Will Time-Warner’s Caps Survive?

No one likes being constricted. The citizens who have Time-Warner cable service certainly don’t like it. A story on ZDNet chronicles a mass exodus from the service, and a DSL provider is picking up the pieces. I have stated this before, as it is a natural business tendency, for the public to seek the best deal, and go for it. Time-Warner does not seem to get it. Comcast doesn’t either, but their audience seems to be a bit more captive.

Last week, Rep. Eric Massa (D-NY) promised to introduce the Broadband Internet Fairness Act to “prevent job killing broadband internet downloading caps.”

The legislation is directly targeted at Time Warner’s rollout of usage-based pricing. TWC would offer plans from 5 to 100 GB of data transfer for prices of up to $75 a month. Now, if you had free choice you could choose Comcast’s 250 GB limit.

But of course cable franchises are monopolies, and while it might or might not - in a competitive environment - make sense to “define (y)our business based on the consumption dimension”, it definitely does in a monopoly.

TWC does have competition in the form of DSL, so strictly speaking it operates in a duopoly. And at least in Rochester, NY, DSL provider Frontier Communications is happy to pick up disgruntled TWC customers, AP reports.

“We have gotten hundreds of calls from Time Warner customers into our call centers,” said Ann Burr, the head of Frontier’s Rochester unit, in an interview with The Associated Press. “I guess it’s been a public relations crisis for Time Warner.”

Enough of a crisis for COO Landel Hobbs to offer a reasonable-sounding explanation:

If we don’t act, consumers’ Internet experience will suffer. Sitting still is not an option. That’s why we’re beginning the consumption based billing trials. It’s important to stress that they are trials. The feedback we’ve received from our customers has been very helpful.

The experience is only a problem because instead of taking profits proportional to any normal business, the company has instead been putting up numbers that look  great to shareholders, but don’t put anything into infrastructure upgrades.

Hobbs goes on to reveal a 1 GB/$15 option for low-volume users, with overage at $2/gig and a 100 GB/$75 option at the high-end. There’s a $75 cap on overage charges, so “for $150 per month customers could have virtually unlimited usage at Turbo speeds.”

This guy must think we are all crazy. He sounds as though he believes his ideas are going to get him nominated for sainthood.

If there were no P2P restraints. But, Ars Technica reports that in a comments documents, TWC told the FCC it has no business to specify net neutrality obligations.

Now is not the time, nor is this the appropriate proceeding, to engage in a debate about the need for net neutrality obligations. . . . Debates in this proceeding about new net neutrality regulations would only divert attention from these important goals, delaying the distribution of funds while generating considerable contention when the Commission should instead be fostering a spirit of collaboration

Hmmm, actually the days of FCC “collaborating” with the industry may be drawing to a close.

I’m not sure who the people at Time-Warner think that they are fooling. This once again shows disrespect for the intelligence of the audience.

This is an instance where my Libertarian views crop up, and I think that Time-Warner should probably be left alone to suffer, wither, and die (as an ISP, obviously, this won’t much affect the television delivery portion of the system – although, those pricing deals (that aren’t) might start to become something of the past, along with TWC’s customer base. There are lots of people who are dropping cable, and/ or satellite, and using DSL or FiOS to watch some television, while using Netflix to grab some movies.

If TWC makes this stick everywhere, it won’t need to worry about legislation, as the customer base will be gone long before anything can get passed through that august body. It seems that Time-Warner’s executives need an attitude adjustment, simply on principle – perhaps a shot in the profits would have the appropriate effect.

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That all men are equal is a proposition which, at ordinary times, no sane individual has ever given his assent. - Aldous Huxley

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