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For years, I have been with Bellsouth (now
AT&T). I chose Bellsouth because in our area Time Warner Cable went down constantly. Bellsouth/AT&T has never (imagine that...never!) gone down. Also, Bellsouth/AT&T customer service has been excellent. I can reach them 24/7--which I have done when I had a couple of software issues. Literally, Bellsouth/AT&T has been one of those companies that I appreciate on a daily basis. I understand that it is a little slower than Time Warner, but after all these years, it seems to be a small price to pay for reliability and good customer service. No, I do not have any personal or professional connections with Bellsouth/AT&T. I just know good service when I have it.

Allen,

I can understand TW wanting to charge by the gig or whatever. I think their approach is what is steaming the users. I use them for cable & internet and, yes, they do go down a lot. If they would supply me with an app so I can measure my usage I could make an intelligent decision on which plan I want. Kinda like my cell phone. But don't just throw me to the wolves and send me a hugh bill out of the blue for excess usage.

MD

You may be able to understand TW, but I sure don't. They send digital signals to my converter box 24/7 and charge me a flat rate to access that data without limit or measuring. Why should an internet usage be so different?

Well said, Namtac.

Don't get use to me agreeing with you. lol

TW must be patterning their business model after the wireless "broadband" providers like Verizon and AT&T.

So much for Business Creativity.

Jumping ship to another provider may be the only option for cost conscious americans.

I also have cable and it too runs 24/7, Amazing how they can jsutify it teh way they have.

Tony
link2eternity.com

Allen, it's not crazy for a business to charge people for only what they use. I'll bet you don't have an all-you-can-eat plan at Harris Teeter, i.e. a flat monthly rate no matter how much you buy. You might object to that because perhaps you don't buy much and you'd rather not subsidize those who do.

It's no different with cable or Internet or other products. A flat monthly rate means that unless you're downloading hours and hours of high-res video, you're probably subsidizing those who do. As someone who tends to use my computer to work, follow the news, view the occasional (low-res) video from YouTube, and of course keep up with your blog, I'm not a big user. I'd love to lower my monthly expense.

I like Mad Dog's idea of a virtual meter (which may well be what Time Warner has in mind). If usage fees aren't a surprise and can be tracked pretty easily, this sounds like a pretty good deal for many of us.

But we Americans love the flat rate, don't we? We love the simplicity and we seem not to care that many of us are subsidizing the big users. On top of that, many of us distrust anything coming from Time Warner, which has an absolutely horrid record for customer service. My cable rarely goes out (so far), but it's very hard to work with TW on anything more involved than sending in my monthly payment.

In any case, the basic idea isn't a bad one... unless you're a big user and you don't want to have to pay your own way.

In a way, this confirms that broadband is part of the New Economy's infrastructure. Americans have no objection to paying per unit used for most products. My example of an all-you-can-eat rate at Harris Teeter would seem weird to almost anyone. But per-unit pricing becomes emotionally charged when the product is the use of infrastructure. Toll roads are present in only a few states, and mass transit is highly subsidized by taxpayers. Back when people were referring to the Internet as "the information superhighway," they were more right than they probably realized.

Hmm...TWC doesn't seem to mind charging me a flat fee for the hundreds of TV channels I never watch.

Andrew, with all due respect, I think you've bought into TWC's lovely little PR campaign about keeping rates fair for the low-end user.
If fair rates were the issue, they would be altering their cable TV rate structure as I write this...and I hardly think that's going to happen. Fairness in rates for the low-end internet user is simply a smokescreen.

Bottom line...they're going for the gold.

Of course they're "going for the gold"! What did you or anyone else think? That's what any company does, and if you're a stockholder, you wouldn't want it to do anything else. Besides, in this case we're talking about Time Freaking Warner, one of the worst customer-serving companies around, and the company I happen to hate like no other. So spare us your analysis. I've "bought into" nothing except the logic of economics.

But fair enough. As I noted above, economic logic often doesn't sit right with people who like flat rates, or those who like to be subsidized by others. To be sure, sometimes it's in the company's interest to go with flat rates rather than per-unit pricing. But when it's not, it's not quite the equivalent of robbing us and yelling at our children. TWC sucks, but not necessarily because of this.

In today's news article, someone explained all this by saying that TWC is greedy. Aside from the fact that of course they are, it's also a kind of greed when one insists that others should subsidize one's activities.

And finally, I'll note once again, in the spirit of full disclosure, that while I'm a big user of the Internet, I'm probably not a bandwidth hog. I don't download a lot of streaming video, for example. A plan like this could well lower my monthly bill, and I'll bet I'm not alone.

@Andrew Brod, your Harris Teeter all-you-can-eat analogy is inaccurate. It is closer to the Chinese buffet, which has had all-you-can-eat for a very long time (where light eaters "subsidize" heavy eaters) suddenly deciding to weigh your plate when you leave the buffet and charge by how much you eat.

Time Warner is introducing a change to the pricing structure. The unlimited usage structure has been in place long enough to encourage richer internet content. Now that people are taking advantage of that content and have grown used to it, TW wants to change the rules. Their cable TV comes through the same conduit, yet they don't charge by how much you watch, do they?

This will have an affect on innovation (will parents encourage their children to use bandwidth to learn web development?) cloud computing, telecommuting. It will discourage companies to relocate to this area (why choose one of only 4 areas in the US that has a backward system like this?). In short, it is bad for the community. We need to find a way to make it bad for Time Warner.

Oops--a correction. I just remembered that I've been watching South Park reruns online. So maybe my monthly bill won't go down as much as I think. But even so, is it really un-American for me to pay for what I use?

Leatherwing makes a good point. A better analogy would be if Harris Teeter had an all-you-can-buy price for years, and then after people got used to it, they changed to a pay-for-what-you-buy scheme. The change would indeed piss people off. That doesn't change the basic economic argument, but it does amplify the pissed-off-ness.

But unlike Harris Teeter, something's changed with the Internet. People are using it more and more for bandwidth-intensive uses. If TWC's cost of providing data is increasing as such use becomes more prevalent (which of course is what TWC claims), an efficient solution is to charge people for what they use. Otherwise, it'll have to charge us all more.

I'm also sympathetic to Leatherwing's point about children and bandwidth. But that reinforces another of my points, that Internet access is part of our economic infrastructure. Often such infrastructure is government-provided instead of a service of the private sector. TWC is in a gray area because its rates and services are regulated. Perhaps the regulators will decide that we all need to subsidize bandwidth-intensive use by children whose families can't otherwise afford it.

But whether it's justified or not, let's not pretend that this isn't about some people subsidizing others.

I've found the proof of my argument here, starting at the 2:25 mark. Rachel and Phoebe and Joey don't want to subsidize Chandler, Ross, and Monica. They'd rather pay only for what they bought. Case closed!

Andrew, to use your (and Time Warner's) terminology, light user's have always subsidized heavy users, and Time Warner has loved it. Most people that purchase unlimited bandwidth packages never approach usage levels that would cost Time Warner money.
They have been very happy with a scheme where almost everyone overpays. TW helped create an Internet culture that thrives off richer web content. Try to apply for a job these days - companies send you to their website. Try to call Time Warner customer service - the menu system refers you to their website. Government notices are starting to be delivered via websites. Even Time Warner's usage meter will be provided on their website.
They have created the world that they wanted, but they may not have counted on people finding entertainment alternatives online that directly compete with their cable TV offerings. The same pipe that delivers a Netflix download also delivers hundreds of channels of cable TV, yet there is no cap or usage meter for what you watch through your television, is there?
Time Warner is hoping to create an Internet class war between light and heavy users - "tax the heavy users, I don't mind" - but the heavy users are often the ones that extend the value of the Internet, by creating content, by being early adopters (and posting their experiences) so that the latecomers can learn from their experiences.
If you've ever used google to look for a solution to a computer related problem, you've probably found an answer posted by a bandwidth hog (to use Time Warner's terminology).

Very good points, Leatherwing.

And returning to the all-you-can-eat buffet analogy: A buffet has been charging $10 for all you can eat for years. It then decides to start weighing plates, so that light eaters don't subsidize heavy eaters. the restaurant institutes a pricing plan, ranging from $5-10, with tiers at 1/2, 1, 2, and 4 ounces. Everything over 4 ounces is charged at 20 cents per ounce.

This is much closer to Time Warner's plan. Their highest tier is ridiculously low. Their claim that only 14% of users will be affected and have to pay for overages is unverifiable. Those numbers are from Beaumont, TX, a city with only two institutions of higher education. Greensboro has seven (and that's before you begin to count Winston-Salem and High Point). Colleges require a lot of activities to be done online (many lower level math course are not offered in the classroom at all, they must be taken online).

You may or may not use any of these services. But why would we want to be one of 4 cities in the United States crippled with such a backwards plan. We will remove ourselves from competition in many ways. Can we afford that now?

Some more good points, Leatherwing.
Very similar comments are being made on the Austin American Statesman website.

http://www.statesman.com/search/content/business/stories/other/04/02/0402timewarner.html

From an economic and PR standpoint, Time Warner Cable would have been better off increasing rates a small amount across the board. They're going to do that anyway. Once they start measuring usage, TWC customers will be nickeled and dimed to death...or more to the point, dollar billed and five dollar billed to death. TWC is being disingenuous by saying most users won't be affected. They just happen to be starting with the high-end users first--using the old divide and conquer tactic. TWC's transparency is almost laughable.

TWC has shot themselves in the foot. Just wait until TWC has some real competition in Greensboro. People will switch first chance they get--just on principal. And customers who leave a company on principal are the worst ex-customers a company can have. These customers tell the whole world how they've been dumped on...and they sound very convincing.

Good Luck, TWC. You're going to need it.

You can get your own free download/upload meter here at FreeMeter (there is a pro version as well). Frankly, I'm surprised at how much up and down I do - and therefore worry more about residential users with teenagers or unprotected wireless.

I respect all of Andrew's comments above; however, he's neglected to talk about TW trying to make money on the front AND back of downloads. (Note: my connection is business class; I subsidize a lot of the neighborhood.)

TW, like all other broadband providers, has been seduced/encouraged and/or rewarded by content providers to enable people to download lotsa lotsa content (e.g. Google, Yahoo, NBC, CBS, ABC, all of them). What makes this successful is the ability of people to download what they put up there. (BTW, YouTube has done a fabulous job of compressing video so that they're really not the culprits.)

Now that young folks use Hulu instead of buying TW cable packages, TW spins off the Internet side so they can bill for those users who choose not to buy television services. I'm all for profit; however, this smacks of something murkier.

Spinning off the broadband unit gets the Internet side around the FTC's regulation. This is an industry crying out for regulation. (There's lots more to this than I included above but it's another POV from what Andrew focused on.)

Leatherwing's analogies are correct; but worse, TW's caps are particularly insulting when compared to Comcast's 250Gb policy.

I hope the fact that VoIP phones are impacted in this policy makes certain that the FTC and the GSO City Council (if they ever wake up) get involved.

I always respect Sue's comments. I too would like a very bright light shone on TWC when it applies to renew its monopoly franchise here in Greensboro. There might be no way we could justify competing franchises here, but the fact is that where cable companies compete, the prices are lower and the quality is higher.

Leatherwing also makes good points. But when he/she claims that the heavy users are the ones who "extend the value of the Internet," it's in essence an argument that the rest of us should subsidize the heavy users. When stripped to its essence like that, I wonder if most users would agree. Maybe they would. As I noted, Americans like flat rates.

Andrew,
I'm not saying anyone should subsidize anyone else. I am saying that TW is being disingenuous when they claim that their new pricing structure is to make things fair. But one of the effects will be a negative incentive for those that try things early, and inform the majority that comes behind them.

We all bought TW for unlimited usage - use all you want for a flat fee. Some only want a few hours a week, some want many hours a week. TW is changing the rules in the middle of the game, and moving us back to a 1990's model. I think it will have a negative affect on innovation in a time when we desperately need innovation to get us out of our economic slump.

Help me out here. It has not been all that long ago that we were paying up to $.50 per minute for long distance calls. Now there plans with unlimited LD calls for 35-45 bucks a month. I don't think any of these providers are in financial trouble (any more than any industry).

Once the inrastructure is in place, what does it matter how much one downloads, it doesn't cost the provider any more (I think). Now, if the provider is required by the additional usage to upgrade their infrastructure surely they have a right, and responsibility to shareholders, to charge accordingly.

Along these same lines, now that I'm not out and about each day calling on customers, I'm all for paying for the miles I drive INSTEAD of a flat gas tax. See, I'm a resonable guy!

Hey, who ever said tonymo isn't a reasonable guy?

Oh, it was probably me.

But tonymo gets at the nub of this issue. He doesn't know if TWC's costs rise as people expand their downloading habits, and neither do I. And neither does Leatherwing. But this is something we need to know. Perhaps Sue knows. Anyway, Leatherwing thinks TWC has changed the rules in the middle of the game. Maybe it has, but so do lots of companies, and in any case the last I heard, that's every company's right in a free-market economy. Whether this is sheer greed or a justifiable move depends on whether costs are a factor.

For years now we've been accustomed to think that there are effectively no capacity implications to our use of the Internet. Well, maybe there are such implications. I'm not teched up enough to know, but others do. And if it's the case that sound management of this resource means discouraging inefficient overuse, the only effective way of doing that is via per-unit pricing.

Please note that I don't have the answer here; I'm just trying to frame the question.

Leatherwing, I don’t see how you can claim that you’re not promoting subsidies. Per-unit pricing is fundamentally fair. It’s not always optimal for the company because it might be cheaper and simpler to charge a monthly rate. It’s not always desirable to consumers, who appear to like monthly rates. But it’s always fair.

And therefore your claim that per-unit pricing creates a negative incentive for certain key users can only imply your support for subsidies. Leaving alone the question of why it’s a negative incentive for someone to pay his own way, why would you decry this allegedly negative incentive unless you think it should be eliminated? Well, the only way to eliminate it is for other users to subsidize the favored key users.

Don’t get me wrong; we purposefully subsidize others all the time. In many private schools, for example, tuition rates subsidize the scholarships of needy students. And of course the whole point of taxpayer support of the public schools is to subsidize the education of all students, including poor ones. These are subsidies that most people support, and maybe the key users of bandwidth whose interests you seek to protect need to be similarly subsidized. Maybe doing so would be for the good of everyone who uses the Internet. I can be persuaded. But I don’t buy for a second that your argument doesn’t imply that the rest of us should subsidize those folks.

Playing with Andrew's framing, "And if it's the case that sound management of this resource means discouraging inefficient overuse, the only effective way of doing that is via per-unit pricing."

"This resource" is about capacity limits to our use of the Internet; in my language, it's about how many people are trying to download something and how fast can I get that download to them and get them OFF my (TW's) routers. It's actually in TW's interest to get users off their routers as fast as possible and that speaks to giving people bigger pipes and letting them download faster. They do that; they charge for that. I pay for that. But just so you know, those routers are enormously expensive and approach $50K for simply regular ones. TW does have costs.

For residential users, a tiered plan is not a horrible thing and may just be the future. "Grandma and Grandpa," (and yes, I'm being just a little facetious) SHOULD be able to get a significant reduction for slower speed and less throughput (aka "the stuff you download" or the caps now introduced) in the new plan's pricing; they do not and that rankles me. A reasonable current and future-thinking "heavy user" plan is nowhere in the proposal.

In terms of "does it cost TW more if users d'load more," then the answer is yes and no. Bandwidth, like storage capacity (hard disk) is cheap and plentiful. They've been increasing capacity for a long time because that's what their business is all about. I'm not anti-profit and have said that I'm for some caps (I made a list of conditions and am not finished thinking them through) but the single biggest issue with the TW plan is its lack of reasonableness (added to its suddenness and huge policy shift without a single consumer input) that speaks to a business without competition or regulation. The costs to individuals and families is going to be enormous.

I fault our (lack of) City leadership for not knowing about this proposed change, for not addressing it as a City Council but pwning some poor City employee with the bag, for probably not understanding it because I believe they're technologically challenged, and for leaving the citizens of this burg to demand they do all of the above loudly and publicly. Austin TX didn't do that; their city leadership is thoroughly involved.

I still hope that the incorporating of TW VoIP phone charges into this plan brings it into the sphere of regulation.

Andrew,

Two family's go to Disney World. One gets there the moment the gate opens, rides every ride, gets off one ride and immediately gets in line for another ride. They fully take advantage of the park and the price they paid to get in the gate. They stay until the park closes and have a great time.

The other family arrives two hours after the gate opens. They leisurely stroll through the park, riding when they want, enjoying the scenery, and basking in the glow of Disney's Main Street. They get tired and leave three hours before the park closes. They're happy and had a great time.

Do you consider the second family to have subsidized the first? I don't. I believe each got what they paid for and used it as they saw fit.

I think Time Warner idsusing the term subsidize to create an Internet class war of light consumers versus heavy consumers, when in reality it is still just Time Warner versus all consumers. Econ 101 teaches that it is the goal of all companies to make a profit. Do you really think that Time Warner has an altruistic motive to relieve the burden of the light consumer? No, they want to increase their rates, but to do so in such a way as to make light consumers take their side and fight part of their battle for them. Their language is disingenuous.

And I still believe that the overall affect will be a negative for our local economy and will have a negative affect on innovation.

Kudos to Sue for a thoughtful post. Leatherwing, however, is missing the point.

By the way, Sue, your grandma/grandpa allusion reminded me of those commercials for Jitterbug cell phones, with big buttons and pared-down features. For some folks, that's all they want, and all they want to pay for.

I haven't responded to Leatherwing's claim that this will hurt the local economy because I thought it was a bit silly. But he/she keeps making that point, so...

My understanding is that Greensboro is a test market for this pricing model. Even if this were a bad idea (and the jury's still out on that, in my opinion), that hardly means that we'll be saddled with a competitive disadvantage relative to other areas. If this model "works" here, by whatever criterion TWC uses, it'll apply it to other areas, in which case we'll all be burdened equally by it. If the model doesn't work here, then TWC will go back to the old model, in which case we'll all be equally unburdened of it. Either way, except in the short run, this won't make the greater Greensboro economy less attractive.

Besides, most businesses understand what "test market" means.

See what Roch says. Clearly, my understanding of the regulatory environment is a bit out of date.

Andrew Brod said, "But it's always fair."

Be careful when you use a word like always (all, never, etc.). I'd think a per-unit pricing model would come closer to being "fundamentally fair" if TW had some competition in this region. As they don't, it looks like TW is using the per-unit pricing model for the appearance of being fair. Basically, I think this is the point Leatherwing is trying to make. Besides that, I think you two really agree on the ECON 101 points. You want to know what you're getting for your money. If you don't like the exchange rate, you go somewhere else. Well, fundamentally.

What chaps is the way TW is presenting this. Sue highlights some of the issues and it's evident that this "magnanimous" decision by TW is not about fairness.

"And if it's the case that sound management of this resource means discouraging inefficient overuse, the only effective way of doing that is via per-unit pricing."

This statement makes me really uncomfortable. It suggests per-unit pricing is a way of policing types of usage. I really, really don't think that's what you mean. Who's determining what efficient use of the internet is? Per TW, the people most affected by per-unit pricing are the ones using the internet for entertainment (video, gaming). Casual e-mail usage is not entertainment? The chain letters, LOLcats, and e-mail hoaxes I receive regularly from all my "grandmother and grandfather" users are efficient and not entertainment? Or is e-mail "always" efficient use? I mean, they're the ones we're trying to save here, right? The so-called "efficient" users. No, I don't think that's what you meant.

Actually, Anonymous, I meant precisely what I said. Per-unit pricing is always fair and it's the only effective way to induce economizing behavior.

But let's set aside those two points for a moment, because I very much agree with something else you said, namely that what's needed is competition for TWC. One doesn't have to look hard to find cities in which cable service is cheaper and of higher quality than we have here. What's different there? Multiple cable companies competing with each other. So competition has great potential to improve things for us, and it's ironic that the cable deregulation act of 1996 set us back somewhat in realizing that potential. I'm glad to see that the city council agrees with this basic point and is looking into ways to attract competitors. For various reasons too boring to go into here, I fear their efforts won't work. But I hope they do.

Dr. Brod and Sue,

I understand you points about those who use lower amounts of data for the month paying a lower fee. I would hope that those same people are subscribing to TWC's lower cost plan all ready.

I'm sure both of you have read TWC's COO's statements about the cap. If not you should check it out. He offers an upgrade for speeds which in my mind would encourage people to download and upload more. Which would in turn increase their bill.

Dr. Brod did you get a chance to watch the City Council meeting last night? Did you see some of the new internet based services the city is now offering? I know UNCG allows you to access your account's HDD from home and majority of the businesses classes require that you use Blackboard to some degree outside of class. Blackboard, for those that don't know, is an internet tool that teachers can use like a mini classroom. You can have online discussions, download materials, take online practice tests and turn in work though it. My wife is a school teacher and now they do all of their grading and attendance online through NCWise.

How will the city's internet based services work when we can't access them because of the cap? How will UNCG students going through the adult program participate in the class outside of home without having to drive all the way back to UNCG, find parking just to spend time on Blackboard? Will I get to see my wife at the end of the day or will she be forced to stay longer at school just so she can enter her grades in through their system? The lowly amount of the caps makes no sense.

I work in the IT field so when I come home the last thing I want to do is look at a computer. Sometimes I do work from home after hours if needed. Who doesn't now-a-days? Most of what we use the internet is for; Wife's lesson planning, schoolwork and grades. We watch a few old series and movies from Netflix. We email our family and friends who live out of state. We use it to play online games. This month we have used 11.3Gb. I would consider us average users for a younger generation.

One last thing, Dr. Brod. Do you consider the internet a product or a service? I've always considered it a service so I'm having a hard time understanding why the price per unit tag is used for it.