MESSAGE
| DATE | 2008-01-19 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [NYLXS - HANGOUT] Time/Warner - Less for more is a boon
|
January 18, 2008, 9:23PM EST Time Warner's Pricing Paradox Proposed
changes in how the cable provider sets fees for Web use could crimp
demand for download services and inhibit Web innovation
by Catherine Holahan
Done right, a plan by Time Warner's (TWX) cable division to charge
higher fees for heavy Internet users could become a boon for most Web
customers. Done wrong, the new pricing could slow growth for fledgling
video download services and discourage Web entrepreneurs from starting
their own bandwidth-intensive businesses.
Time Warner Cable plans to test a multitiered price system for high-speed
broadband service later this year. New customers in the trial area of
Beaumont, Texas, will be charged different rates based on the amount of
data consumed in a month, much like a cell-phone plan charges based on
minutes used.
Some consumer groups say the proposal could benefit average consumers
who use the Web moderately, for such services as e-mail and the
occasional YouTube (GOOG) video, rather than frequent network-clogging
downloads. Tiered pricing would provide many users faster service by
forcing the small percentage of Web surfers tying up the network to pay
a premium.
Time Warner and other major Internet service providers (ISPs) often
blame slowdowns on the 5% of users who consume as much as 50% of network
capacity downloading vast numbers of large files, such as movies, videos,
and songs. By charging such consumers more, companies could encourage
them to curb excess use, or generate enough extra cash to enable their
systems to handle higher data demands. "What we are trying to do is
create the best experience possible for all of our users," Time Warner
spokesman Alex Dudley says. Unintended Consequences
But the plan could also stifle demand for movie-download services from
companies including Apple (AAPL), Amazon (AMZN), and Netflix (NFLX),
some consumer groups say. "It depends on how they structure it," says
Art Brodsky, communications director of Public Knowledge, a nonprofit
consumer advocacy group focused on digital rights. "You don't want to
do it so you totally discourage uploading videos and downloading videos,
and doing what the Net is used for."
Another unintended consequence of tiered pricing is that it could
discourage some companies from launching new services that require large
bandwidth, consumer advocates say. The plans could also penalize early
adopters whose heavy use of new services helps developers come up with
refinements that use up less bandwidth, says Marvin Ammori, general
counsel for Free Press, a nonprofit consumer group that advocates laws
that would bar network owners such as cable and phone companies from using
discriminatory pricing and other methods (BusinessWeek.com, 1/29/07) to
smother competition. "It could stifle new high-bandwidth applications."
Affordable Options
Time Warner intends to offer plans priced for up to 5, 10, 20, and 40
gigabytes per month, with middle-tiered plans running roughly the same
amount average users currently pay for high-speed connections. (Time
Warner offers high-speed plans for $29.95 a month in some areas.)
Time Warner would do well to keep its plans affordable, or it may lose
customers to rival providers. Consumer advocates are optimistic that
such competition will encourage companies to price plans so customers
feel free to try new services. They also hope ISPs will use extra revenue
from premium plans to upgrade their broadband networks, enabling more and
different kinds of services to become available in the future. "We are
hoping that this is only an interim step as the ISPs move into improving
their networks," says Ammori. Trending Toward Tiered Fees
Time Warner isn't alone in considering higher fees for big Net
users. Comcast (CMCSA), one of the largest residential high-speed ISPs,
is evaluating such a system, says Comcast spokeswoman Jennifer Khoury. Cox
Communications, which has 3.6 million U.S. subscribers, is also looking
into variable pricing, though it doesn't have any immediate plans to
adopt such a system, says spokesman David Grabert.
Verizon (VZ), which has been rolling out its own high-speed Internet
service across the country, has no plans to adopt a similarly tiered
payment plan, says Verizon spokesman Eric Rabe. "I think this is Time
Warner's response to the cable companies' problem in a shortage of
bandwidth," says Rabe. "We don't think that we are in a position that
we need to do that." Fair Warning
Currently, Comcast and others manage users who exceed bandwidth limits
by warning them to curb their data use or upgrade to a business account,
lest their service be terminated (BusinessWeek.com, 3/27/07). The strategy
has resulted in loud complaints from customers and consumer advocates.
Time Warner's tiered service would also warn users when they are consuming
more data than their plan allows and encourage them to upgrade to a higher
plan. However, it would charge users fees for exceeding their gigabyte
limit, rather than boot them from the service. "Time Warner's pricing test
could be a welcome development for consumers and for the cable industry,"
Public Knowledge President Gigi Sohn said in a statement. "Cable companies
could be able to better manage their networks and costs, so they won't
have to resort to cutting off customers for exceeding phantom usage
levels or throttling some applications."
Holahan is a writer for BusinessWeek.com in New York .
--
http://www.mrbrklyn.com - Interesting Stuff
http://www.nylxs.com - Leadership Development in Free Software
So many immigrant groups have swept through our town that Brooklyn, like Atlantis, reaches mythological proportions in the mind of the world - RI Safir 1998
http://fairuse.nylxs.com DRM is THEFT - We are the STAKEHOLDERS - RI Safir 2002
"Yeah - I write Free Software...so SUE ME"
"The tremendous problem we face is that we are becoming sharecroppers to our own cultural heritage -- we need the ability to participate in our own society."
"> I'm an engineer. I choose the best tool for the job, politics be damned.<
You must be a stupid engineer then, because politcs and technology have been attached at the hip since the 1st dynasty in Ancient Egypt. I guess you missed that one."
© Copyright for the Digital Millennium
|
|
