There's No Data To Prove Metered Billing Is NecessaryJournalists start crunching numbers, call Time Warner plan 'obscene' ( old news - 11:00AM Thursday Apr 09 2009) tags: business · bandwidth · Op/Ed · cable · RoadRunner CableThis week has seen Time Warner Cable CEO Landel Hobbs do a rather poor job as the company's primary spokesman on the issue of metered billing, after the company announced last week they'd be expanding metered trials into four new cities later this year. Time Warner Cable's PR people probably wish this story would just die, but it would appear the public, politicians and the media are only just getting warmed up. Journalists are only just starting to crunch the numbers and seriously ask why an already very profitable company (see their 2008 10-K) needs to start charging consumers $1 per gigabyte. Especially when hardware and bandwidth costs are dropping, many costs are fixed, revenues from VoIP/TV/Ads/broadband are growing, and the cost of upgrading to DOCSIS 3.0 technology is relatively (particularly when compared to FTTH upgrades) inexpensive. Saul Hansell of the NY Times tries to pick Mr. Hobbs' brain on the matter, and doesn't have much luck: I tried to explore the marginal costs with Mr. Hobbs. When someone decides to spend a day doing nothing but downloading every Jerry Lewis movie from BitTorrent, Time Warner doesn't have to write a bigger check to anyone. Rather, as best as I can figure it, the costs are all about building the network equipment and buying long-haul bandwidth for peak capacity...Mr. Hobbs declined to react to my hypothesis about how costs are almost all fixed costs. Time Warner Cable is repeatedly incapable and unwilling to offer up hard data that supports their claim that flat-rate billing is not "viable." The company last week told us they will not release hard numbers, only their analysis of internal numbers. Except Hobbes' analysis this week has been inconsistent and at times incoherent. Earlier this week he insisted consumers wanted metered billing, despite obvious indicators to the contrary. In the Times he's lost in sort of a public relations purgatory, trying to soothe investor worries by saying finances are fine, yet at the same time trying to tell consumers that they have to pay by the byte because the entire billing model the company's currently built on is utterly unsound. At no time is supporting data (network or fiscal) introduced. Meanwhile, Ars Technica crunches the numbers as well and finds Time Warner Cable's new plan borders on "obscene." Nate Anderson of Ars chimes in: As TWC expands its test markets for the data caps, it offers plans with 5GB of monthly data transfer for $30. Plans with 40GB of data go for $55. The thinking here is that most customers currently use only 4GB per month or so, and offering those customers a cheaper rate is actually doing them a favor. . .But the only favors being done here are to TWC's bottom line. That base rate works out to a truly jaw-dropping $6 per GB per month, and it's so far out of line with competitors' plans as to shock even the most cynical heart. Granted these trials aren't just about testing the back-end systems that make metered billing possible, they're about perfecting the marketing message and collecting data that supports it. Rest assured that when Time Warner Cable actually gets around to releasing hard data of any kind it will be of the 21st century think tank variety, scrubbed and polished to only support the position that metered billing is an essential (d)evolution.
Related:- Time Warner Cable Expands Metered Billing
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- Time Warner Cable Offers Weak Concessions
- Time Warner Cable Protests Planned
- Time Warner Cable Metered Billing Will Return
- Time Warner Caps Go from Ugly To Invisible
- Time Warner Cable Acknowledges 'Debacle'
- Time Warner Cable GETS MORE EXTREME!!!
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rudnicke
Premium
join:2004-10-23
Rantoul, IL
1 edit | Gonna loose customers? Think they will lose a lot of customers over this?
EDIT: Spelling correction. | |
|  | | | DarkLogix
join:2008-10-23
Baytown, TX | They'll go bankrupt then maybe a better cable ISP will buy them | |
| | | iansltx
join:2007-02-19
Golden, CO | Re: Gonna loose customers? Comcast? Oh wait, they're bumping up against the 33% rule or whatever.
Not really sure who *could* buy them...everyone else is rather regional. Maybe Cox, but I wouldn't think so... | |
| | | | 
RR User
@rr.com
 from:
Core0000 
| Re: Gonna loose customers? TW may not be able to offer any hard numbers but I'll show them some hard numbers when I call up to cancel all my services with them if they bring this to my area.
I'll also do my very best to convince everyone I know to follow me and do the same. Since I already have an established relationship (I'm an on-site local PC tech that fixes computers) with a lot of people in my local area, I can tell them why they need to switch. Over the years I have referred everyone I know on DSL or other services to switch to TW. My success rate is literally 100%. Once someone's local trusted PC tech starts harping over how much better U-verse is they will switch, because they follow my advice. I bet TW would love to have that kind of influence over people.
I only do this though because deep inside I want the best for myself, and those that I help. TW's metered usage plan just makes my job that much easier to recommend a competing providers service.
I can definitely give TW some hard numbers starting with plenty of customer defections once this comes to my area. | |
| | | | | Core0000
Premium
join:2008-05-04
Somerset, KY | Re: Gonna loose customers? Good idea! | |
| | | | | bootspur
join:2009-04-11
| Thank you, precisely my sentiments you have saved my fingers a number of key strokes, I will add, this will go over like the 2006 effort by politicians to provide amnesty to 50 million Mexicans, (who REALLY knows the math?) There was a tremendous backlash against that IDEA...
Just wait, there will be an uprising against this stupidity, Corporations ARE NOT going to steal the internet from us, place a TOLL BOOTH on it, or any other scheme to SCREW OUT of out money OR access to this! (internet)
Corporation's will have completely MISJUDGED the mood of the American people over this issue should they attempt ANOTHER RUN at corporatization of the INTERNET! Not a chance!! | |
| | | Beylan
join:2001-09-15
Mount Airy, MD | Big companies don't go bankrupt anymore, they get bailouts. | |
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baineschile
2600
Premium
join:2008-05-10
Sterling Heights, MI
1 edit | When did metering become about being necessary, as opposed to an exuse to get rid of the high-use people they dont want? | |
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AtlGuy
join:2000-10-17
Marietta, GA
| Re: Gonna loose customers? When caps of 5GB to 40GB were instituted in test markets, with a $1 per GB overage. You're telling me a family of 5 who has multiple computers who uses 50GB on average a month are high use?
If they want to terminate high use accounts, then do it. I'm sure there has to be something in their TOS to allow such a thing without instituting a ridiculously low cap on everyone. | |
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RR User
@rr.com
from:
Core0000
jonnyz
| Re: Gonna loose customers? Actually, what TW doesn't want you to know is that even a heavy user that consumes 50-100GB a month is highly profitable. Even a 500GB+ a month user is profitable. The real problem is that the last mile doesn't support very heavy users well. 40Mbps of shared bandwidth between 100-200 people doesn't cut it very well anymore in the age of HD video and 10+ megapixel images. TW is just too cheap to upgrade to DOCSIS 3 right away, and therefore came up with this genius plan to hold them over a while longer, all the while collecting a huge profit in the process.
It costs TW (and most other broadband ISPs) roughly $5-$8 a month to physically provide you with broadband service. That's the cost per user which goes back into the system to pay the tech support, tech visits and network maintenance and keeping the physical plant running. The rest of the $40-50 you pay is nearly pure profit. And for those who ask... I got this data from a technical write up on broadband service published a good few years back. If I still had the URL I'd surely post it here.
If "little ol me" can buy bandwidth in 1TB chunks at a rate of 2-3 cents per gigabyte from the host who manages my servers, what kind of rates do you think TW gets? I keep running the numbers though my head only to come up with the fact that bandwidth is most likely a reasonably fixed cost for TW, which basically brings the problem down to the shared 40Mbps last mile.
All I can say is "Spend the $20-50 per customer and upgrade to DOCSIS 3 already, TW" because this is ridiculous. Comcast is doing it, Cox is doing it, hell even bankrupt Charter is doing it! There is no reason TW can't be upgrading as well... They are raking in more profits than most cable companies.
There is no reason to meter residential bandwidth use. Digital phone isn't metered, nor is how many hours of TV you watch. TW makes the claim that it's unfair for those who use less... Well what about the people who spend an hour a week watching tv, or using the phone, while the guy next door watches TV 12 hours a day and is on the phone 24/7, yet pays the same rate as you. It doesn't float. You sell a service at a price people are willing to pay and let them use it how they want and feel is worth while... Or we could go back to the days of metering phone usage, and why not start charging $1 an hour to watch TV as well.
Stop crying poverty TW, don't you realize how much money you're already milking out of us? A lot of us really don't have anymore to give! If I could pay my bill with my own blood, I'd be dead. | |
| | | | | KodiacZiller
join:2008-09-04
73368 | Re: Gonna loose customers? RR User, you are on a roll, bro. Keep it coming! | |
| | | | | | | bootspur
join:2009-04-11 |  Re: Gonna loose customers?
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anon234
@rr.com | yeah i'd cancel pretty quickly | |
| elwoodblues
Elwood Blues
join:2006-08-30
Toronto, ON
| It will move forward No matter what the outrage, this will go ahead, who is going to stop them?
Consumers have very little choice when it comes to Internet providers.
--
It's 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses. | |
| | zod5000
join:2003-10-21
Edmonton, AB
 ·TELUS
·TekSavvy Solutions..
| Re: It will move forward said by elwoodblues :No matter what the outrage, this will go ahead, who is going to stop them? Consumers have very little choice when it comes to Internet providers. Well typically in most cities, theres a cable internet provider and dsl internet provider. Hopefully whoever the DSL provider is in the areas takes advantage of this and exploit the hell out of it. | |
| | ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL
| Possibly, but look at what happened in Lafayette. Cox and BellSouth were providing awful service, so the city built its own network. Granted, not every city will do this, but the threat will be there, and we have yet to see what the new administration might do in terms of broadband policy. And let's not forget the possibility of using white space for data, as well as WiMax.
If I were planning this strategy for TW, I'd be careful. Their position may be secure now, but things can change pretty quickly. | |
| | | elwoodblues
Elwood Blues
join:2006-08-30
Toronto, ON
| Re: It will move forward said by ISurfTooMuch :Possibly, but look at what happened in Lafayette. Cox and BellSouth were providing awful service, so the city built its own network. Granted, not every city will do this, but the threat will be there, and we have yet to see what the new administration might do in terms of broadband policy. And let's not forget the possibility of using white space for data, as well as WiMax. If I were planning this strategy for TW, I'd be careful. Their position may be secure now, but things can change pretty quickly. I thought constitutionally, the "Government" was not allowed to compete against private enterprise?
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It's 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses. | |
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neowulf
join:2000-10-20
Port Orange, FL
| Re: It will move forward If enough people get together in a city there is no reason they can not start up a co-op. Or if a provider feels the area is not worth the investment I see no reason that a city can't build their own network.
Or in the case of the Wilson's community network in North Carolina (www.greenlightnc.com)which the City of Wilson owns and operates the system, for the community. 20 Mbps symmetrical Internet service is $59.95 per month. While their 100 Mbps for $299.95 and talk nothing about caps anywhere.
I am sure that kills any competition in Wilson, but to be honest it just shows how much private enterprise is already making on their service, and then to cap it to make more profit.
I am all for free enterprise but if you can't even beat the government's, as we all know, over inflated prices, then maybe you don't belong in the market.
I would love to see more Cities like Wilson, but that is just me I guess. | |
| | | | ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL | Nope, nothing prevents that. Governments compete with private businesses all the time, from city water vs. bottled water to public transit vs. taxis to public schools vs. private schools, to name just a few. | |
| rcabor
join:2007-04-17
Grand Prairie, TX
| Funny Its funny how they want to charge more so they can upgrade to Docsis 3.0, but why if the caps are so low would "customers want" that? And with the argument that using more than 50 gigs per month degrades other users performance, why are they willing to let bandwith hogs continue to do as long as TW rapes them at $1 per gig?
Just sickens me everytime I think of the greed they package as shit, but try to sell as roses. | |
|
Mang
@yahoo.com
| How does this logic work... So if everyone is catching on to this BS that TWC is giving... how long till they go after the mobile phone companies for charging SMS fee's (double dipping for both sending and receiving) @ 0.20 cents each message?
$1 per GB or $0.40 per SMS (about 160 characters)
Which is a bigger rip off? | |
| | rcabor
join:2007-04-17
Grand Prairie, TX
| Re: How does this logic work... said by Mang :
So if everyone is catching on to this BS that TWC is giving... how long till they go after the mobile phone companies for charging SMS fee's (double dipping for both sending and receiving) @ 0.20 cents each message?
$1 per GB or $0.40 per SMS (about 160 characters)
Which is a bigger rip off?
While I agree that SMS is a ripoff, most all of the USA has many wireless carriers to choose from, but not all have more than 1 ISP to choose from. | |
| | | | | DGLewis
join:2006-03-10
Freehold, NJ
| Doing the Math According to TWCs 10-K, their high-speed data revenues in 2008 were $4,159M. Their Cost of Revenues for high-speed data, defined as "the direct costs associated with the delivery of high-speed data services, including network connectivity costs," was $146M. On the capital side, the company spent $604M on "scalable infrastructure," which includes the majority of data networking equipment (except for the cable modems themselves), as well as video and voice equipment that grows with the number of subscribers.
The extent to which it can be demonstrated that marginal costs for high-speed data require TWC to implement metered billing is left as an exercise to the reader. | |
| | 
SLD
Premium
join:2002-04-17 | Re: Doing the Math Go exercise yourself! | |
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zpm
join:2009-03-23
Columbus, GA | Re: Doing the Math It's called corporation greed!!!!!!!!!!!!!!!!!!!!!! | |
| moonpuppy
join:2000-08-21
Glen Burnie, MD
·Verizon Online DSL
| Hmmmmm Earlier this week he insisted consumers wanted metered billing, despite obvious indicators to the contrary. Really? People want metered billing? My guess is that do want metered billing. BUT, they want a lower initial monthly cost to coincide with the metered billing. They DO NOT want caps on an already high monthly bill and then tack on more cost for bandwidth. Pay $20/month and then charge for extra, MAYBE. Otherwise, OH HELL NO!
Time Warner is smoking some good stuff to spout off the crap they are spreading.  | |
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See 14 replies to this post | |
| gopnick
join:2005-01-07
Benton, AR | i wonder... How much longer till We The Sheeple are bailing them out? | |
| majortom1029
join:2006-10-19
Lindenhurst, NY
| hmm I think its funny that even other cable companies like cablevision are saying that metered billing is not the way to go. I dont understand how cablevision can be so much better then the other cable companies(notice i said cable companies not including verizon). | |
|
Anon51
@rr.com
| Typical They will try anything until someone tells them to quit. If they can get away with it, they will.
Problem is, most folks don't respond until it happens to and affects them.
The unregulated monopoly continues. We need cable regulation to control this. | |
| DoubleK
Doublek
join:2003-03-04
Beloit, WI
clubs:
1 edit | EGAD !! If they pass it grab your pitchforks and go!
If anyone needs metered billing it is my isp Charter. They are Bankrupt and then some. If they passed metered billing in my area I would get involved in local politics real quick. | |
| | |
Orwell2
@comcast.net
| Newspeak... As a "dinosaur," from the days past of plodding through the *rip-offs* of a tropical jungle of tar pits, quick sand and peat bogs of *long distance* charges, I see a "clear and present danger" of a *Jurassic Park like* resurrection of the falsities of "long distance charges" morphing into the "Corp-speak" of "metered billing." | |
| travelguy
join:1999-09-03
Santa Fe, NM
2 edits | Let's be clear about this... Metered billing has zero to do with costs and everything to do with trying to change a business model to one that maximizes revenue.
It's a basic tenet of the MBA crowd that you are leaving money on the table if you don't charge what the customer is willing to pay, and different customers are willing to pay different amounts for the same thing. That's why you don't see airliners selling every seat on a flight for the same price.
By switching to metered billing, by assuming that high use users are more willing to pay, they get a crude way to charge those users more. | |
| | robl27
Premium
join:2008-07-16
Mary Esther, FL
 ·Cox HSI
 ·Vonage
| Re: Let's be clear about this... Ok then.. when your bill jumps from $60 to $600 don't come bitching at us.. this is about control pure, plain and simple. what you do on a daily basis will soon become a thing of the past.
Wake up will you.. it's not about a "business model" at all. If it was, this would have happened a long time ago if it didn't work.
This has been successful for over 5 years.
Say no to metered billing say yes to an open interent.
-Rob
--
Our 96K BroadBandStream
Our Dial Up Stream
Chat with us (IRC)
follow me on Twitter | |
| | | travelguy
join:1999-09-03
Santa Fe, NM
| Re: Let's be clear about this... Dude, you are missing the point. I'm not supporting what TW is doing, and I'm not dissing them. I'm explaining how they think and trying to show that people who fall for the metered billing is a cost argument are seriously misinformed.
TW is looking for a way to maximize revenue. That's what companies do. It doesn't matter if flat rate billing has been working for 5 years or 25 years. The fact is that if TW customers buy into metered billing because they think it's somehow fairer than uncapped, flat rate billing, and that model makes TW more revenue, then they are obligated to do that.
True flat rate uncapped billing will never be sustainable because someone will always figure out a way to use that capacity to the detriment of others. The old tragedy of the commons problem. Phone companies didn't let you keep a dial up line engaged 24/7, dial up ISPs didn't let you do that, and cell companies charge outrageous fees for every minute over your bucket.
What makes you think broadband connections are any different? And before you answer that, consider that the only real answer is for you to create your own broadband service and make a go with your unlimited billing plans...  | |
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See 7 replies to this post | |
Chiyo
Save Me Konata-Chan
Premium
join:2003-02-20
Minneapolis, MN
clubs:
·Comcast
| what about Comcast and the rest? So if everyone is jumping this hard on TWC then why in the hell isn't Comcast and the rest hearing this garbage too.
--
That was the wild boar.... Moo!
My podcast: The Banzai Beat »www.banzaibeat.com | |
| | DarkLogix
join:2008-10-23
Baytown, TX | Re: what about Comcast and the rest? easy
comcast is slightly reasonable 250GB soft-cap much better than a 5GB hard cap
you go over 250GB its likely nothing will happen (unless you go way over)
but TWC you go over 5GB you pay out the arse | |
| 
ctceo
Premium
join:2001-04-26
South Bend, IN
clubs:
·magicjack.com
 ·AT&T U-Verse
·Comcast
·AT&T Midwest
 ·HughesNet Satellit..
1 edit | All of a sudden Why is everyone so ambitious to speak up now? It's been in the making for like years now, and many, including me, have pointed it out several times. I've even tried to get a petition started which hasn't yet taken off. I'm up to 50 petitons as of this posting.
If the industry experts don't see that enough people will terminate their accounts via an organized petition or some other such movement, they are simply not going to listen.
Yes you may vote with you pocket books. But what do you value more, your current internet connection or the future status of it?
Also, I'm still looking for some suggestions to add to the petitions body. Statistics, links, sponsors, etc. etc. It is the first of it's kind that I'm aware of.
--
Would you like your ISP to govern how much you can use the web in a month? Well it might happen if we don't do something NOW! »www.ipetitions.com/petition/PMDBI/ | |
| radougherty
join:1999-07-23
Austin, TX
·RoadRunner Cable
| Test markets, download everything you can! TWC says that they're gathering data now to determine how to set the tiers. OK, everyone in the test markets should download and/or stream everything thing they can now to drive their numbers way up on what current usage is. They'd either have to make the tiers much higher then they've announced so far or the numbers would show that many people would be paying more, not just the few extream users. | |
| 
sholling
Premium
join:2002-02-13
Hemet, CA
| Don't You Just Love Monopolies? It's called having a monopoly. When you have a monopoly you can charge as much as you want and your customers have only 2 choices... Bend over, or do without Internet access.
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"Government is the great fiction, through which everybody endeavors to live at the expense of everybody else."
--FREDERIC BASTIAT-- | |
| chronoss2009
join:2008-09-23
·TekSavvy Solutions..
| FACT is it hurts poorer people best high use users as i have seen do what they do in tech savvy forum get mlppp expensive modem ( meaning they got cash)
then they get double or triple the accounts and carry on
POOR people suffer and those at lower ends say , sorry to expensive im gone and that's what is and shall happen TO ANYTHING YOU RAISE PRICING and lower WHAT ONE GETS OR THE AMOUNTS.
lot people say the bell Canada 60 GB cap oh well i just get 4 accounts via mlppp
ONLY RICH PEOPLE CAN AFFORD 4 - 55 $ accounts or those really up to no good. | |
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ctceo
Premium
join:2001-04-26
South Bend, IN
clubs: | Re: FACT is it hurts poorer people best Where do the sentences end? | |
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Xenon
@qualcomm.com | Something's fishy! Anyone else find it odd that TWC wants to charge $1/GB, HD movies are about 5GB in length, and TWC's charge for an On-Demand movie is $5? Hmmmm... | |
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