Time Warner Starts the Meter in Net Access Experiment
Jan 17, 2008 11:35 AM PT
In a move with potentially far-reaching implications for Web users and Internet companies alike, Time Warner Cable will test a new model for high-speed Internet access that charges users based on how much bandwidth they consume.
Time Warner Cable will try out the metered approach to selling high-speed Internet access through its Road Runner cable broadband service in the city of Beaumont, Texas, it said. For the time being, only new customers will be given the metered option. After a yet-to-be determined test period, the company added, it will revisit the idea before considering whether to expand it.
The approach, first reported earlier this week by Broadband Reports, which cited an internal Time Warner memo, represents a major departure from the one-size-fits-all approach of selling high-speed Internet access that is dominant in the United States.
Currently, users choose a speed for their connection -- with faster service generally costing more -- but have no limitations on how much bandwidth they can consume in exchange for their monthly payments.
The result is that a relatively small number of users consume a great deal of the available bandwidth by accessing certain services. For instance, a user who checks e-mail and visits basic Web sites likely consumes a fraction of the bandwidth as a neighbor who frequently watches streaming video, downloads or uploads large music or video files to peer-to-peer (P2P) sharing sites or plays interactive computer games.
In fact, Time Warner says just 5 percent of Road Runner subscribers utilize more than half of the total available network bandwidth. The new scheme would force those users to pay for what they use beyond a set amount -- similar to over-charges levied on cell phone bills after a user exhausts her monthly minute allotment.
Net Neutrality Issues
Time Warner's plan includes installing bandwidth meters on new high-speed accounts and giving users access to a Web page where they can track how much they have consumed and upgrade to more expensive plans if necessary. Users will pay on a per-gigabyte basis for bandwidth they use above and beyond their plan. Time Warner did not disclose specific pricing.
Other high-speed access providers have reportedly considered such approaches, but balked at rolling them out for fear of causing customer backlash. Such a move may also antagonize the already tense relationship that ISPs (Internet service providers) have with many Internet companies and help bring the net neutrality argument back to the forefront.
ISPs have long complained that certain uses gaining popularity on the Web are depleting their network resources. Last summer, Comcast was found to have rationed bandwidth when users were grabbing massive files from P2P site BitTorrent. In the wake of that revelation, the Electronic Frontier Foundation suggested alternatives to all-you-can-consume monthly plans may be a way for ISPs to legitimately ration their network capacity.
"The availability of metered access alongside all-you-can-eat plans, combined with accurate advertising by ISPs, is one alternative that might solve the congestion issues raised by the downloading habits of a small number of users," EFF staff attorney Fred von Lohmann told the E-Commerce Times.
The EFF notes that broadband users in Australia have long had a choice of flat or prorated services, and said such a consumer's choice model may be a way to avoid the disputes over more surreptitious bandwidth-rationing that is taking place in the U.S.
The Google Effect
While Time Warner will be watching to see how consumers react to the metered approach, Web companies such as Google and Facebook, gaming companies and video sites, may also have a stake in the debate.
Such companies could see usage decline if a pay-as-you-download scheme took hold. Currently, users are limited only by how fast their connections are in what they download and most likely give no thought to how much bandwidth they are consuming over the course of a month.
However, the approach could also benefit those same companies if broadband providers are able to free up network capacity and in the process make such bandwidth-hogging services easier and faster to use. Some third parties claim cable and telephone companies are already using back-end techniques to help balance use.
Metered Internet access is common outside the U.S., but relatively rare domestically, although some satellite broadband providers do sell service on a usage basis. Getting the millions of American broadband consumers to wean themselves from the status quo would likely prove difficult.
Cost Per Click?
Last year, Canadian communications provider Rogers began instituting usage caps. Earlier this week, meanwhile, business broadband provider XO Communications announced it would offer metered broadband usage to its corporate customers, charging them only for the network capacity they use to carry voice, data and video traffic.
"There could be a major change in the way people view the Web," Forrester Research analyst Josh Bernoff told the E-Commerce Times. "Instead of seeing it all as free and a great place for discovering new things, each click now comes with a cost.
"The fact is the current model came about before today's Internet services were being widely used," he said. The problem is only going to grow worse, he added, with even more bandwidth-hogging options -- such as high-definition video -- coming to the Internet.
There could be other impacts for consumers as well. For instance, many broadband customers likely have open WiFi connections that others are able to piggyback on. Such connections would need to be secured to prevent a subscriber from paying for others' online usage.