Time Warner Cable: Three Mistakes on Usage Pricing

Don't you agree 15 million just last year a little exccessive when there is so little $$$ for upgrades?

Hardy Boy, you are right. We will run out of bandwidth IF the TW execs keep putting the excessive profits in their pockets and not reinvesting them in the upgrades they promised in the past.

@Ron - get educated my boy. Independent research (from Nemertes) predicts Internet bandwidth demand will exceed access-line capacity in N. America as soon as 2011. Come on! Read up! www.nemertes.com/internet_interrupted_why_architectural_limitations_will_fracture_net

BTW, did any of you actually read the 10K filing? They talk about futire stuff in there. Guess what? The furture stuff was all about the downward trend in cable services and how they are going to have to offset that - and how internet video is effecting, and going to effect their cable subscriptions... hmmmmmm.....

So we should just ignore the past years where bandwidth went up 40-60% per year with network costs trending downward on a ~10% decrease - despite the increase traffic? Should we also ignore the trend that profits are increasing? Should we also ingnore the trend that there has been no major network upgrades since roadrunner was deployed in my area 12 years ago? Should we ignore that when TW has no competition, they do what they want - such as historicly downgrading their network to slower speeds until there was a competitor? We started at 10Mb, then we were given 2Mb. DSL came in the area and now we are at 15Mb at turbo speeds. RR is the defacto stand in broadband where I live. DSL is available to a limited area, and in that limited area is slower, for the same price. Bandwidth is not a problem - they have said so themselves. They have told their shareholders that they have no intentions of upgrading most networks for a long time. In fact, the only ones they are going to upgrade are where they have - you guessed it - competition that has faster speeds available. You simply cannot compare wireless plans with wired plans. They are different, and, alot of the newest phones can connet to wireless hotspots to not use data from your plan. Again, I think the wireless cellphone internet stuff has been slow to inovate becuase of the Gb limits. No body wants to old AOL plans of pay by the hour - that is exactly what this is - you might as well go to an internet cafe.

@Ron: Pshaw. we're talking about __future__ investments over next 2-3 yrs not __past___ performance. All that stuff is covered under safe harbor

@Hardy Boy: Your comments about them lieing to their shareholders would be against the law. Also a falsified SEC-10K filing comes with serious consequences.

Hardy Boy, I know more than you think I know. You can sit there all day and say I don't but we all know it is a "cop" out because you can't argue with the facts bud. Want to prove your point? Show me some hard facts from a independent source that supports your argument and the industry's argument. So far all I have seen is pure conjecture and little if anything based on factual data.

@Hardy Boy
I don't own an ipod and have never been to pirate bay. My kids and grandchildren do play online games and watch netflicks movies. I upload and download astrophotography pics. Other than that just browsing. Went well over my 20Gb limit that cost me 45/month. After doing some research I find .07/GB seems more a realistic figure then the 2.50/GB + 1.00/GB overage charges. Look at Verizons new wireless prices. Look at the "oil company like" windfall profits TW made last year not to mention the runaway executive compensation. Invest some of that and end of argument. I cancelled my internet, phone, and cable service with TW in the Beaumont TX area. I also sold all my stock (the little I had). The expirement failed as far as I am concerened.

@Phillip Dampier: let us put aside for the moment that you are simply wrong about it being 'dirt cheap' to upgrade an HFC network to handle 50%+ annual increases in network usage. Is your basic problem that the 40GB you downloaded from iTunes or PirateBay last month would cost you 15 bucks more???? My freaking violin is out for you pal. Spanky already pointed out that the proposed TWC caps/tiers were miserly.... you have to expect when they come back with CBB trials those caps will be higher.

@Tim: LOL no I'm talking about being educated on the design & operation of Internet access networks

Those upgrade costs are considerably less than what Time Warner Cable just spent to handle Switched Digital Video, yet I somehow missed the "pledge drive" for that expense. The 'D' and 'C' in DOCSIS 3 should stand for "dirt cheap" because that it what it costs... less than a set top DVR box, less than SDV, and with tons of built-in profit potential from new speed tiers and reduced need for node-splitting, and a more uniform level of service with fewer customer complaints.
No upgrade any cable operator is planning comes close to justifying the rate increases Time Warner was "testing" on customers. Their original offer, at the same price we are paying now, would have coughed up a maximum of 10GB per month. You'd need to spend $15 more for 40GB, which they were proposing to market as their new "standard" tier.
I knew there was a reason why 80% of people surveyed in this area and others wanted NO PART of consumption based billing.

Hardy Boy, I am educated, college educated. Can't argue the facts can you? That's what I thought.

I should realize that sarcasm doesn't type well. Anyway TW internet costs went down over 11% last year and the customer base increased 12%. Spend some the extra profits on system upgrades. Of course the massive executive bonuses may be smaller. Just check those out. I have no sympathy for TW after that bit of research. BTW I am a former customer in the Beaumont area. Don't like unannounced overages on my bill.

Stew, no, it wasn’t clear you were being sarcastic — that’s been a real question from people on this topic. Yes, the costs are generally fixed for the current infrastructure. But upgrading networks to handle higher overall rates of data consumption will require additional investment.

You do realize I was being sarcastic? You must also realize most of the cost to deliver broadband is fixed costs and the increase costs for increased usage is miniscule. Hence the backlash against the metered usage billing trial in non-competative markets.

@Hardly Boy - Where did anyone ever say that anything was unlimited or that the cable companies network would NEVER have to be upgraded? TWC is telling their shareholders that everything is great, costs are going down, revenue is up, and upgrades are not needed right now (at least in the near future), but they are telling their customers that the sky is falling, upgrades are in desperate need and they cannot survive the way the they are currently operating. One of those versions is true and one isn’t. Per TWCs SEC filing and TWCs conference call with investors it seems that the version that customer is getting is the false one. TWC is telling customers that they need to effectively pay 300% more for the same exact service (which is upwards of 10 years old now) and they have no immediate plans to do any upgrade to their network which would raise additional revenue and eliminate most of the issues that they say they are currently facing. Perhaps when you are ready to stop your childish name-calling and insulting people’s intelligence maybe YOU will be ready for a meaningful conversation.

Stew, there are technical reasons why metering TV usage is unnecessary - basically it’s the difference between a unicast vs. broadcast network architecture. I’ve written about them in a previous blog post: Why There’s No TV Gauge In Your Cable Set-Top

If consumption based billing is so great, why not have it for television viewing. Price it per hour. Those of you that watch more can pay more than those of us who watch a couple hours a week.

@Tim: with all due respect, you have no idea what you're talking about or the issues involved. Get educated, then we'll have a meaningful conversation....

@Hardy Boy
Nothing is "unlimited" in this world or universe and if you had simple econ 101 you would know that. Data has nothing to do with bandwidth. They are separate measurable entities just as an amp and a volt are different measurable entities. If running out of "bandwidth" was the issue slash problem, then the solution would be to limit it not data, right? So they could remedy the problem simply by putting new customers on the "lite" plans. But that isn't the case and it is obvious what their intentions really are. They want to limit data so competing online services will be hurt and their video on demand services will look more appealing. Like I said before, if you are pro business, you should against these caps because it will hurt many more businesses than it helps. Also, it is a win-win for consumers because there is competition and where there is competition, there are lower prices!

@Ron: of course Time Warner is going to tell Wall Street that they have ample bandwidth but the truth is it's not unlimited. the networks will need to be upgraded to keep up with demand, simple fact.

I would also like someone to tell me: Who is the biggest bandwidth problem customer - the one who uses 100Gb per month, in a burst way - say in 1 week he uses 60 Gbs of data, then the next 3 weeks in the month uses 40 Gbs of data. Or the person who uses 40 Gbs of data in one month, but their internet connection is constantly busy - there is no time that data is not moving across the network during the month. Who is affecting the rest of the network?

@Hardy Boy: I have been in the network administration business for 25 years. I know how it works. The cost of bandwidth to TW is their lowest cost in maintaining the network. Please do your homework. They are not overloaded on their internet bandwidth, they refuse to expand their neighbohoods or split them as needed. Please tell me again, how spending less year after year to maintain their networks equates to them running out of bandwidth? Please tell me how giving people 15-20 Mbs of speed downloading helps their bandwidth consumption? Please tell me how upgrading their network to a faster speed to allow 50/5 help's their supposedly bandwidth problem? It is you that think your customers are the unwashed masses who in no way know how this "magic" called the internet happens. Please read or listen to their shareholder conference call and pay especially to the area where Britt (whatever his last name is) talks about there is no bandwidth problems at Time Warner. Also, please read their SEC-10K filing where they point out, with hard numbers that network costs are declining and that all the trouble of their business has to do with cable services declining due to internet video streaming. It is all spelled out for you, all you have to do is open your eyes and ears. Like I said before, the internet is the great leveler. Information is your friend, at least until Time Warner tells you how much stuff you can learn in 1 month.

Geniuses, for the last time bandwidth is not unlimited. Please get educated on how the Internets works. There are oversubscription ratios built into every access network in existence!!! There is a cost associated with providing sustained bandwidth utilization to even a relatively small group of subscribers. Please, do your homework !

@DWS: I read your post twice and still could not make head nor tail of it. What\’s so difficult to understand??? The more you use the more you should pay. Bandwidth is not an unlimited resource you nitwit..!! FIOS will start capping at some point, just wait and see. You are sadly ignorant.

\”The situation today isn’t dire if, say, less than 5% of users fit an ultra-high-consumption profile. But once you get to 40% or 50% of subscribers hitting high usage, something has to give. All access networks are designed assuming a certain concurrency and usage profile — and those metrics are increasing, and increasing quickly.\”___________

And there you have it folks…Spanky FINALLY admits that it is not the current \”heavy hitters\” or \”bandwidth hogs\” that TWC is worried about (you know the ones that have always been there and got services like TWCs Roadrunner off the ground in the first place as generally the people clamoring for it to arrive) but it is the average user (you know the ones that TWC states would NEVER come close to those ever so graciously generous caps that they so very much want to implement) that is the real problem. As I stated in a previous Spanky blog that TWC wants to go back to the \”good old days\” where the vast majority or users got the content that they viewed via their cable TV connection and only us \”geeks\” were sucking down the data, while the vast majority of consumers were overpaying for a service that they largely didn\’t (and mostly still don\’t) need. The majority of the users that ACTUALLY would not reach the caps that TWC cable is longing to implement would do just fine on the RR Lite plan. And once again, users are paying for bandwidth, not data, and they are paying for the speed, convenience, and the potential that RR gives them. If me and my grandmother each went out and bought brand new Corvette and I decided to drive mine at 150mph down the highways and she only would drive hers at 30mph down the street to the corner store and back, would the Chevrolet dealership charge her less than me? No, and rightly so…. she and I have the SAME POTENTIAL to the same speeds and usage; I just choose to maximize it. My grandmother would be much happier in the vastly cheaper Buick Lacrosse (RR Lite) or even a Buick Lucerne (RR Standard) than the Corvette (RR Turbo). Oh, and before anyone “complains” or whatever, I realize that I may not have used the best car models for my analogy (price comparison wise) but I think everyone can get the general point. Also, he is admitting (whether he realizes it or not) that what we are saying is totally true in that in TWCs cap ‘n tier system 40-50% of users will eventually be those heavy users and will be paying outrageous overage charges, despite what he and TWC has said and all this amounts to is a way for TWC to grab loads of cash when that happens.

@Hardy Boy: Bandwidth is unlimited. It is not consumed like gas, water, or electricity. When you are done using it, it magically comes back. Gbs are not bandwidth? When are people going to learn this? Bandwidth can be managed and it is costing less and less every year and getting fast and faster. We shall see if it get's capped or not. If TW does caps, i xpect a large number of people to change to uncapped services, even slower services. No one that understands the technology wants capped internet except the people in the bussiness. they see $$$$ and want it. You really want to pay $150 for the same level of service you have today? What is wrong with the tiers they have today? Everyone convieniently ignores that everyone does not pay the same price already.

Hardy boy, if bandwidth was the problem bud, why aren't these companies pushing their "lite" plans on their subscribers? See if it was a bandwidth issue as you would think and others as well, then the solution would be the already in place lite plans. Where you are wrong, is they are capping data not bandwidth. They will still give you maximum bandwidth. It is incredulous to me, why you and others can't make a simple differentiation between the two. These companies want to act like a unregulated Electric or Gas company and meter your usage. Peoples consumption will only go up not down and they know this well. The caps of today will be nothing a few short years down the road and trust me they know this and have already figured out how much they can make.

Robb, you think 30%-50% annual growth in usage is “sickly and weak”? Only if you’re starting from a small number. And we’re not.

Todd, that's why I say DOCSIS 3.0 is such a win-win for everyone. I am sitting here in Rochester with 15 down/1 up for Turbo (it's 10/384k on standard). I'd pay in a NY Minute for faster speeds, but TW can't do that for me using DOCSIS 1.1. I'm not even the heaviest consumer of bandwidth, consuming around 60GB a month. I'm ready to give them more of my money for faster speed, as are MANY heavier data consumers. I'd happily do so. But the solution to this problem, in their eyes, is to triple the price for the service with zero improvement in it, and force me to ration my usage. TWC already said in their statements they see no future hurry to deploy DOCSIS, nor do they see any real network capacity problem. There is no fire to put out with Cap 'n Tier business models. Nor is there any hurry for them to come and get the money I have on the table for them to deliver a faster product to me.
Finally, if this was as dire of a problem as some would have us believe, why would TWC contribute to it with TV Everywhere, which would only intensify video streaming? The logic just isn't there, not on any level, except when you consider their desire to leverage massive new profits from their market concentration and inadequate competition.

Todd, from where do you get that Internet consumption continues to "skyrocket?" From all the data I see, the year-over-year growth of the Internet is smaller now at the end of this decade (somewhere between 30-50% growth) than it was at the end of the last decade (doubling every year).
Wireless data consumption is "skyrocketing." Comparatively, the growth on our wired networks is sickly and weak.

Let me give my disclaimer: I'm no financial expert.....but I do understand 1) growth is up, 2) profits are up, 3) capital costs are down, 4) reinvestment in infrastructure is down. I just don't see the alarm bells going off over at TWC in response to "metrics are increasing, and increasing quickly."

Thanks for posting your thoughts, Phillip. Let me add one more thought: As the disclaimers for financial services companies say, past performance is no indication of future performance. The situation today isn’t dire if, say, less than 5% of users fit an ultra-high-consumption profile. But once you get to 40% or 50% of subscribers hitting high usage, something has to give. All access networks are designed assuming a certain concurrency and usage profile — and those metrics are increasing, and increasing quickly.

The answer to those networks increasing rapidly is to re-invest in their business and stop the downward trend of investing in their networks. A price increase would have not resulted in so much outrage. Adding $5 to each tier that they now offer (and I would even say $10 to the turbo plan), while would have angered people, but would not have resulted in the problem they all face now. Really, the whole saving people money angle was all smoke and mirrors.
I can only believe TW executives when they say they do not have a real need to increase capacity on their networks. How do you explain them spending LESS while the traffic is increasing? They are only upgrading their network at this time in NYC, where they have plenty of competition.

Todd and the other so called sky is falling people, what part of differentiating bandwidth from data do you not understand? Bandwidth is a measure of how big your pipe is while data is a measure of how much goes through that pipe during a certain period of time. TWC wants to meter data not bandwidth. Data is finite yes but only for the source and the end user. It has no affect on bandwidth whatsoever. You guys claim that "we" don't know how a business runs but at the same time, you can't even understand rudimentary terminology properly. If TWC was worried about running out of bandwidth, they would push the Road Runner Lite plan on people. But that doesn't fit into their profit margins.
___________________Here is why they want to go to metered data plans. One, they know bandwidth consumption will only grow. Seeing this, they want to capitalize on it by starting a metered tier system knowing users will eventually go over their limit and opt for more expensive plans. Two, if they do implement metered data plans, they will inhibit services like Hulu, Netflix, Bluray settop boxes, or game console services, which will make their services look more palatable. Three, they can prolong upgrades to their system as long as possible resulting in inferior service for consumers abroad.___________________On a last note, everything is going "connected" people. Things like your Bluray settop box, game console, TV, and audio equipment for example. Almost ALL software companies make you update through the internet. Some game patches can be near 1GB or more in size! Some security updates can be up to several hundred MB's in size. Drivers for you hardware can be several MB's. Add on top of that emerging audio and video services and that cap looks smaller and smaller. It baffles me that you would think, even the casual user, would never break his cap limit when there are so many way, some more apparent than others, to do just that.

Kablkidd:
All networks have a finite capacity. The question is, what is that limit, and what technological solutions exist to jump past it. With cable, it's DOCSIS 3, a very inexpensive upgrade that allows for increased speeds, fewer neighborhood node splits to deal with traffic out into the last mile, and better network management. No significant increase in capital dollars is required to manage this, and in fact the marketing opportunities to create higher speed premium tiers while reducing network management expenses makes it a win-win for everyone.
Further, as cable's own financial reports attest, their costs are declining, yet their pricing has remained the same or increased slightly in many markets. They also added 11% more new broadband customers and at the same reduced their capital expenditures on the network by 11%. Broadband remains among THE most profitable services cable sells, so it is pure fiction to suggest that broadband network management in any way threatens the bottom line profits of the cable industry.
What has changed is that people are becoming smart enough to bypass the marketing and PR hype and see the data themselves, realizing that the oil company-style returns some companies seem to want, leveraged by their monopoly/duopoly market position, aren't justified.
This industry occasionally gets a bit too arrogant and overreaching, and the result historically has been regulation, and that's precisely where we are going to head next if the abuse continues. I've seen it before, and it will happen again.

Todd is back to the theory of "subsidizing" again. If anything, the lighter tier users are costing TW revenue they are making back from the Turbo speed tier customers. Listen to the investor conference call. You'll hear it yourself. RR Lite, which is practically top secret in my market, already gives consumers looking to pay less the choice to do exactly that. But the company doesn't market it because it doesn't carry the same profit margin standard service does.
DOCSIS 3 goes a very long way towards dealing with the last mile congestion issue (which Time Warner denies it even has) and is dirt cheap to deploy - far less than the cost of deploying SDV technology for HD channel capacity. TW does one happily (SDV), and doesn't increase pricing for its all you can eat HD tier, yet refuses to be in any hurry to do the other (DOCSIS 3) and demands it needs consumption based billing to pay for it. It just doesn't pass even the most rudimentary logic tests.
The question you are afraid to ask consumers is if they actually WANT consumption-based billing, which the overwhelming majority do not. Consumers are well aware of "fairness" when it comes to their local cable operator. They know it will cost them more no matter what. And when you look at the 1000-2000% markup on TW's proposed bandwidth overlimit fees, and the paltry tiers at higher prices, they knew what to do - raise hell.
Wireless providers have a much narrower pipeline to deliver data services to customers and they don't have the easy upgrade path wired providers do yet. They impose limits on broadband to ration and limit its use, plain and simple. As network capacity increases, one carrier will drop the limits and market it, and watch what happens as the others follow suit. Of course, in many communities, you can choose 6-8 different wireless companies. When it comes to 21st century broadband at speeds of 8-9Mbps+, you typically have ONE choice, the cable company, unless you have a telco deploying fiber. If that provider is FiOS, which has no limits, you can be certain Time Warner won't be testing a 20/40GB limit in those markets.

It is funny. You should all read TWs SEC-10k filing and read or listen to their reports to their stockholders. The internet is a wonderful place and it is the great leveler for businesses who do not tell the real story to their customers.
In 2008, TW spent 11% less on their network that in 2007 and that is with a 40% increase in traffic. The TW CEO stated to stockholders that bandwidth is not a problem for them - they have plenty. T=He also said that upgrading their network is not a high concern for them. Why would he say those things to the stockholders if they were not true? he has also said that turbo customers are leveling their profits for people that are finding out about their RR Lite plan and moving to a lower cost plan. In other words, the people who are paying more are paying for that network. Here are the numbers - 2008 cost to maintain network $147 million. 2008 revenue $4.1 Billion. That is only from their internet side. Their cable side is sliding. Their internet side is making money on the current plans. Other cable companies have said it costs between $50-100 per household to upgrade to DOCSIS 3. Sorry, we do understand businesses. And I think we understand exactly what TW and the other guys want to do.

It is important to remember that high speed networks have a finite capacity. As demand grows, the networks need to be upgraded to address the increased demand. The exponential growth of aggregate bandwidth over the next few years would reguire a significant increase in capital dollars. So the ISP is now spending more money to keep the same revenue stream. Stockholders don't like that. From my vantage point, ISPs are scrambling to address the explosive network growth and manage the network with a finite capital budget. If you will remember the municipal wireless projects building a business on 'free' services? If the ISPs can't make a reasonable return on their investment, then something will have to change. Usage based billing may be a component. In my opinion, those who scream the sky is falling in regards to usage caps have never run a business.

Todd is correct. It was handled poorly.
When I first was given reclaimed water, it was $15.00 and all I could use as they wanted to get rid of it. 10 years later, everyone wants it, so now they charge by usage.
What did they do? For 3 months on the normal bill they sent out how many gallons I used prior to usage billing.
That is what TWC needs to do. Give the data for each month for the preceding 12 months. Then give the monthly data each month for 3 months prior to changing.
At that point, 95%+ will realize they are so far under the cap, it makes no difference. Those last few "power users" can decide do they want to switch plans or switch providers.
This will happen, just as it did for AT&T, Sprint and Verizon. I paid for unlimited data for years - but now all have a 5 Gig limit. Sorry, but as Directv, Dish and others want to do VOD, the cable providers will enact limits to make this a less attractive option.

Lee, I think 99% of your problem is that you think people are stupid. What facts are you implying about? So far, I haven't seen any facts from the other side of the aisle other than a plethora of conjecture.

Todd - 99% of your problem is in fully display right here on this thread - you have people who have no clue about how a business functions. The real question is how does the industry manage an issue given than some people can't be bothered to understand the facts.

Well, I was going to explain why wireless carriers have metered data plans but I think Ron pretty much said what I was going to say. Good job Ron.
Todd, be pro business and be against any cap bud. Come to the good side of the force bud. :-)

@Hardy Boy: You should really look around you to find out what id going on. Why is all the pricing the same? Also, wireless was originally built for phone, not data access. they still see their primary business as talking on the phone. Both of those companies are phone companioes, and have been for the longest time. really, more people should read the book titles The Leadership Engine. Sometimes companies do everything they can to maintain their stus quo business rather than re-inventing their business to change with the times. Kodak is a good example of that. So are the cable companies and the Record Industry. Companies like Intel (they used to only manufacture memory, and then re-invented themselves to a processor company or risk becoming irrelevant) have followed the leadership engine. the funny thing is cable companies are in a great position to capitolize upon their internet services. The should be looking to embrace the technology. Get on the bandwagon with netflix and have a DVR that streams netflix to the cable box, charge $5ish a month and requires a netflix account. They should be looking at ways to get Hulu and Youtube or any other site into their cable boxes and integrated into peoples entertainment centers. After all, they are already there. Instead, they are the last ones to get on the DVR bandwagon becuase they did not want to change the business as usual way that they do things.

@Ron: you know more about the wireless data business than ATT + Verizon!!! You should offer them consulting services + charge them big $$$ LOL!!!

Todd,
Yes,they do want to limit the data you use so they do not have to invest money in the services. Yes they would have a competitive advantage. Just like they would have a competitive advantage if they included free unlimited texting or texting that was not the same price as their competitor. Wireless plans are all the same, and that is the way they want them to stay. The way they try to distinguish themselves is by their phones. There really is no competition (price wise) between the big carriers - they are all the same price.
Wireless carriers have also not given unlimited data plans for the last 12 years.
Tell me why you think that they would want to limit the information that people can recieve?
I also do not believe the claims that people use hardly any data. Add up everything you do and you will surprisingly see that you use alot more that you think.
Daily McAfee anti-virus updates are at least 50Mb.
Windows Updates can be hundreds of megabytes
Updates for most software that are turned on automatically to check for new updates.
Software is increasingly becoming downloadable. Even Windows Vista. Buy the cjearpest and you can upgrade to the most expensive through Microsoft Web Site.
All your friends sending you e-mail pictures and videos.
Visit disney.com and a video streams automatically. You pay for that, everything you see has a cost associated with it under that plan.
Why can't they use the tiers that they already have? No one is subsidizing anything when the 5Gb data people use RR Lite for $25 and the 200Gb people use RR Turbo for $50.
IS it really to get around this whole net nutrality thing? I think so. You can make deals in the background and force site like hulu and netflix to pay Time Warner to not be included in the data caps that they have. Then TW sells it as a feature.
I see it as killing broadband in US, and I will not be a part of it. I will not look at a gauge online and then decide wether my family can go on the internet that night or not.
I refuse to pay $150 for the level of service that I am getting for $60 a month right now.
Why can they raise the price so much? Lack of competition.

So Ron — again, why do the wireless carriers want to limit data usage? Wouldn’t, say, AT&T have a competitive advantage over Verizon Wireless if it offered an unlimited plan? Is your hypothesis that the wireless carriers are simply trying to general additional revenue?

Todd,

Please read up on network terminology and the way networks are designed. They are not limiting bandwidth, they are limited data.

A lot of us do understand the technology and how it works. The reason they limit the data is to limit the usage, nothing more.

Tim, why do you think AT&T and Verizon Wireless have usage limits on their wireless data plans? What’s your theory about that?

Sorry, just noticed $15/GB, should be $.15/GB.

Todd, it really amazes me that you lack any foresight. You remind me of the days when Intel and Microsoft said we wouldn't need more than a megabyte of memory or a 20MB HDD. If you are pro business, you would be against any caps whatsoever. These caps will on stymie innovation, hurt businesses, and end up costing consumers more. If ISP's were concerned with "running out of bandwidth", they would push the lower tiered plans they have instead of pushing for the higher speed ones. They want caps for a few reasons and it baffles the intellect why you can't see past the subterfuge. One reason is they want the caps is because they know bandwidth will only increase and never decrease. People opt for lower cap plans but they know, possibly in a few years, that they will eventually "blow" those caps. Two, TWC for example, has services that are in jeopardy at the moment, ie Video On Demand. Netflix and other online services are popping up offering streaming video to your TV either through a PC or game console. Lastly Todd, bandwidth is uber cheap. To say it costs $1GB or even $2GB is just ridiculous in the extreme. If these ISP's were smart, they would of started out at $15/GB or something like that and then worked their way up. But they wanted to cash in on the cow now so they went big to win but it back fired as we all know.
And another thing, bandwidth as Ron pointed out, is how big your pipe is not a measure of how much data transferred. Take a water pipe 1" ID and another 2" ID. Let's say I want to water my lawn and I need 50 gallons of water to do it for some reason. Well, both lines could do the job just fine. Just one, would do it faster that is all.
So what happens if you run out of bandwidth? You can't. Take the water pipe analogy above. If the pipe could only handle so many gallons/minute, then any amount over that would just take more time to pass through than usual. The pipe wouldn't seize up because of the amount of water wanting to be passed through.

GB does not equal bandwidth. That is the explanation. Bandwidth is how much of the "pipe" that you are using at the moment. TW already controls that with packet shaping. It doesn't matter how much GB you download or upload, what matters us the speed that you do it in.
There already are 3 tiers. TW does not advertise anything but 1 tier where I live. You call and get service and you get put on the $40 plan unless you know there is a $25 Lite plan. There is also a $50 plan for their top speed.
Lite users should be paying $25 and high users should be paying $50. There is no reason why they cannot put people on the tiers that they use, except they do not want people to actually pay less than they are now.

Phillip, can you explain why usage-based pricing is prima facie unacceptable? Why shouldn’t somebody who uses 200 GB per month not pay more than someone who uses 10? Assume for the sake of argument that these two subscribers are both on the same speed tier. Isn’t it fundamentally unfair to ask the lower-usage customer to subsidize the heaviest users?

Canadians are not at all happy with consumption pricing. They have not organized as effectively, but there is a groundswell of aggravation about it. This extends all the way into wireless pricing for the iPhone. Internet in Canada is too expensive and too restrictive.
Poor communication is NOT the problem. The premise, the plan, and the execution are the problems. If you honestly believe that with "re-education" consumers will be happy with Time Warner's Cap 'n Tier, watch what happens when they attempt it again this fall.
We'll be waiting and watching for the "gas gauge" to appear and then launch phase two of our pushback based on its appearance. We're not even close to being done with this issue.
Time Warner could develop tier pricing that is pro-consumer and a win-win for everyone - tiered pricing for different speed levels. Heavy users will gladly pay more for better speeds, underwriting any expenses for DOCSIS 3 rollout. As TW admitted in their last financial report, Turbo customers are already subsidizing some of the reduced revenue earned from RR Lite.
Your premise about "fairness" based on consumption has no relationship to what Time Warner is doing. Vastly overpriced tier plans, overlimit fees, and what effectively becomes rationing antagonizes customers. The lesson still to be learned is that consumers will agree to tiered pricing, but on speeds, not on consumption.
And those consuming terabytes of data at any plan level are already being dealt with by Time Warner, as witnessed in Austin where customers are being shut off for consuming "too much."
We are still hoping that TW will do the right thing by their customers, and not blunder right back into the same storm they barely escaped from a few weeks ago.

Competition is going to eliminate metered data. Cable should be concetrating on quad-play bundles.