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This Week in Tech Covers the Road Runner Rationing Plan – Eight Minutes You Need to Hear

Phillip Dampier April 9, 2009 Editorial & Site News, Talking Points 8 Comments
This Week in Tech covers the Road Runner usage caps issue

This Week in Tech covers the Road Runner usage caps issue

Coming on the heels of yesterday’s report about the amazing inconsistency of responses coming from Time Warner customer service employees to our readers, here comes another one.  This Week in Tech [thanks to Steve Rea from Sound Bytes for pointing the way] covered the usage cap story this past weekend, and if you are new to this site and don’t understand what all the fuss is about, this is around eight minutes you need to hear to understand what is going on.  It covers the broadband industry model, the inconsistent messages the broadband industry is sending to consumers, and what one of the fundamental goals of broadband capping seeks to achieve: a reduction in risk to their primary video programming delivery business.  The more you watch online, the less you’ll think you need those bloated cable TV packages with all those channels you never watch.  A cap that makes watching video online an expensive proposition means you’ll think twice before watching another Hulu or Netflix movie on your computer.

I’d also like to share some of the behind-the-scenes contemplating I have been doing on this issue based on the evolving message coming from Time Warner on this issue.  I think the increasing reliance on their use of the words “experiment” and “test,” and the supposed willingness to “rethink” the level of the caps may be part of an effort to lay the groundwork for some sort of damage control announcement that the company is going to “double” or “triple” the caps in their upcoming “experiment.”  In thinking about how this industry has worked over the past two decades I have been keeping an eye on them, it would not be outside the realm of possibility for them to try and proclaim a “victory for consumers” by simply increasing the caps, but still imposing them anyway.

When you hear this podcast talking about Time Warner employees referring to some “internal memo” or “email” on this subject (and we’re always happy to receive our copy here at StoptheCap! should someone anonymously drop one our way), it would hardly be surprising if something akin to this wasn’t under consideration.

But I want to make everyone clear that a cap, of any kind, is honestly not a victory for anyone. It’s a Band-Aid.  And even assuming they tripled the proposed caps, where the maximum 40GB becomes 120GB, that still puts them below other competitors in this race to the bottom, and your bill is still going up, and now you have to watch a gas gauge every time you sit down in front of the computer.  And using their own claim that average subscribers are increasing their usage by 50% a year, we’ll be right back here on this issue soon enough as people start getting larger and larger cable bills for “going over.”

The only real victory here is a complete revocation of the “cap experiment.”  No caps.  If Time Warner wants to rake in additional revenue, why not consider creating new super-tiers that are priced higher, but also offer heavy users faster speeds, particularly for uploads.  There are plenty of heavy users of the net who already pony up an additional $10 a month for Road Runner Turbo, if only for increased upload speed.  I am among them.  In many markets, like Rochester, there is room to grow on the top end without imposing caps on anyone, and still collect additional money from subscribers who choose a better level of service.  Punitively punishing every customer from the very light to the very heavy user is nothing less than market abuse and an effort to extract even more dollars out of your customers.  The costs to upgrade their facilities to provide a level of service capable of easily growing with broadband demand is not nearly as expensive as they would lead you to believe.  We’ll get into the weeds on that issue shortly.

And it’s not just consumers saying caps are bad.  Other cable companies and those in the financial sector who track Time Warner are saying it too:

Pali Capital analyst Rich Greenfield, in a note to investors Wednesday, said asking consumers to keep checking their consumption “sounds tedious.”

“Let’s start with a simple premise: moving from an all-you can eat ‘buffet line’ for bandwidth usage via broadband to an a la carte system of paying for every gigabyte you eat is subscriber-unfriendly and will be confusing to the average broadband user,” he wrote, referencing the opposition by Massa and the Greensboro city council.

“In an increasingly competitive world, the age-old saying of ‘keep it simple stupid’ should not be overlooked,” Greenfield continued. “If competition exists, we suspect a provider offering broadband without caps or a simplified strategy toward broadband will gain meaningful market share, assuming TWC continues to move forward with its bandwidth-cap strategy.”

At last week’s Cable Show ’09, Jim Blackley, Cablevision Systems senior vice president of corporate engineering and technology, said on a panel discussion that bandwidth-usage caps are not in the MSO’s plans.

“We don’t want customers to think about byte caps so that’s not on our horizon,” he said. “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.”

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p style=”text-align: left;”>Press the play button to listen (you must remain on this web page to hear the entire segment):

Currently there are 8 comments on this Article:

  1. David Myles says:

    Simple reason TW and Comcast want to change to this structure…

    So why does Time Warner really need to ration your Internet service and punitively limit your use of the net? Michael T. Fries, the chief executive of Liberty Global is candid:

    Fear. Other cable operators, he said, are concerned that not only will prices fall, but that the super-fast service will encourage customers to watch video on the Web and drop their cable service.

    The industry is worried that by offering 100 Mbps, they are opening Pandora’s box, he said. Everyone will be able to get video on the Internet, and then competition will bring the price for the broadband down from $80 to $60 to $40.

    Aren’t you worried that the prices will fall too? I asked.

    “Maybe,” he said very slowly. “We’ll see how it happens. We want to keep it up there for now. It is a premium service.”

  2. Christine says:

    http://www.democratandchronicle.com/article/20090409/BUSINESS/904090334

    Not sure if you missed this or not, Phil… the comments degenerated into typical “us vs. them” BS on a couple points, but I hadn’t seen this article here. I’ve been watching the D&C religiously for articles on this… I know RNEWS won’t touch it.

    • Yeah, I saw it. It prompted me to begin work on some basic talking points I want everyone here to learn and take back to these other websites and engage the readers who are drinking the Kool Aid on this issue. They are arguing points based on what Time Warner posits is the only workable solution to this “problem.”

      Daily Kos has a diary up that also seemed headed in the same direction. So much work to do, so little time.

  3. Earl Cooley III says:

    I would switch to Grande Communications were it not for the fact that TW has a monopoly in my part of town. Solution: break the back of the monopoly. I just don’t know, at this point, how one would go about doing that.

  4. Joseph Kim says:

    Exactly – TWC want us to focus on the cap amount (5GB to 40GBs) with the ludicrous limit. They want us choose between “small cap” vs. “large cap” rather than “no cap” vs. “some cap”.

  5. Josh Beck says:

    I would listen to the clip, but according to my gas gauge I’m getting pretty close to my monthly internet allowance. Let me see if Time Warner has that on Demand……

  6. Dan says:

    This “where else are you going to go” argument has to be killed and fast. They aren’t easy to find but after a bit of time searching around it seems the Austin area has Earthlink, Grande Communications, Frontier, and my guess would be others as well which I haven’t run into yet.

    Maybe it’s time to put together lists of options for people in affected areas, kill this “we’re stuck” idea once and for all?

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