SubscribeIt’s baaack. Gary Kim, self-described member of MENSA, elected to link to our recent article about a customer in Austin having his Road Runner service cut so that he could drag out that we have heard before. Mr. Kim, who has penned his views for a boatload of industry trade publications, as well as running a few of his own, has trotted out that old chestnut about not paying flat rate for gas, electric, and water. Except he takes the analogy to the extreme “conservation” argument, as if the world of online video is leading us to a broadband global warming catastrophe.
Are you as smart as the industry guy?
Now I’m not a member of MENSA. My experience with IQ tests was limited to those wooden pyramid puzzle things they used to put on your table at the Cracker Barrel. But I’ll give this a shot anyway.
Lots of people get upset about bandwidth caps that strike me as extraordinarily generous. Does anybody think the planet or the economy would be better off, companies better able to improve service or people given incentives to “do the right thing” if electricity, gasoline, water, natural gas or heating oil were sold on an “all you can eat” basis.
Which bandwidth caps are extraordinarily generous? The 5GB cap on your wireless phone plan (or the one Frontier considered but discarded in light of the competitive advantage it now seeks in one Time Warner test market), the 40GB power user tier Time Warner started out with, the 150GB limit AT&T is playing with, or the 250GB cap Comcast has today? The caps are all over the lot, with each company swearing on a stack of press releases their cap is the one most justified and required if a company can survive the Irwin Allen-like Exaflood future.
Second question: What exactly is “the right thing?” Bowing to the cable television industry’s business plan opposing a-la-carte video packages in order to enjoy the revenue that comes from all you can watch television? Is it the wrong thing for people to make their own decisions about what they do with their Internet connection? We’ve been down the road of why the Internet is not the same thing as oil, gas, or even water for that matter. StoptheCap! reader Brion perhaps had the best debunking of this analogy:
Mr. Kim then suggests he doesn’t necessarily like his electricity or water rates, but he conserves because there is a penalty for unrestrained use. Actually, there isn’t really a penalty at all. Gas, electric, and water service are sold on a true metered basis. There are no “bucket plans” for these services. They are also utilities, and their rates are either regulated outright, or carefully monitored in the limited competition models some states have for these services.
Your water company bears the minimal cost of pumping a gallon of water from a body of water or aquifer. It then resells that water at a per gallon rate marked up to cover all of the overhead and expenses it has, sets a little more aside just in case of a non-rainy day, and delivers it to you at a rational, non-gouging price. If you don’t want to pay, you leave the faucet off. On the Internet, the faucet drips… all the time. The only way you are assured of not paying is to unplug your modem, never check your e-mail, and avoid websites with ads, because those are now now on your dime, especially when Time Warner marks up its wholesale cost by 1000% or more for that data. It’s like getting a glass of water but handing half of it to the stranger walking by your house, who also wants you to pay him a dollar on top of that.
Time Warner is also, like many cable providers, hip deep in a conflict of interest on broadband consumption. Cable has a vested interest in forcing you to “conserve” your connection, particularly by not using those services which directly compete with its business models. Streaming video online offers the customer the possibility of foregoing a cable TV package altogether. A Voice Over IP telephone provider on the Internet makes Time Warner’s Digital Phone product redundant. A Netflix set-top box that streams movies and other video programming in competition with premium/pay per view channels represent just one more service that panics many in the upper floors at Time Warner Cable’s headquarters.
Ironically, it was the very same cable companies that are whining about Exafloods and a crisis of costs who have contributed to the demise of “long distance.” Time Warner, among others, are now pitching cheap unlimited calling plans to customers who will never pay for another long distance call. In the wireless industry, price skirmishes have already broken out with carriers marketing true unlimited calling plans or calling circles which, for most people, mean no more airtime minute watching.
When I renew my Verizon Wireless contract this December, I will be handed a new phone and the option of a better plan with more minutes at or below the price I am paying now. By that time, there is every likelihood Time Warner will be asking me to pay three times more ($150 a month) for precisely the same level of service I am receiving now for around $50 a month. One of these companies is responding to the reality that bandwidth costs are declining, and are reducing rates and offering more. The other is taking advantage of a very limited competitive market and wants to triple charges claiming they are on the edge of broadband bankruptcy — only they’re not when you read their financial reports. Guess which is which.
I am also glad you are asking real people these questions, because companies like Time Warner certainly aren’t. Any reader here can recite poll after poll. The overwhelming majority of broadband customers, even those who are not defined “at the moment” as “abusers” of the network are content and satisfied paying one monthly fee for their service. They don’t want your plan, the industry’s plan, buckets, limits, caps, overlimits, or whatever else the marketing people decide to call the equivalent of Internet rationing at top dollar pricing.
We are consumers. We are customers. We are not industry insiders and we don’t write for industry trade publications. We don’t get a paycheck from this industry. Indeed, this industry raises our bill year after year, delivers inconsistent messages about why we are now being asked to pay for “buckets of broadband,” yet still denies us the ability to choose the channels we want for our own video package, paying just for what we want.
We also are empowered and educated enough to use this incredible tool called the Internet to research the assertions some make and simply expect others to accept at face value. We now read financial reports and statements. We verify. We also discover the language of the lobbyist, the marketers, the astroturfers, and the executive elements that are now attempting to sell consumers on their scheme to pay considerably more for the exact same thing, or less. Then we compare that with the glowing results given to shareholders, and we see the chasm between the two messages. We realize what we are being sold: a soon-to-be-even-more-inflated bill of goods.
Frankly, you don’t have to be a genius to recognize that looking at a gas gauge, worrying about overlimit fees, and being stuck paying $100 more a month for broadband is not going to make anyone outside of this industry happy.
The first time a consumer gets a bill from a company with a plan like Time Warner’s, they are going to kick the bucket.
Anyone who doesn’t recognize and admit the real potential of market abusive pricing and policies in a limited competitive marketplace isn’t being completely honest, especially when the players do not offer roughly equivalent levels of service. If the future of broadband in this country is to be unregulated virtual duopolies, then perhaps consumers need to insist on common carrier status for those networks, allowing equal access to a variety of competing providers, with oversight to guarantee fair wholesale pricing and access.