Reader Michael sends a BusinessWeek piece about Time-Warner Cable's plans to institute consumption-based Internet pricing in the Rochester market. Unfortunately, it's not an April Fool's joke.
This isn't the first such effort in the region. Last Fall, Frontier changed their terms of service to include a very low (5GB/month) cap. After an outcry, including a website dedicated to stop the cap, Frontier backed down.
There's nothing wrong with the concept of usage-based Internet pricing, but all of the usage tiering I've seen is unrealistic. Time-Warner's is no exception: by one calculation, their top tier, which is still pretty limited, would lead to $200/month in overage charges for a family whose use I'd classify as "moderate".
I have yet to see a pricing plan that acknowledges that the average user in 2009 spends a fair amount of time on YouTube, that Internet use will grow, and that the Internet provider's cost for raw bandwidth has been shrinking. These plans also ignore that broadband Internet has been sold on basis of speed, not usage, for the last decade, and that the Internet providers have cut their own throats by promising ever-greater speeds without major price increases.
Most importantly, none of these pricing plans give anything to get their greatly increased profits. These new plans don't guarantee speed or availability. They just demand much more money for less service.
There's little or no competition in the home Internet market -- Time-Warner has a monopoly in large parts of the 29th district. One way to get a real market here and elsewhere is to treat Internet service the way we treat telephone service. Local service - the connection to the nearest switching center - would be the responsibility of Time-Warner or Frontier and have a regulated, low price based on the actual cost of delivering the service. At the switching center, other, nationwide bandwidth providers would be able to compete with Frontier or Time-Warner for our Internet business.
Like long-distance, once real competition hit the market, we'd see an ever-diminishing cost for Internet bandwidth. It's only because TWC and Frontier have a monopoly that they'd even consider $200/month Internet pricing. Their recent actions have shown that their Internet monopoly needs to be broken.
Comments
More money for less product from Time Warner Cable. Why am I not surprised?
As of 1 January 2009, Time Warner Cable Rochester stopped providing Elmira TV stations to customers in their Finger Lakes - South area, which includes Yates County. Never mind that we are right next to Steuben County, the heart of the Elmira market. No, some bozo in LA or NYC decided we are in the Rochester media market. But we do get the Syracuse stations - a market we are even further away from. Gotta have those SU Orangemen games, after all.
In taking away the Elmira TV stations, TWC also took away the best source of information not only on the 29th Congressional district, but also my State Assembly and Senate representatives.
I guess TWC is trying to find what it takes to drive customers to the competition.
TWC is facing the same dilemma as newspapers: customers are getting their content over the Internet for free. And, just like newspapers, they are doing two dumb things:
1. Reducing the amount of their content. All newspapers have shrunk. TWC eliminated Elmira from your package because they saved a few pennies per subscriber.
2. Trying to charge people for something that they've expected to be free. For some papers, that was content (e.g., NY Times Select). For TWC, they are trying to clamp down on Internet usage.
It's a dead-end strategy. Politicians believe that the Internet is sacrosanct, and TWC's efforts are going to spark a public outcry that will get them more regulatory scrutiny. I just can't see them getting usage caps in the current environment.
Unfortunately, they probably picked Rochester for a reason. They have "competition" here, Frontier. Frontier is itching to do the same thing as TWC -- a draconian usage cap. So as soon as TWC does it, Frontier will too, and TWC can argue that the "market" has spoken.
A duopoly isn't a market, but TWC and Frontier hope nobody will notice.
"In taking away the Elmira TV stations, TWC also took away the best source of information not only on the 29th Congressional district, but also my State Assembly and Senate representatives."
Pick up a copy of the Corning Leader
Hey, I missed that the first time around. Do you mean to imply this blog isn't the best source of info on "the 29th Congressional district" !? :)
This is ridiculous.
We're back in the battle once again. Last summer we fought back Frontier's ridiculous 5GB usage cap, now http://www.Stopthecap.com here in Rochester is batting Time Warner's Internet Rationing Plan.
We invite everyone to join the fight!
Philip, glad to see you going again.
I think that Frontier is going to try to scoop up as many TWC customers as possible then institute their own cap.
If you sign a price protection agreement for 2-3 years, you are being guaranteed no capped service. I verified this personally by phone with them this week. My sources inside Frontier tell me management does have a group contemplating whether this represents a golden opportunity to poach customers and keep the caps off.
There is a comprehensive article up explaining your options if you are in Rochester: http://stopthecap.com/2009/04/02/road-runner-is-for-the-birds-time-to-fl...
We will begin a more coordinated public policy pushback next week, tailored to the dwindling GOP members in the region and a slightly different one for the Democratic members. But first I wanted to get people accommodated into an Internet service plan that works without a cap, if they need one.
Wondering how long I could rip off unsecured wifi from my neighbors (access to 5 signals) before a cap would force them to, GASP!, create a password.