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Cogeco: Metered Billing 'Not About Making Money'
Editorial: It's about helping children, puppies and the downtrodden...
by Karl Bode 03:42PM Tuesday Apr 14 2009
Somewhat buried under the Time Warner Cable metered billing kerfuffle is the fact that Canadian cable operator Cogeco also announced they'd be imposing overages on its customers. While we were the first to report the changes, the news is now getting out to Cogeco customers, who aren't particularly happy. Just like Time Warner Cable, Cogeco has decided the best course of action in response to angry customers is to insult their intelligence:
"We’re doing this so we can give the best service to all of our customers," said Marie Carrier, Cogeco’s director of corporate communications. "This is not something we’re doing to make money; it’s to better manage our service."
If it really wasn't about making money, a carrier could follow Comcast's lead and simply impose a very high cap (250GB) to rein in their heaviest users. Or they could push these heavy users, who carriers admit make up a mere 1% of their userbase, onto more expensive business-class tiers. Or, they could raise flat-rate unlimited prices on just those customers. Or, if it's really not about money, they could boot those users from the network.

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There's a number of creative business models to address problems faced by modern ISPs that don't involve bandwidth markups of 2500% over cost.

Instead, Cogeco chose to take aim at regular users and ordinary households, implementing caps as low as 10GB with overages as high as $2.50 per gigabyte. Keep in mind Cogeco had already implemented caps and throttling, meaning any purported network congestion issues were already being addressed. Cogeco made the decision to start charging overages in addition to caps.

That decision wasn't prompted by philanthropy, fairness or mysticism. The move toward metered billing is a pipe dream for investors and executives, who love the idea of charging more for bandwidth as hardware and wholesale bandwidth prices plummet and most product delivery costs drop or remain fixed. Executives also like the idea of either cashing in on Internet video delivery, or preventing it from eroding TV revenues.

Cogeco's decision has everything to do with making money.

Consumer advocates worry that such restrictive limits will limit consumer exploration of innovative content. Several carriers recognize that metered billing confuses customers, driving them to competitors. Of course Cogeco operates in monopoly and duopoly markets, and the lack of sustained competition is what allows the carrier to ignore, then insult their customers without penalty. And Cogeco is being insulting.

Like other carriers who've recently made this migration, Cogeco has provided no hard network or fiscal data to suggest why an already very profitable (pdf) company would need to radically overhaul their pricing structure. Just be assured: it's for your own good, and it's not about making money.

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Allen, TX

2 recommendations

reply to mattei

Re: I'm tired of ISPs implying usage = pirate

said by mattei:

  • The article, as a whole, implies abuse by a few.
It's called a bell curve. The outliers at the top of the graph suck down bandwidth like there is no tomorrow, while grandma is sitting there at the other end pulling up their genealogy websites once a month. A deviation shift to the left will release so much bandwidth, it's worth it for companies to do it.

  • The majority of releases I've seen from Marie on this subject do.
  • CSRs do.
  • Employees roving these forums do (not all).
  • Ignorant members with no hard data do.After reading about this for a while, I suppose I made the erroneous assumption that everyone had received the "abuser" = pirate/criminal memo. If you disagree with my assessment of the tone I'd like to hear your take on it.
  • Could it be because it's true? Or do you slurp down terabytes of "Linux ISOs"?

    A quick search through torrent search engines, eD2K networks, and Usenet will show the VAST majority of the content to be of dubious merits or pr0n.

    But, oh, you only get "Linux ISOs" and "patches" that way right?

    Don't pretend like pirates are not a large part of the problem. They consume WAY more bandwidth than any family watching Hulu 24x7.