Kyle McSlarrow, president of the National Cable & Telecommunications Association (NCTA), a cable industry trade group, wants cable companies to be able to continue experimenting with metered broadband service.

McSlarrow

In an interview with Ars Technica, McSlarrow claims broadband pricing experiments aren’t about “gouging” customers or creating even fatter profit margins.  Instead, he claims the cable industry just wants to provide Internet access in a way “that’s best for the consumer.”

According to McSlarrow, there’s no particular rush to pick one business model, and the industry has no “grand plan” hashed out by cigar-smoking executives in clubby back rooms. In his view, though, cable needs to do the experiments to make sure that the Internet survives the coming bandwidth apocalypse.

“As demand goes in a certain direction,” he says, “someone’s going to have to build a network” to deal with “not just instantaneous peak but, more importantly, average peak usage. The whole point is to do it in a way, and to serve your customers in a way, that they have a great experience. If you fail on the network side to do that, particularly with our shared network, that’s a real problem.”

McSlarrow himself enjoys flat rate pricing from his Internet service provider, so he’s not a part of any experiment, nor is he willing to defend Time Warner Cable’s recent attempt to launch metered billing in several cities around the country.  But, he feels that broadband service doesn’t have to come with a single monthly price for everyone, claiming that the “majority” of broadband customers consume so little, they are basically overpaying to support heavier consumers of bandwidth.

McSlarrow, who has ties to the Republican party, having been the national chairman for Dan Quayle’s failed 2000 presidential bid, and has worked for two Senate Majority Leaders — Sens. Bob Dole and Trent Lott, is a firm believer in free markets, with no government regulation.  He also claims the broadband industry is highly competitive, which means market forces will protect consumers from gouging providers.

McSlarrow must have spoken to Ars Technica on Fantasy Island, because that must be where he is living these days.  He certainly doesn’t live in Reno, Beaumont, San Antonio, Rochester, Greensboro, or Austin, where AT&T and Time Warner Cable decided to test their paltry Cap ‘n Tier schemes.  It’s no surprise he wasn’t willing to defend Time Warner Cable, which tried to launch a Money Party at consumers’ expense.  McSlarrow should also know that free market competition without regulation only works when there are competitors — lots of them, offering similar levels of service.  That’s not the broadband industry the majority of America lives with today.

Nate Anderson, who penned the piece for Ars, took a skeptical aim at many of McSlarrow’s claims.  We’re willing to go further and say they don’t represent reality, period.

Anderson says it himself when he points to cable’s long history of rate gouging and lousy customer service.  The cable industry has had a license to print money, and investors know it.  This industry leverages its barely competitive position into fat profits and excellent returns year after year.  It has never shown an interest in voluntarily reducing the level of either without government intervention or heavy competition.  It’s not about to for broadband either.

Most people usually have a choice in participation in an experiment or trial.  AT&T and Time Warner Cable never offered an opt-0ut for their customers.  Instead, it was “take it or leave it.”  Both companies chose experimental cities where customers were unlikely to “leave it” because the competition was either hampered by slower speeds, unavailable, or worse than the “experiment.”  Not one market test has been conducted in a city with a robust competitor offering equivalent service over the entire service area.  When consumers thought they had found one in Earthlink, a Time Warner Cable corporate spokesman wrote to one reader to tell them they would make sure Earthlink was made a part of the “experiment” despite their obvious unwillingness to participate.

The hypocrisy of the supposed magnanimity of the cable industry to “help the little guy” who doesn’t use enough broadband to justify his current rate is laughable.  This is the same industry that under markets their existing “lite” plans to those customers, and has never shown the slightest bit of interest in offering the equivalent on the video side of their business with a-la-carte pricing.  Furthermore, metered broadband experimental pricing initially announced by Time Warner Cable would have cost even lighter users more money than their existing Road Runner Lite plan.  Even modified, it would have subjected consumers to a ludicrous cap of 1GB per month, with a $2/GB overlimit fee, nearly 2000% above their estimated costs.

NCTA rhetoric has historically never met actual reality for most consumers, and that remains the case today, particularly with the “exaflood” excuse that even cable company officials rapidly dismiss at investor conference calls as a non issue.

As far as being given the right to conduct “lots of experiments” with transparency and “full input” from consumers, we’ve seen how that works in practice.  All of the “experiments” are designed to do one thing – maximize profits through controlling usage and reducing investments.  They are transparent once you blow the fog generated by the industry propaganda/PR machine out of the way.  Consumers have already given their “full input.”  In poll after poll, consumers overwhelmingly reject this kind of billing, often at levels of 80% or more, and the majority will try and switch if their provider attempts it.  That, along with other customer input is routinely ignored.

For many customers, cable understands they can afford to ignore them.  Where are they going to go?  Slower DSL, if it’s available?  Satellite or wireless mobile, which is heavily capped and slow?  Dial-up?

We’ve reached out to some of the lighter users who pondered whether Time Warner Cable might have had something for them, but were skeptical and suspicious this would give them the savings they were seeking.  They were right to be skeptical, having known a cable industry that never sends a lower bill for anything, unless you drop services.  They never realized Time Warner Cable even offered a “Lite” plan, because it’s not well marketed (and was nearly impossible to find online in Rochester).  Given the option of paying a few dollars more for the peace of mind flat rate service provides, versus a plan that charged exorbitant overlimit fees for exceeding the tiny usage allowance given, they preferred the existing Lite plan or decided to stay with the standard plan they already had.

Perhaps an honest experiment might be the one that they are terrified to try — asking customers if they want to remain on the current system, or switch to a metered billing approach, and let them decide.  Of course, they already know the answer, which is why it’s the one experiment not coming to a city near you.