Challenge: How do you, the second largest cable company in the nation convince people you cannot afford to complete needed upgrades of your network without rationing usage and massive rate increases, while the fifth largest cable company just pulled it off with no drama and has announced the nation’s fastest residential broadband service, at fire sale pricing with no caps or limits on usage, starting May 11th. Cablevision even doubled the speeds of their free wi-fi, offered as a public service to their broadband customers at no additional cost in many public locations, to three megabits per second.
Time Warner wants to ask customers to pay $150 a month for 15Mbps service while Cablevision rolls out Optimum Online Ultra, priced at $99.95 per month for both consumers and business customers, offering 101Mbps service. You read that right. One hundred one megabits per second service. Cablevision has no caps or limits on its customers — doesn’t need them, never wants them. Cablevision’s new broadband package even blows away Verizon Communications FiOS highest tier, which offers 50Mbps priced at $139.95 a month.
How can Cablevision pull this off while Time Warner has a hissy fit and yanks back their own vaguely-promised upgrades because customers rightfully said no to a 300% rate increase?
Integrity, honesty, real commitment to the communities they serve, and a recognition that a credit-card-like-pricing model at a time when the economy is hurting is about as low as you can go, all might have something to do with it.
Cablevision didn’t whine when it saw broadband growth. It simply reached inside the broadband division’s profits, and made an investment in the future needs of their customers. They completed upgrades to DOCSIS 3.0 without a lot of fanfare, without the need to impose rationing plans and without any caps dumped on everyone from the lightest to heaviest users. In other words, they chose treating their customers with respect instead of considering them crooks, bandwidth hogs, and freeloaders that needed to pay more… much more, for the exact same thing. That “other company” saw the same growth in Internet usage and felt their best option was to cut investment by 11% last year.
“Optimum Online Ultra firmly solidifies Optimum as the fastest Internet service in the home, at work and through the air over Optimum Wi-Fi,” Cablevision chief operating officer Tom Rutledge said in a statement. “This is a perfect complement to our existing high-speed data products, which are fast, reliable and far superior to anything available from our competitors.”
You bet it is. Standard service customers who receive 15Mbps/2Mbps service will also reap the benefits of less congested bandwidth pipelines, made possible by the technology upgrade. For Cablevision, it means reaping the rewards of an easier-to-manage-network, happier customers, new profit-making possibilities afforded by higher speed premium tiers, and an assurance they will retain their 75% market share for broadband services in their service areas.
That “other provider” continues to stomp its feet and decide the real problem isn’t their rape and pillage pricing plans, but the fact customers weren’t “smart” enough to see the genius of turning you upside down and shaking you for every dollar that happens to fall out of your pocket in the process. You cannot Re-Educate an informed and empowered consumer that can see right through the PR campaign: not yesterday when you shelved it, not today while you ponder how to market it, and not tomorrow when you bring back the same rejected plans with a new coat of paint.
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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.