Is The All You Can Eat Internet Over?

January 18, 2008
Earlier this week, Time Warner Cable Inc. announced plans to trial a new billing methodology, one based on usage rather than the current flat-rate pricing that is the norm throughout the U.S.
The cable giant will roll out the new tiered pricing scheme in Beaumont, Texas (everything’s bigger in Texas) later this year and says the shift in tactics is designed to underpin a strategy to help reduce network congestion.
Apparently, according to Time Warner Cable, the change will affect but a minority of its users — about 5% — who reportedly use about 50% of total network bandwidth.
Time Warner is concerned that downloading of large files, including video is slowing the network, and they believe that with increasing video usage the problems will worsen.
The company recognizes the need for clear marketing of this initiative to consumers, as a spokesman for Time Warner admitted, “We don’t want customers to feel they’re getting less for more.”
I expect some backlash from consumers who believe the increased pricing will extend beyond just the small percentage of “heavy” users. I also believe that as video and other high-bandwidth applications (Scrabulous HD with full voice and video conferencing, anyone?) become the norm, bandwidth providers will leap at the opportunity to label an increasing number of consumers as “heavy users.” Expect other providers to follow suit.
Note: I realize Cablevision has a sort of tiered pricing too, with the option of paying more for increased bandwidth (one price for 15MB, another for 30MB), but for some reason it doesn’t feel like a penalty. It’s positioned as a bonus. Maybe it’s just good marketing.
We’ll see how this plays out. Time Warner says the Texas trial (Texas is bigger than France, you know) will begin later this year.

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