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.