs were sunk in HFC put in the ground years ago, to deliver HD video. Their 40GB caps are an over-recovery of costs. By offering different speed tiers for higher prices, they can adequately recover costs, approximate the additional strain from heavy users, all without gouging the customer.