This 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.