Is Time Warner Cable Completely Insane?!?


The blogosphere, if I may use a crutch favored by lazy journalists these days, went berserk.

Without trying very hard (as I said: lazy), I found kilobytes of bloggy outrage directed at Time Warner Cable’s planned test to charge Internet subscribers extra in a small Texas system if they slurp down more bandwidth than is "normal."

You don’t really need to click through to read these posts — the disbelief and shock register from just the titles:

The company claims it’s only an experiment to find a model that will be fair: pay for what you use, and if you use a lot, you should pay more. Just like your wireless phone plan, according to Time Warner Cable. And the additional revenue will be used to finance infrastructure upgrades, the cable company says.

Bollocks! cries the irascible digital mob.

The conspiracy theory: that Time Warner Cable is trying to pinch off all-you-can-eat Internet access so that customers will have to pay through the nose to watch Internet TV and download movies from iTunes.

"It is TW’s FU to the net neutrality debate: If we can’t gouge both ends of the pipe, we’ll doubly gouge the one that is stuck with us," writes Seeking Alpha blogger Jeff Jarvis. ("FU"? Are we in high school?)

And the caps — ranging from 5 to 40 gigabytes — are too low, bloggers grumble.

A high-def movie download is around 4 gigabytes, notes Zatz Not Funny!’s Dave Zatz. "Until TWC considers a limit of at least 100GB, I’ll continue to assume this isn’t at all about financing a ‘needed investment in the infrastructure’ but rather an anti-competitive VoIP and VOD play." blogger "Karl" believes that "the push toward ‘over use fees’ has less to do with fairness and more to do with increasing already plump revenue while cashing in on competing video services (Vuze, AppleTV, piracy)."

The fundamental issue here, and the trigger for the unbridled umbrage, is that charging for something that used to be provided free of charge (or as part of a fixed price) is one of those things that consumers simply go nuts over. 

American Airlines, for example, now will charge $15 to check your first piece of luggageunbelievable! and JUST PLAIN NUTS! say bloggers.

Of course, not everyone thinks Time Warner Cable’s bandwidth-cap pricing scheme is ridiculous, anticompetitive and destined to fail. ZDNet’s Larry Dignan is a voice of reason amid the chorus of blog-rage.

"Your electric is metered. So is your water," Dignan points out. "In Europe, metered Internet access is common. Your wireless bill also has charges if you break through contractual caps. Yet no one screams about it."

I see some kind of usage metering as an inevitable development for all broadband providers. Indeed, operators including Comcast and Cox already have explicit or implied maximum bandwidth-consumption limits; they just aren’t charging customers who blow past those caps.

No Internet service provider would find the economics favorable in offering, say, a 100-Mbps unlimited-usage Internet connection for a flat rate of less than $100 per month, especially as more bandwidth-chewing high-quality video content wends its way online.

The questions are what the exact caps should be, and how to deal with the corner-case consumers who truly utilize their connection 24 hours a day. 

That’s what Time Warner Cable hopes to discover with its trial in Beaumont, Texas

Lesson # 1 (which we already knew): managing the P.R. aspects of changes like this will clearly be the biggest challenge.