Cable giant Time Warner recently announced it would be moving to expand bandwidth usage to determine customer pricing much like the way your electric or phone company charges for service based on minute usage. Customers who use more bandwidth can expect to pay more for internet service. The era of the fixed, flat rate for cable service may be going bye-bye.
The exact amount of usage depends on your computing habits. If you limit yourself to emails and web browsing, you’ll use less space than someone who takes and sends a lot of digital photos, who in turn, uses less than someone who records HDTV broadcasts to a home theater or like many of us are beginning to do, download movies. Only about 5% of users account for more than 50% of the total bandwidth used.
The timing is bad as more tech companies are announcing they will offer download movie rentals over the internet. Companies like Apple, Netflix and Microsoft are jumping into the download business with both feet. Video downloading -- particularly high-def downloading -- is moving more into the mainstream as tech companies make it easier to rent and buy movies online.
Time Warner quietly conducted a trial of metered internet pricing in Beaumont, Texas last year. Now, that pricing model will be expanded. Time Warner has 7.4 residential internet subscribers. Customers generally pay a flat rate for Internet access that can be as low as $30 month. But a small minority of users downloading like crazy and sucking up bandwidth, we will all be affected , some more than others.
As both heavy television viewers and heavy purchasers of cable television, urban shoppers may be disproportionately affected if more cable companies adopt bandwidth pricing. No doubt companies like Verizon FIOS, AT&T and cable companies will be watching consumer acceptance of Time Warner’s new pricing as it opens the floodgates for a lot more usage and tier based pricing.
Time Warner's problem is a physical one. Their cable system can’t handle the bandwidth needed to provide the services they advertise. Most of their system was built for low resolution video/RF signal. Cable companies have always oversold their systems with the intent that many people would not be using it, but as users joined, access has suffered. The truth of the matter is, bandwidth has been practically the same since they started. With more people using it, the slower it gets. Time Warner can’t sustain a huge increase in power users on the current infrastructure, forcing it to either expand and upgrade its network or force heavy users out of it altogether. Comcast Cable terminated the accounts of some of its heavy downloaders.
This is not a "pay for what you use" system, it is a "pay more for what you use", and it will be a significant price increase over a relatively short period of time. If you are a light user, you probably won’t notice too much difference in your cable bill however if you are addicted to downloading (and new tech players entering into the game is only going to make it worse), you can expect to pay more.
Time Warner’s new billing system will reportedly apply to new customers only, and the company isn't giving any details about how it will structure the metered pricing system or how much it will charge. So all you big downloaders prepare to pay more for leisure. Caveat Emptor!
