Time-Warner Considers Per-Gigabyte Service Fee, After iTunes 557
destinyland writes "Time-Warner is now mulling a plan to charge a per-gigabyte fee for internet service. A leaked memo reveals they're now watching how many gigabytes customers use in a 'consumption-based' pricing experiment in Texas, which we discussed early last month. The announced plan was that they were considering a tier-based approach, as opposed to per-gigabyte fees. 'As few as 5 percent of our customers use 50 percent of the network,' Time-Warner complains, with plans to cap usage at 5-gigabytes, and more expensive pricing plans granting 10-, 20-, and 40-gigabyte quotas. Steven Levy at the Washington post suggests Time-Warner's real aim is to
hobble iTunes, raising the cost of a movie download by $10 (or $30 for a high-definition movie). Eyeing Time-Warner's experiment, Comcast cable also says they're evaluating a pay-per-gigabyte model."
Not only is it a step in the wrong direction... (Score:5, Interesting)
Right now, I could call up Verizon and get FiOS. In about 6 months I'll be able to call up Verizon and get FiOS TV. Hell, theyre currently installing FiOS in my parents tiny village of about 5000.
These cable companies are facing the first real competition they've ever had and instead of reacting by making their service better, they're planning out ways to make their service worse.
And no, this isn't some sort of viral FiOS ad. I'm just a dumbfounded consumer.
Good luck with that guys (Score:5, Interesting)
Time Warner and Comcast need a reality check (Score:4, Interesting)
Get ready for the apocalypse privacy-invading broadband douches.
I wish I had another choice (Score:3, Interesting)
This just frosts me even more, I don't WANT to switch to DSL, but I may have to.
MOD PARENT UP (Score:5, Interesting)
In this situation, the regulators ought to look at any competitive advantage this gives their content products and require them to price those products high enough that the bandwidth pricing is competition neutral.
Re:Charge or don't charge but don't hide it (Score:5, Interesting)
As long as there's competition, and the customer is well-informed about the service they are buying, then a free market works. If either of these conditions fails then you might need some regulation.
Re:5GB?! (Score:4, Interesting)
1500 HD movies a month? (Score:5, Interesting)
Re:Charge or don't charge but don't hide it (Score:3, Interesting)
Speakeasy will sell you a T1 with 1,5Mbps down, 384k upstream for about $360/month. That's the real cost of unlimited bandwidth.
A bunch of smoke being blown in your... (Score:5, Interesting)
So these companies complaining makes no sense. In fact they just shared our regional numbers with us and HSI was profitable by some comparable sum equal to video.
IMO these companies should just become common carriers like AT&T and provide you access. Other companies should provide IPTV which would either be free or subscription based. Thats where I see the industry hopefully going!
Re:MOD PARENT UP (Score:5, Interesting)
Did these guys... (Score:3, Interesting)
Does the Board of either company actually believe this $/GB model would have anything other than a short-term revenue burst? I refer of course, to the people who will receive their statement once this plan has been put into effect (I'm assuming it will be made retro-active for the billing period when the policy is put in place).
And leveraging the price of iTunes movie downloads? First of all, if Time Warner is already being paid per GB, then why would they need to do this? To offset profit? I purchased a movie from iTunes, (Wargames, if you must now) and it was not a small file.
Secondly, a $10 increase? $30 for High-Definition? Why not just send out billing statements that have a 10% Off coupon for any TW-Library title at Best Buy, because I certainly believe the desire here is to push the physical media rather than the digital.
Finally, does Time Warner actually believe that Apple will roll over and say "okay"? Apple had it's arm twisted once over the price of songs and didn't quit. So why would they suddenly agree to a $10/$30 increase and hamper their own sales just so Time Warner can force their On Demand service to their customers? Apple may just do the opposite and end all dealings with TW once the contractual obligation ends. Add to that, customers won't want to download from the On Demand service if it will cost them per Gig.
This is an excellent method for alienating an entire customer base in one simple step.
Re:U.S. falling behind (Score:5, Interesting)
My friend runs a local network in his neighborhood (few apartament blocks, ~200 computers) and they've set up both DC and an FTP server to aid everybody's piracy needs. One of the side effects (besides everybody being able to get pretty much whatever they want in minutes) is that they've been running on something like one 2Gbps/256kbps DSL line (for http, games, ssh and stuff like that) and one 2Gbps/2Gpbs line (something much more expensive, I don't know much about this stuff though) for a few years and owners of ~200 computers are happy with it (partly because it costs peanuts).
Now Wait A Minute!!! (Score:1, Interesting)
I am not trying to defend cable telcos here, but let's look at it from their perspective for just a moment. One of the biggest things which telcos are fighting right now, is to not be treated like a "dumb pipe." Why? They have spent a significant amount of money to build complex networks (fiber and coax), data centers, and their goal is to recoup the cost of their investment. After all, they are a business as well.
Now, by setting the prices of access to this network, they are estimating that the average customer will stay with them for a period of, say, 5 to 7 years. This goes into the formula to figure out how much the monthly fees should be, based on equipment aging, breakdowns, etc... Usage and growth is factored in, as well.
Now, you have a service like iTunes, or NetFlix, which severely stresses your network infrastructure. This situation requires for them to start upgrading their network much sooner than expected, spending more on infrastructure than previously thought. Just another reminder: they are a business.
Why do I mention the business bit so often - it's pretty simple. You come to them as a customer, expecting a certain level of service. They have other customers who invest in them externally (stock market). As long as things are running smoothly, the company revenues grow, and everyone is happy: the home customer is getting good service, and the investor is getting good return. However, if the company starts to falter and provide shitty service to end-customers, customers leave. This reflects in the bottom line, which in turn, can be seen on the stock market. Investors see the company is not performing "well," so they don't invest.
What's the solution? I am sure that many telcos have toyed with the idea of charging an extra service fee to companies like iTunes and NetFlix. Call it a "network improvement fee." I think it makes sense - after all, these companies are relying on the telcos "dumb pipe" to deliver goods to customers, from which the telcos do not see any revenue. Should end-customers have to pay the same? Perhaps to a smaller degree. It should depend on a minimum guarantee which is established between a telco and an end-customer.
It is also worth noting here that the stress on the infrastructure is partly (a significant portion, actually) based on the amount of SPAM and "dark traffic" flowing across telco networks. Last year, SPAM topped 90% of all email delivered. Sure, maybe SMTP traffic accounts for only (say) 40% of all web traffic, but that is not an insignificant number. One way to combat this, is to filter traffic which enters and leaves a telcos "private" network. How would you feel about that? You can get more speed, but you won't be able to run a web or mail server on your cable modem. Would you be happy with such a compromise?
Sometimes, too many choices, or lack of direction, actually limits your ability to choose. I think as end-customers, we need to stop and think about the choices we are making, and become more self-critical. It's not possible to have everything all the time - we will end up paying for it sometime - sooner or later.
Nothing New, we do it already and people LOVE IT (Score:5, Interesting)
Re:Nothing New, we do it already and people LOVE I (Score:2, Interesting)
People just need to realize that as an ISP the pipe doesn't magically get bigger, it costs alot of money to get that bandwidth to increase and believe it or not what you pay per month doesn't all go to us. The actual profit margin for an ISP that actually maintains equipment and lines is about 10% of what you pay. So, if you are a customer and you pay $50 a month for internet, only $5 of that is profit. It takes alot of $5 increments to make the millions it takes to upgrade a provider plant.
Re:MOD PARENT UP (Score:5, Interesting)
I don't think many slashdotters are privy to the actual costs of internet connections. I work in the networking department at my work where we had a T3 (45 Mbps). We've moved to leased fiber to a co-loc and now have 250 Mbps for less. It's the same ISP, all we did was take the phone company out and costs went way down.
The cable and phone companies are able to charge so much because they are the only last mile connection in many places. Having a data connection (phone, TV, internet) that the government (controlled at the town/state level) treats like the roads would be great.
My model would have the government run single-mode fiber to every house and bring it all together in a building in each town (or maybe larger). It would then be the responsibility of a company to actually give service over the fiber to homes. This would allow people much more flexibility, so if a group of people want to just share 100 Mbps from a big ISP, they have the power to do so.
What won't change (Score:3, Interesting)
It's a money grab, plain and simple. I note that Cox has been noticeably silent on this issue.
Re:5GB?! (Score:3, Interesting)
Dude, this isn't net neutrality. It's cheap for an Australian ISP to have their users download from iTunes because iTunes content is distributed using Akamai, a caching CDN. Bandwidth inside Australia is plentiful and cheap. Bandwidth out of Australia is extremely expensive. Because they're caching the content inside Australia the ISP only has to pay for each separate file once. EG when they sell Lost, the first user that downloads it hits the trans-pacific links and from then on it stays within Australia.
If Amazon wanted to come to the same arrangement, I'm sure that'd be OK with those ISPs. It's basic HTTP caching. I suspect they could, in theory, not charge for any content which hits the ISP HTTP caches and it'd mean that everyone competes on a level playing field (if the caches are large enough), but that'd be a complete nightmare to track and explain to users. So it's sold as "iTunes is free, other stuff isn't" because that's easy for the punters to understand.
Re:What's so critical? (Score:3, Interesting)