Time Warner's Test Expansion Heats Up Broadband Metering Debate
Time Warner is expanding its test of metered Internet broadband connections to new markets, again kicking up controversy on pricing. Media advocacy group Free Press wants Congress to investigate, while the CEO of a cable industry group has defended the market trials.
If video killed the radio star, than Internet video may signal the demise of flat-rate broadband pricing. At least that's the suspicion of public advocacy groups who are complaining about attempts by Time Warner Cable (TWC) and other providers to experiment with metered high-speed Internet usage.
For those groups, methods like capping broadband usage and adding fees for exceeding a certain amount of data will penalize customers for increased downloading of movies and TV shows, which, they argue, cable companies would like to keep in their profit columns.
However, the cable industry this week used the same grassroots blogging tool favored by groups like Free Press to make its case to at least allow the testing to continue without fear of regulation or legislation.
On Wednesday, National Cable and Telecommunications Association CEO Kyle McSlarrow struck back at Free Press' intentions to ask Congress to look into Time Warner's new pricing plans. "At a time of economic and financial challenges for our country, I for one would rather Congress spend its time on real problems, not fictional ones," McSlarrow wrote in the NCTA blog CableTechTalk. "Despite Free Press's hyperbole, the facts are these: Time Warner Cable has merely suggested that they are interested in conducting a limited set of trials of a new pricing model -- in a careful and transparent manner -- that may serve the vast majority of customer better by reflecting the growing reality that some consumers utilize far more high-speed bandwidth than others."
McSlarrow even used Free Press' own words against it, citing a group member advocating consumption-based pricing in a Comcast-related FCC filing from 2007.
New Cable Industry Tactics?
Is the industry trying to get ahead of what Free Press is calling a "backlash" against new pricing models, illustrated by New York congressman Eric Massa's intent to introduce legislation called the "Broadband Internet Fairness Act?"
Everything is still in the testing phase, maintained Time Warner spokesperson Alex Dudley, even as the company announced plans to expand its metering pilot program already underway in Beaumont, Texas, to include Austin; San Antonio; Rochester, N.Y.; and Greensboro, N.C. sometime by late summer.
So what has Time Warner learned from the Beaumont testing? "We've learned that we can make it from a technical perspective," Dudley told the E-Commerce Times. "We've learned that we can bill accurately, and we've learned that we can provide customers with measuring mechanisms for consumption. Our next step is to try and vary the size and geographic and demographic markets."
When asked if he understood suspicions from groups like Free Press that the cable industry is simply looking to justify adding costs for the rise in video downloads, Dudley replied, "The bottom line is that we think metering has the potential to be a very equitable way to distribute costs with growing Internet use. Basically, the light users who log on once a day to check email are subsidizing the people who are downloading huge amounts of content. It may be more equitable to have people pay for what they use. But it's just a test right now."
Free Press on the Defensive
Free Press is aware that the new pricing plans are pilot programs, according to Policy Director Ben Scott, but Time Warner Cable's intent to expand to four more markets "signaled an important change. When a major national Internet service provider expands a practice from a small trial to a big trial, it's a serious enterprise," Scott told the E-Commerce Times. "And we can reasonably expect it is the tip of the iceberg, and that we'll soon see other major ISPs (Internet service providers) follow."
Though the cable industry claims that bandwidth is a shrinking resource and that higher fees are needed to keep up with higher costs, Scott disputes the assertion, maintaining that TWC isn't being forthcoming about the true costs behind the rise of broadband usage.
However, he doesn't dispute that his group did indeed argue that consumption-based pricing would be a viable option during an FCC Comcast hearing in late 2007.
"NCTA is right that we did indeed tell the FCC that metering would be a superior practice, but only when compared to outright illegal blocking of Internet content and applications," Scott said. "We continue to hold that position. But calling the practice superior to unlawful activity is a rather low bar of endorsement. As for whether metering is fair -- it can be. But that is a question of whether the rates are fair in relation to the costs -- the same costs that TWC refuses to disclose."