Fiona Morgan of the Independent posts troubling information about upcoming changes to Time Warner’s broadband pricing. According to Morgan, Time Warner will begin throttling customers in Greensboro, NC and three other markets nationwide. According to Businessweek, Time Warner will offer four plans:
Customers will be charged $1 for each gigabyte GB over their plan’s cap. Time Warner Cable offers four cap levels of 5, 10, 20, and 40 GB [per month]. A download of a high-definition movie typically eats up about 8 GB.
The 5GB plan will cost around $30, with the 40GB plan topping out at $55. By contrast, Comcast does not offer tiered plans, but places a 250GB limit on throughput.
What does this mean, practically? If you’ve got a Roku, an hour of streaming equals about a gigabyte of bandwidth. At the low-end plan, if you watch more than 2 movies a month, you’ll get penalty charges. On the high-end plan, 40 hours of Roku a month (20 movies) will mean you’ll be charged fees.
While I’ve been happy with my Time Warner broadband, needless to say I’ll be dropping the service if they expand tiered pricing. Ars Technica shoots all sorts of holes through Time Warner’s logic; this is simply a ploy to charge customers more. How long until we’re back to 1995′s pay-per-minute pricing regime?
Update: The NYT has a frustrating article on the reality of cable internet speed:
Pretty much the fastest consumer broadband in the world is the 160-megabit-per-second service offered by J:Com, the largest cable company in Japan. Here’s how much the company had to invest to upgrade its network to provide that speed: $20 per home passed.
…
The cable industry here uses the same technology as J:Com. And several vendors said that while the prices Mr. Fries quoted were on the low side, most systems can be upgraded for no more than about $100 per home, including a new modem. Moreover, the monthly cost of bandwidth to connect a home to the Internet is minimal, executives say.
So what’s wrong with this picture in the United States? The cable companies, like Comcast and Cablevision, that are moving quickly to install the fast broadband technology, called Docsis 3, are charging as much as $140 a month for 50 Mbps service. Meanwhile other companies, like Time Warner Cable, are moving much more slowly to upgrade.
Competition, or the lack of it, goes a long way to explaining why the fees are higher in the United States. There is less competition in the United States than in many other countries. Broadband already has the highest profit margins of any product cable companies offer. Like any profit-maximizing business would do, they set prices in relation to other providers and market demand rather than based on costs.
