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Yea, this isn't a shocker. The only additional costs come with adding to the infrastructure. When you don't do that, you make more, and the internet gets slower. By putting in metered BB, you don't ever have to invest in infrastructure, and speeds never improve.
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@Darrone: Talking to my brother, his RR could use a speed up in the evening's when everyone is on. Then again his neighbor on u-verse is b*tching about the same thing with his \"Max DSL\" (18M/b) package...
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It's not whether or not they're making money now. It's a strategic business decisions based on a perception of how costs will move going forward. If it's a bad idea to give bankers bonuses for products that can lose money in the future, it's a bad idea to pull today's financial statements to decry tomorrow's broadband cost structures. The inevitability of high-quality video distribution over the internet is an when-not-if question.
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@ADismalScience: Your argument still does not jive with TW's excuses. In fact, your point confirms that TW needs to spend more on updating their infrastructure instead of bolstering the shareholders and upper managements pockets with cash.
At this point its either \"upgrade or die\" and if these TW press releases are any indication of the future.... TW has apparently chosen... DEATH.
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@ADismalScience: it isn't a when-not-if question, its not a question at all. 'high-quality video distribution' is already happening and has been happening--and a switch to metered bandwidth would have an inverse affect on this.
why do you predict that we will be in a high-quality video revolution in the near future that dramatically outpaces our current transition? i would contend that we're in it right now, and that if they're making those kinds of profits now, they're be perfectly capable of upgrading their infastructure as the 'revolution' continues.
if they can afford to have 1/4 of their net income remain as profit, they can afford to begin upgrading their infastructure and improving user experience now. you dont use financial statements to definitely say if they should or should not do that, but certainly with this information you can decide whether or not its is absolutely necessary.
perhaps if they released the information they made the decision to begin metered internet with it wouldn't be an issue, but they haven't, and this is not what they made their decision based on--unless $200+ million somehow is equivalent to operating at a loss. they must have projections on cost, mustn't they? thats the only kind of education thats going to convince anyone that metered broadband is okay.
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The market is pretty static now. You aren't going to get millions of new subscribers in the future. It just won't happen. Of the people currently using the internet, I believe their usage patterns will remain the same for the future. If you play online games 20 hours a week, download 3-4 movies now, you will in the future. So I don't believe their gloom and doom that we are going to run out of bandwidth in the future. The usage isn't scaling that fast. The only reason they want caps is to limit competition of better products (Hulu, Netflix, etc.) They want to continue their monopoly on video.
@Saboth:
I don't think they care about the content anymore - they have and always will used the power of their distribution network to sell to customers. You buy cable because that's how you get MTV - you buy internet service because that's how you get Hulu/Netflix.
I would agree with you that the install base is pretty substantial, though there is room for growth. Where we differ is on anticipated future usage - a major sticking point, because I think we're at the ground floor of video on the web. You haven't seen a Blu-Ray disc or 1080p streaming video pass through the internet yet on a large scale.
Even then, though, it becomes a question of how to best assign cost (and margin) to the customer. I think if you look at bandwidth usage per user you see huge deltas. A small population of individuals are rapidly driving the bandwidth needs of the entire consumer base upward. When you look at how to best charge those customers, does it make the most sense to continue forcing email users to pay for the 1080p-streaming NetFlix lover down the street? Or should we all subsidize the massive pipes needed for his torrenting majesty?
@ADismalScience: The torrenters are a major thorn, but they're a small percentage of the population. A really high cap, like Comcast's, can mitigate that. Streaming video is still small but will become more prevalent, and that is a more valid concern. Here's where I take issue though: where did they come up with the cap for each tier? They seem insultingly low.
Broadband has pretty much been on the \"buffet\" model, where most people will pay for more than they eat, but a few will eat more than they paid for. When changing the model, TWC kept the buffet prices just with a few tweaks. Imagine if a restaurant you like switched from a buffet to a traditional style, but now 1 plate costs as much as all-you-can-eat. Sure, the few people who weren't that hungry can save by just buying appetizers, but it still seems like an insultingly bad idea. Add the fact that there's not much competition, and of course that's not going to fly.
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@ADismalScience: you make a good point & there's plenty of industry data to show that some networks are taxed right now.
however, this financial shows that the company certainly has the capacity to upgrade infrastructure & just chooses not to. they would rather take the easy way out & leave their networks overloaded despite widespread increases in subscribers & usage.
i'll tell you right now, it's going to blow up in their face. it may appear as if abusers are responsible for this, but they're not. nodes can handle heavy use. what they can't handle is heavy aggregate use. if a whole node of average users decided to double their usage in a month, that node would be plagued by outages. & it shouldn't be, but TWC (like most other providers) has been exceeding industry standards for their hardware for YEARS!
& now, faced with the reality that it might kick them in the ass, their answer is...metered broadband. what a way to ignore the obvious.
@ADismalScience: Don't care about content? That doesn't make any sense. A large portion of any cable company's income comes from advertising; if you're watching all your TV on Hulu, then you're not watching the cable company's ads (instead, you're watching the content producer's ads). And if there's less people watching the cable company's ads, the amount of money the cable company can charge goes down.
@Shaggy: Crap. Let me re-write that last sentence:
\"And if there's less people watching the cable company's ads, the amount of money the cable company can charge to show those ads goes down.
If TWC actually gave a damn about it's \"light user\" market, they would create a \"light user\" class of services in addition to their current offerings, instead of calling the current offerings \"light user\" and adding new, three-times-as-expensive service that does the same goddamn thing.
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@Sean Masters: They have Road Runner Lite, they just don't advertise it. If they did a lot of people would probably go to that to save them some money. My girlfriend has it and its fine for basic websurfing or email.
@Sean Masters: Dude... they do, it's just not advertised, because why do that when they can sell you something you don't need?
Did TWC ever claim they \"needed\" to switch to metered broadband? They are a for-profit company after all.
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If Internet users don't moderate their bandwith consumption, and providers don't put in caps on their usage, the Internet could start seeing \"brownouts\" by 2012, said Time Warner Cable's chief operating officer Landel Hobbs today.
That count?
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@PunditGuy: Only in the same way the earth is in the Center of the Universe and Jesus walked with the dinosaurs.
Simply put , in a competitive environment , what would happen is if it got scarce, costs would rise, then someone would come in and add capacity driving costs down. It would be a huge negative national economic externality if Broadband got treated as an inelastic good by monopolies.
Unfortately, Greensboro's Congressman (Howard Coble) is a dolt on anything technological, and impossible to throw out of office.
@Ben Miner: Doesn't that give them the right to do whatever they want? Um, no, not really, they are subject to regulation, and a new FCC chairman who isn't clinically insane.
They did claim that a few \"super users\" were making costs increase for lesser users. What this post shows is that costs are going DOWN, even for lesser users, and profits are up.
If I may suggest, TWC stop trying to bilk consumers for their hard earned $. Thief. This tier bs is prolly some hired marketing d-bag who got a promotion 'cuz of this stupid idea... he came up with.
@the_gank: on a similar note, the lowest tier of service in Rochester appears to have lost three channels since this started. Granted they were like the catholic channel and some old movie thing but for them to make this arguement is sleazy.
This is where we see that the marriage of CU and Consumerist is a beautiful union.
Metering on it's own isn't IMO a bad thing if done properly. Have a basic service fee for providing service and then charge by some unit of measure, by the GB or 10GB or something.
The main problem is that TWC appears to want to use a pricing structure where they recieve substancially more than it costs to provide.
If they charged \"reasonable\" rates based on cost to deliver, maintain and upgrade their infrastructure coupled with accurate and reliable bandwith monitoring tools to let customers how much they've \"spent\" at any given time it could work.
Then again, we could probably see pigs flying before they implement such a reasonable scheme.
++ to Kogenta. That's something I can agree with. There is absolutely no evidence to back the claim that superusers should be paying $150/mo (especially since only 30% of their customer base are considered \"light users\" or, more likely, \"Charging them $50 is fine by us, but the second they pop over to Hulu.com let's nail them for another $50/mo.\" \"Hahaha, that sounds great, Buffy!\" \"When is tee time, Charles?\" \"Why, threeeeee-thirtyyyyy\".
...and yes, I imagine the voice of the Tootsie Pop owl whenever I think of evil corporate chairpeople ;)
Umm Asbestos suit on, but isnt this a capitalist society? We're mad cause we are on the wrong side of the equation.
Realistcally, if you use more electricity, you pay more. If you use more gas, water, propane or other utility, you pay more. Isnt cable and internet pretty much a utility to most people now?
While their pricing is way off, a metered system isnt a bad thing. I'd be through their caps in about 3 days, but I use more, so I expect to pay more. My mother uses about 30 MB per MONTH. She should expect a smaller bill. TWC is a BUSINESS (from the greek for \"money taker\"). They can and will charge whatever they want to to bolster the bottom line.
@WyattCivet: Broadband internet is not capitalist, it's monopolistic. Big difference.
Also Utility rates are capped by law, the water company can't go price-gouging.
@WyattCivet: If in some markets they have a monopoly, then NO they really can;t do whatever they want. They have to do what local legislature says.
(Admittedly most local legislators are usually paid off by TW somehow so its fail/fail.)
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We can complain all day long about what a company should and should not do to its customers, and how much the government should and should not get involved. Neither of those make any difference in the long run, however. The real issue here is a lack of competition.
If you looked closely, most, if not all, of TWC's metered rollout took place in areas with little to no competition, and certainly none from the likes of Verizon's FIOS or AT&T's U-Verse. In areas with decent competition, I guarantee at least 25% of TWC's customers would have jumped-ship as soon as these insulting caps showed up. That would certainly do something to TWC's bottom line, and might even get some of the ape-like executives who helmed this project to stop picking golden bugs off each other's backs and start scratching their heads.
Could competition not do any good? Possibly. It would be a disaster if the broadband conglomerates really started colluding with one another, and rolled-out caps and raise prices in parallel (though I'm sure that's illegal business practices). I just know that more government and the continued lack of competition would not solve the current issues with our nation's sorry, sad state of broadband pricing, coverage, and quality.
Here's what the real issue is: More and more consumers are watching/buying shows on the Internet via Hulu/iTunes/whatever, and especially in this economic situation, people are looking to cut bills. What can go? Cable TV. So what TWC is trying to do is to keep you from watching those shows on the 'net so you will continue to subscribe to their expensive cash cow TV service.
@chris_d: Exactly, although they make FAR more on Cable Internet. They only make about 10% profit on cable tv, they make about 90% profit on cable internet. Atleast that was the case when I worked for cable.
@gqcarrick: They may not make a large profit on cable TV...but whether 10 people or 30 people in a neighborhood have the service, most costs are the same. That 90% is what pays for the lines, upkeep, etc...and they won't be saving all that money if you walk.
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\"The company still argues that charging by use is more equitable - and that the current pricing structure is unfair to light users\"
Does this mean I can only pay for the Channels I want to watch? Nooo, instead they force you to pay for packages of tiers to get the 1 channel of the bunch that you really want?
www.stopthecap.com
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@ADismalScience: rather than implementing a cap that will drive people away or soon be a joke like dial-in, they should utilize the profits to reinvest in the infrastructure to guarantee a high level of service to current and future customers.
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This is why I love Consumerist/CR/CU. This is the kind of thing that I as a general person with dishes to wash and a kid to care for and laundry piling up do not have time to go digging for.
Thank you. When TWC tries to pull this nonsense again here in Austin, we will use this against them.
@dresden & gqcarrik: I stand more informed, then. Really, then, if they care so much about the 30% of people who use little-to-no bandwidth, and are so worried about those people's feelings and well-being, they should be adding their \"light\" service to all product materials. In fact, they should be sending out letters to those users saying, \"Hey, you know what? You barely use any bandwidth and we feel that's unfair to you as a consumer. We're cutting your bill in half. Have a great day!\"
Anything less is just hypocrisy. They are specifically claiming that the reason behind the metered system is that the current system is \"unfair\" towards \"light users\". They should be rectifying that situation (by slashing prices for those users) instead of complicating it (by adding tiers and metered bandwidth).
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If they want people to continue to use cable TV, then they have to implement the a la carte system. It's the ONLY thing that will keep people from dropping cable when times are tough.
No one wants to pay $80 a month for fifty shopping and God channels and only about four or five that they actually watch.
I have my own conspiracy theory, I think they cap it in order to entice you to lock you're router, thereby selling more cable.
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Just keep this in mind guys.. There are those of us within the company that are trying to convince the big wigs to stop this nonsense.
As I have posted in a previous TWC article/discussion on the Consumerist, I have refrained from switching to TWC for internet service because of their poor handling and blatant lies over this situation. I have been suffering through 640KB D/L speed on my DSL line because of distance from the CO and will continue to wait for U-verse before becoming a customer of TWC. Keeping spinning, TWC. You will continue to lose current and not gain new customers.
The real question, what can city governments do to keep this from happening, Punitive taxes?
In NC TWC is trying to make it where cities can't do their own internet services. (SB 1004)
I would have to drop TWC if they made the switch. I am on their hitlist and have fought them off 2x already when they tried to drop my internet. They only keep me as a customer due to our total monthly bill being in the $400 range (cable, phone, internet). They first dropped my in October of 2008 for bandwidth usage. We used an average of 28GB daily for the month. They accused me of pirating and torrents which wasn't true. We have Netflix and Amazon to our Tivo box and use it heavily. Having 3 kids that do nothing but ps3 and youtube for music videos doesn't help the bandwidth either. In March our internet was again disconnected. I knew what the issue was once the phone rep said no area outages. I explained to the internet security people we are heavy users. He explained we are in the top 1% for usage. I told him it is all or none for my needs. I guess that $400 bill worked until next month. My router shows we used 41GB yesterday. If they switch to a metered plan, I'll be paying $40/day which is insane!
lack of competition. Someone above said it. That's it right there. Open the markets. Get 3 or 4 internet/cable providers in any given market and watch customers everywhere benefit with lower rates and higher speeds.
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Here's what I got from being backstage at a big Cable Industry meeting in DC a few weeks ago:
The cable companies are scared shitless right now. They see consumers leaning more and more towards a completely on-demand system of watching TV and movies, be that via the internet or on the company's own OnDemand offerings.
Despite what people think, there simply is not enough bandwidth to accommodate this. They don't have the infrastructure to support everyone watching Hulu instead of regular TV and using Netflix instead of watching HBO.
Now, the big problem, and the turd in the scrambled eggs is that though they know this, and they see the future, they haven't really done much in the way of expanding bandwidth, improving infrastructure, or rolling with the tide instead of trying to stem it. Instead, they're trying to institute caps and metered billing not really to make more money, though that's a pleasant side effect, it's more to dissuade people from buying broadband cable and then just using it for web streaming, torrenting or other high-rate activities, instead of watching TV.
The reason is because Cable TV is brought to you by your subscription fee, AND by the channels that buy into the system. If nobody watches the cable channels, they won't want to buy into the system and the cable company loses revenue. Then the channels lose revenue and can't put the great shows you like to watch up on Hulu anymore.
What's really scary is that some channels are looking into an online, subscription-based system where you put in your name and password and you can watch anything you like. HBO had a nice presentation on this.
Cable companies see this as getting the same service they provide only without them really providing it. And they don't like it, so they're pouting and brooding instead of being proactive and on top of the situation, because that's how corporations act. That's the only way they can act because of how many people have to make decisions to get anything done. They can only be reactionary.
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Fuck this company! Their HD TV is pixelated and the internet is slow unless you are online at 3am. I don't get pissed at much, but cable companies really rub me the wrong way. I think it has to do with the monopoly on a non-essential service that the gov't doesn't really monitor, let alone care to regulate per the franchise agreements.
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It's a great racket...penalize the heavy users, but continue to charge light users the same. Cable companies are monopolies and they know it. Local telephone companies have to give multiple carries access to their copper, and in many places, electric utilities must allow consumers a choice of energy providers..but there doesn't seem to be any such regulation for cable providers. I bet rates would plummet if cable providers had to give competitors access to their coaxial cable.
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Surprise!