Posted on 04/17/2009 8:24:40 AM PDT by GATOR NAVY
Analysts say the value of the Internet means providers can sell bandwidth much like utility companies sell electricity or municipalities sell water.
Time Warner Cable's expansion of its bandwidth cap testing marks the evolution of the Internet to a utility, like water and energy, where people pay for what they use.
People who have used the Internet for years have grown accustomed to paying one monthly price for unlimited access. However, that model is no longer sustainable as the increasing number of devices and people place higher demands on bandwidth, a finite commodity. Without controls, Internet users could experience "brownouts" as early as 2012, according to Time Warner chief operating officer Landel Hobbs.
The profit opportunity is also a major draw for cable and telecommunications companies. Capping bandwidth would enable networks to serve more people with minimum degradation while also allowing providers to get top dollar from the heaviest users -- in the case of Time Warner, as much as $150 a month for unlimited use.
Besides Time Warner, Comcast is also looking at bandwidth caps and has already imposed a 250-GB monthly limit for residential use. AT&T is reportedly considering a 150-GB cap.
But Time Warner is among the most aggressive and it appears bandwidth caps are inevitable for its customers. Through the rest of the year, the cable company will be taking the model from Texas to New York and North Carolina. In announcing its plans this week, Time Warner drew waves of protest on the Web and sparked a letter-writing campaign by Free Press, asking Congress to investigate.
Indeed, Rep. Eric Massas, a N.Y. Democrat, plans to introduce a bill that would prohibit "unfair tiered price structures from Internet providers."
However, Kyle McSlarrow, president and chief executive of the National Cable and Telecommunications Association, a trade group that counts Time Warner as a member, pointed out that the industry has spent "hundreds of billions of dollars" in the deployment of broadband, doubling or tripling speeds in the last few years.
In defending Time Warner, McSlarrow said in a blog posting: "Time Warner Cable has merely suggested that they are interested in conducting a limited set of trials of a new pricing model -- in a careful and transparent manner -- that may serve the vast majority of their customers better by reflecting the growing reality that some consumers utilize far more high-speed bandwidth than others." Gartner analyst Elroy Jopling believes people will eventually have to pay for the amount of bandwidth they use. "The Internet has become a utility," Jopling told InformationWeek. "You nearly can't live without it."
As such, Internet providers are in a position to sell bandwidth much like utility companies sell electricity or municipalities sell water. "If you water your lawn every day, then you have to pay for it," Jopling said. However, in imposing caps, cable and telecommunication companies need to follow the 95-5 rule. "You are going to irritate customers," Jopling said. "But hopefully only 5% that use the system and not the other 95%."
As an example of a relatively smooth transition to tiered pricing on bandwidth use, Jopling pointed to Rogers Communications in Canada. The cable company's new pricing model was easy to understand, and the company made sure to explain exactly what customers would get for their money, that is, how many videos, songs, and e-mail they could download or send without going over their limit.
In addition, Rogers sent notices via e-mail and a browser alert when customers reached 75% of their cap. Finally, the price was reasonable by local standards: $44 a month for the maximum service of 95 GB.
In the United States, however, bandwidth caps are relatively new and the transition is just beginning. How it plays out will depend on how well network providers, which have monopolies in some areas of the country, communicate the change and impact on their customers, while charging prices that don't appear excessive to most people.
InformationWeek has published an in-depth report on rich Internet applications. Download the report here (registration required).
consumer backlash to this may rival the Tea Parties...
However, as soon as they start losing customers to ISP’s that will still offer unlimited bandwidth, or at least reasonable “caps”, they will be forced to move back to reasonable rates or bankruptcy.
Their greed is appalling.
Kind of old but maybe it has some info you can use. There are bandwidth monitor programs you can download that would give you an idea of your usage.
It isn’t flash or java on web pages, it’s video.
Hulu, Netflix streaming movies, MLB.TV, movie downloads.
Competition with other video services is the driving force behind the caps.
Why should I pay $100 per month for cable, when I can watch all the shows I want on the net? The MLB package is $169 per year on cable and $109 on the net. The online version shows all the games in HD while the cable version has low quality standard def.
Hulu shows current TV shows for free. Netflix streams movies and TV shows. There are a growing number of made for the net video shows.
Cable companies are losing customers to broadband video services. It’s under the radar right now, but like the loss of land line service to cellular, it will grow and drag down the cable providers.
Nothing, really. If you run a bandwidth meter while you play, you transfer maybe a few thousand megabytes during the course of a day of play. It's not small potatoes by some standards, but I don't think you'd hit a 10 GB cap in a month.
That being said, this will completely destroy internet marketing and advertising. People will find non-graphical browsers or even go back to the old days of text-only. I run Firefox with AdBlock Plus and NoScript, and a lot of the graphical, flashy media is blocked anyway. How much advertising is lost by that though?
I have been trying diligently to cut back my internet usage. No social networking sites, instant messaging, etc. I do my FReep stuff, read emails, banking, etc. For the most part, however, my entertainment comes from books. I think a lot of folks should find other means to entertain themselves. Gardening, HAM radio, woodworking, or gunsmithing, all favorites of mine, would be adequate and fulfilling hobbies to enjoy.
We need to get back to basics. Online is no place to make things happen. There's nothing more satisfying than a beer after a day of hanging
There have been some pretty interesting threads here on that subject.
So glad I jumper from TWC to FIOS, even with a few billing glitches at verizon.
Cable is doing this to cash in on the coming wave of entertainment integration online. HD Movie downloads, HDtv over ip, news feeds, gaming communities etc. Its going to be huge.
I think we’re about to see collusion at its worst as they all implement caps. The key will be to continue to watch the market, negotiate the best deal, and be willing to switch as needed. I’d expect something similar to the cell phone business where you lock into a certain rate for a period of time. For email I’d switch to an ISP-insensitive service like gmail so that as I switched providers there would be no email address change to deal with.
I would think that the advertisers would scream the most as there would be a distinct rise in ad-blocking software - why pay to get ads? Not me...
Oh well, my $.02
Me too. Something tells me TWC wouldn't even think about this if I had Verizon to service my house too.
>>Analysts say the value of the Internet means providers can sell bandwidth much like utility companies sell electricity or municipalities sell water. <<
Eheh, heh. He’s not very good at analogies. The utility compamies are the SOURCE of the commodity, not merely hte pipeline through which it is delivered.
It’s like deciding to increase long distance rates while the rest of the world is moving towards a free long distance paradigm.
You can always cancel your service and just use free wi-fi, which is only increasing in availability.
But imagine if you were billed for Internet usage, just like Electical usage, where each MB downloaded cost more, you basically would have to offer a no-frills version of your site that only downloaded the least amount of data needed to do the task, it would be like the early days, where bandwidth was limited due to technical constraints, now it would be necessary to limit the expense to the website user.
I would think that there would be a way to distinguish Internet usage for things like downloading movies, from regular Internet usage. So would pay to provider a fee for downloading a movie, but it wouldn't go against regular Internet usage, which would still be a flat fee. Ahhh, but here is the rub, if you choose to download movies from outside of your Internet provider, with the huge file sizes, then that's what they want to control, in order to force you to only purchase that kind of content through their service. So what they could do is charge you based not on total usage, but on the size of a file, so as long as a downloaded file doesn't exceed a certain size, they won't charge, but if the file size suggests it some kind of entertainment content, then you would get charged. Of course bit-torrent programs are a way to get around that limitation.
What's even better is that where I live, DSL isn't an option, since I'm too far from the CO, FIOS isn't available (though Verizon does offer 1Mbs wireless), so all that leaves me is TWC. Time Warner has an exclusive agreement with the city: My aunt in a neighboring city has a choice of 4 different cable services, consequently she has telephone HS Internet, and cable tv service at just a bit more than 1/2 of what I pay just for my Internet service through TWC.
Mark
how very leftist.
knowledge is to be metered out to those who have the ability to understand.
internet is knowledge and knowledge for all is a danger to the state. As far as the corporation is concerned, people only need to be smart enough to pay for streaming movies but not smart enough to ask questions that endanger the company. (nobody likes those pesky people at utility meetings)
Next it will be only certain bandwidth is allowed.
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