Time Warner faces backlash on broadband caps
Time Warner Cable's plans to cap broadband speeds and charge $150 a month for unlimited broadband downloads has caused quite a stir among consumers and politicians.
U.S. Rep. Eric Massa of New York is promising to introduce in Congress that will curb the use of tiered broadband services in areas where there is only one service provider. And angry consumers have taken to the blogosphere to express their outrage at a new plan that would theoretically charge them more on a per Gigabyte basis for downloads than they'd et from other services.
Last week, Time Warner Cable, the nation's second largest cable operator, said that it plans to expand its test of using bandwidth caps for its broadband data service. Last year, the company began testing broadband services in Beaumont, Texas that allowed 5 to 40 gigabytes of uploading and downloading a month. Now the company is planning to expand the test to other cities this year including Austin, San Antonio, Rochester, NY and Greensboro, NC. The company also has plans to increase the caps to between 10 GB to 60 GB a month with prices ranging from $25 to $65 per month, depending on the region.
Time Warner also said that it would introduce a new plan that offers 100 GB of downloads for $75 a month. Additional downloads would be charged $1 a GB with a cap of $75 on the extra fee, essentially making an unlimited plan cost $150 per month.
By comparison, Comcast's service, which costs $43 a month, has a bandwidth cap of about 250 GB per month. And Verizon Communications' cheapest broadband package with its fiber-to-the home Fios service costs $45 a month and has no download limit.
Time Warner's plans ignited a firestorm of protest among consumers and consumer advocates, who believe the company is unfairly hiking prices on broadband services for some subscribers. And Congressman Massa has called the plan, "nothing more than a large corporation making a move to force customers into paying more money."
Time Warner's Chief Operating Officer Landel Hobbs, tried to explain the company's position in a letter posted on April 9. Hobbs said that the reaction to reports of the new tiered offering are overblown. But he said the company has heard the "passionate feedback" and is taking steps to address the concerns. And he outlined some minor changes.
For example, the company will also offer a new $15-a-month plan that is suitable for light e-mailers. The service offers download speeds of 768 kilobits per second and a 1 gigabyte monthly cap. And it will offer a new 50Mbps download and 5Mbps upload service over its new DOCSIS 3.0 infrastructure in some trial markets for $99 a month.
Hobbs explained that bandwidth usage is growing about 40 percent a year on Time Warner's network and the company has to come up with a new business model to handle the added cost of handling so much traffic.
"As a facilities based provider, we've built a network that must be maintained and upgraded," he said. "We have increasing variable costs and we have to continue to invest in the network itself. "
Indeed, managing bandwidth has become a big deal for broadband providers over the last couple of years. Comcast got into hot water two years ago when it was caught slowing down BitTorrent traffic on its network. The Federal Communications Commission said that Comcast's actions were illegal, and the cable company has reformed its practices.
Time Warner believes the metered approach will help it better manage traffic on its network, and control bandwidth bogs who use an inordinate amount of bandwidth on the network.
But the truth is that today Time Warner's customers aren't using that much bandwidth anyway, according to an article published a couple of weeks ago by Business Week. Of the 10,000 subscribers in the Beaumont, Texas trial, only about 14 percent exceeded the cap and had to pay the additional fees, which totaled on average about $19. The company also learned that the top 25 percent of users consumed 100 times more data than the bottom 25 percent of users, which suggests a pretty big gap in how consumers are using broadband.
For now, the trials appear to be angering consumers, who likely aren't breaking these caps anyway. But the very idea that the company could meter its traffic may be enough to cause some subscribers to cancel their service and sign up with a competitor that offers no caps. And for those customers who don't have a choice of another provider, Time Warner's trials may spur a more aggressive eye from lawmakers, who would want to curb the use of these caps.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
So why is it that the CATV providers are the ones who are wanting to cap service? Most of them give their best rates if you bundle the broadband with the CATV service. Why would they necessarily care which of their services you're streaming through their pipe?
Perhaps the bigger issue is that they are running into capacity problems because they want to carry more and more of their VOD CATV service in the same pipe that their customers want to use for everybody else's VOD Internet service?
No, I would not cancel my service as my job requires constant high speed access to the Net. What I would do is scream to my local municipality that sanctioned this crap and to my state and federal congress members until something gave.
Fortunately, Verizon is sitting here waiting with a decent DSL solution and FIOS on the way. It was just easier to get TV and Broadband from one place. That will change if they implement unreasonable caps.
Are governments at various levels now part of this telling companies what they should charge?
In the older days, if you had dial up, you had cap's on transfers, ISDN, T1 same thing.
But, if a company offers unlimited and you signed up for unlimited, then they should stick to it, and leverage in there agreements how much time they need to give you before your existing contract is null.
This is not the world of free everything. Looking at the housing market we can see what happens when we think we should get everything for free or low low prices.
I don't understand how Europeans and Asians can get faster unlimited service at a cheaper price than we do ? In Japan, one cable ISP provides 160Mb/s for US$60.00/month. It cost that company $20.00 per household to build the infrastructure. Why is TW so inefficient that it can't do the same ?
Everytime TW introduces some tier structure, TV or internet, they make money, we get screwed. As soon as a choice arrives in my neighborhood, I'm gone.
I encourage everyone to write TW and let their collective voice be heard loud and clear.
24/7 connectivity is what everyone needs, and the price of that is too high because of the bandwidth hogs.
The best is if 24/7, high speed, data traffic limited, is very cheap or almost free (e.g. City Wi-Fi), but with higher fees as data traffic increases. That's not even a new idea, it's how web hosting plans are priced, it's how SMS charges are billed.
To give one example, many don't mind having an open Wi-Fi connection with neighbors occassionally using it to surf the web and check email, but most would mind i they notice a neighbor logging in and downloading huge files.
Frankly, this is just a power grab by the cable companies to prevent people from using competing video services.
Charging more for the same amount of product because you are the only provider or the largest provider isn't 'consumer capitalism.' This is why the government files anti-trust lawsuits.
"If you don't like it select your other options, use dial up ISDN, DSL, Satelite."
The ISPs need to be realistic. Internet usage isn't what it once was. I upload, probably in the neighborhood of 20gb of photographs per month, sometimes per week. Going back to relying on dial up isn't realistic. The ISPs sold us unlimited broadband access and now that we have it - and now that people's livelihoods are dependent on Internet access - they think they are in a position to raise rates as high as they want. This, too, is a violation of anti-trust laws.
"Packard Bell of broadband providers"
Love it! I wonder how many people remember Packard Bell...
I was an early adopter of RoadRunner here in Austin, TX, and was perfectly happy with the 4Mbps download speeds I was getting. A couple of years ago, it the maximum speed was raised to 6Mbps, and since last year my download speeds top out at sustained 8Mbps.
Quite frankly, it's fantastic service. I can download a hour's worth of standard definition digital video in 10 minutes flat, and it doesn't matter what time of the day or night it is. The service is so good and so fast it's no surprise that more and more users are downloading hundreds of gigabytes worth of data. There certainly doesn't seem to be any bandwidth capacity problem at all--not even close--certainly not at the moment.
I admit that I am a heavy user of RoadRunner, but I never asked for 8Mbps sustained download speed. Why do I even need to download a 500MB hour-long video file in 10 minutes when it takes me an hour to watch it? Sure it's convenient, but I would be perfectly happy if I could stream it at 2Mbps -- at a quarter of the bandwidth that I have today. The same goes for all my downloads. Unless I am wanting to stream high-definition video from the web, then I don't need a higher bandwidth at all.
Thus Time Warner could easily throttle back the bandwidth being consumed by its customers with minimal impact to their daily use of the Internet simply by reducing the maximum download speeds to 2-4MBps instead of the current 8Mbps, and offer higher bandwidths for higher prices, as they do today.
But, of course, that doesn't bring in any extra revenue, and adding strict monthly download limits (in this age of digital video) they are essentially performing a bait and switch. They have ramped up the download speeds over the past couple of years and now that their customers have become accustomed to the lightning fast speeds, TW is hoping that they will continue to download massive amounts of digital content and reap the rewards through sticking their heavy users with massive overage fees. I don't know for sure, but I am probably one of those people who could be paying between $100 - $150 per month if I continued to use the internet as I do today.
But that's not the only problem. Imposing strict caps is a tax on all the new digital download services that are coming online now and in the near future. Why would I want to continue using Netflix's high definition download service when I have to pay an extra $4 per movie because I have used up my bandwidth for the month? Online gamers may not feel too much of a pinch at the moment, but the amount of downloaded content and streaming of data will only rise in future, and they will eventually begin to blow through the caps before the month is over.
What about cafes and restaurants that offer free online access as a lure to attract more customers to their establishments? Free internet access in those places will instantly become a thing of the past since they will not longer be able to afford to pay for the heavy traffic the surfers will cause.
And while TW says they can't throttle back specific types of internet usage like peer-to-peer services, by its very nature, P2P is going to be hit twice as hard as other forms of use. P2P can only truly be effective when there as many people uploading as there are downloading, and that takes twice the bandwidth as a service based on more traditional downloading techniques.
So assuming rather than penalizing users by throttling back the P2P download speeds, TW is simply penalizing P2P users another way -- by forcing them to use up their monthly bandwidth allowance at twice the rate of other users. I fail to see how this is an improvement.
The most aggravating thing about all this is that Americans are already paying more for their digital services -- phone, internet, and cable -- than many other countries in the world, like France and Britain. My parents in England pay about $35/month for their phone service (including free phone calls to the USA!) and unmetered 4MBps DSL service. I already pay about twice that amount for the same thing, and it would be even more if I bought the ridiculously expensive internet phone service from TW. Next year, if TW has their way, I will be paying up to five times as much for the same service.
Shameful.
I think we all have to make a whole lotta noise at the FCC level. And don't expect Congress to get it done, there are too many congresscritters beholden to the Lobbyists representing these industries. Yes, there have been a few feelgood bits of legislation, like for broadband mapping, but if Connected Nation ends up being the mapper of choice, we've not gained a thing, since Connected Nation is funded by the Telcos.
Time for Voters to Impose some Term Limits . . .
- by bearwalker01 April 15, 2009 1:59 PM PDT
- Watch out, all you Facebook posters!
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