Bye Bye Unlimited Flat-Rate Internet

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Tom Keating
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Bye Bye Unlimited Flat-Rate Internet

Say buh bye to unlimited Internet access, or at least if Time Warner Cable has its way. In an effort to stop excessive bandwidth usage caused by "bandwidth hogs", mostly caused by P2P networks like Bittorent and video downloading, Time Warner plans on charging Internet users by usage.

After an internal memo was leaked, which said:
The introduction of Consumption Based Billing will enable TWC to charge customer based upon usage, impacting only 5% of subscribers who utilize over half of the total network bandwidth.

The trial in the Beaumont, TX division will apply to new HSD customer only, will provide a destination for customer to track usage for each month and will enable customers to upgrade from one tier to the next to avoid payment of overage charges. Existing and new subscribers will have tracking capability, however only new subscribers will be charged incrementally for bandwidth usage above the cap.

Following the trial, a determination will be made as to whether or not existing subscribers should be charged. Only residential subscribers will be impacted. Trial in Beaumont, TX will begin by Q1. We will be testing technical backend as well as Marketing and Messaging to customers. We will use the results of the trial to evaluate results for possible future nationwide rollouts.

Time Warner Cable confirmed it's planning a trial in Beaumont, Texas where users will pay based on usage. So the $50/month that gave you unlimited Internet usage now may only give you 50GB per month. What if you go over? What will the overage fees be? $5/byte? How will you know you go over? Will Time Warner force you to install some sort of toolbar or notification software that lets you know you are getting close to your allocated bandwidth. What if the kids go crazy and start watching tons of YouTube videos? Shall parents expect a $200 bill? What if you make a lot of VoIP calls on your "unlimited" flat-rate calling plan.

Unlimited VoIP not so unlimited...
Will it no longer "truly" be flat-rate since you are paying for the bandwidth? This gives cable companies and phone companies a huge advantage since they own the last mile and can offer bundled packages that include voice, video, and data. They can for example "exclude" VoIP traffic from counting towards the overall bandwidth usage.

Obviously, TWC sees the writing on the wall with competitors coming at them from all directions. AT&T, a traditional phone carrier offers video service via U-Verse and there are tons of Internet companies now offering streaming or download video content. It goes beyond Youtube amateur videos too. You can download movies on websites such as Netflix, MovieLink, and MovieFlix. And of course, Apple just announced it will offer downloaded movie rentals via iTunes (including high-def) over the Internet, which will work with Apple TV. Netflix is working on a set-top box to do the same thing, and Microsoft offers movie downloads to its XBox consoles.

With the current unlimited bandwidth model, Time Warner Cable realizes they are enabling their competitors to eat them from within their very own network, so this is a pre-emptive strike before they start losing market share. Is this the beginning of the end of unlimited flat-rate Internet access or will Net Neutrality advocates now have the ammunition to petition Congress for action against the duopoly of cablecos and phone carriers to block tiered Internet access.

Gigaom has more.

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