Following up on yesterday's post on bandwidth, here's a more technical analysis of Time-Warner's claims that they need to raise prices because of Internet usage.
The technology used by Time-Warner is easy (and cheap) to upgrade. Most of Time-Warner's cost is "sunk cost" of a fiber network that's been in place for at least a decade. Also, Time-Warner's own analysis (in Beaumont, Texas) shows that most users don't exceed their caps today.
It's clear that Time-Warner's real reason for a cap has nothing to do with usage or cost. The goal is to protect their cable TV business from Internet encroachment tomorrow, and to chisel heavy users of their service in cities where they have a virtual monopoly.
The article also points out that Time-Warner and AT&T, the other provider in Beaumont, are not competing to the benefit of consumers. AT&T has already decided to cap usage in that market. Expect the same collusion from Frontier and Time-Warner in the Rochester market.
Beaumont is a few miles up the coast from Ron Paul's district in Texas. He has a good word to describe what Time-Warner is trying to pull: "corporatism".
Comments
Let's not forget that high usage of the Internet is a devil of Time Warner's own making, if indeed they actually believe it's a problem. They along with every other HSI provider have been advertising for years that you can "download movies and music" using their service. Well, so we are, and now they want more money for doing what we were told we were supposed to be doing.
I realize that Time Warner's argument is just disingenuous, but if we have to play the game. . . .
And as I've pointed out on my site many times, we're not even getting the same bang for our buck on the supposedly maxed out networks we have access to now. Other countries get double and treble the bandwidth for nearly the same price. What makes the US so special that we're stuck with stunted Internet access that we have to pay per gigabyte for?
"if indeed they actually believe it's a problem" -- no kidding.
The usage issue is a red herring. The Internet, unlike electrical power or natural gas, is a utility where it's constantly getting cheaper to provide more of it (up to a point). New engineering pushes more bandwidth over the same fiber/copper, and every new generation of the equipment attached to the fiber/copper is cheaper.
All of this is basically a "back door draft" to tearing down Net Neutrality. I think the idea is to harass customers until the idea of "having to pay for more service" becomes the default axiom, rather than a strange concept. Then customers will want the online sites to pay for it.
But that's just a guess.
Also - one of the talking points is "billing for Internet like cell phones", even though they're not the same thing. Basically, trying to get people used to thinking about Internet service as something it's not.
What makes the US so special that we're stuck with stunted Internet access that we have to pay per gigabyte for?
The elusive goal of homogeneity. We should be as third-world in telecommunications as we are in health care, justice, and social services.
[/snarky]
The real goal for TWC is to monetize internet video and audio, and stifle competing VoIP services. If they can't get us to pay directly for their content, they want to make us pay more to receive content from other sources.
TWC's markup on bandwidth is in the neighorhood of 1000% (see this). How can they sustain the argument about cost of providing service? Or improving service for the masses? It's fairly obvious that the intention is to subsidize their cable TV operations.
TWC is an independent company now; consequently, they need to show a profit. Maybe they could cut some costs. Start by not mailing me a flyer biweekly about how wonderful and economical their telephone service is because I'm not nor will I ever be interested.