Friday, April 3, 2009

A threat from Time Warner Cable that requires your attention and action

The Internet was invented here in the United States, but regrettably we don't have the best Internet access in the world. In fact, we are far from it. Many other countries have much higher speed access than we do. At home my Internet connection is faster than most, 20 megabits/second for downloading and I pay Time Warner Cable about $50US per month for Internet service. Contrast that with what users in Japan get for their money. In Japan you can get 20 megabits for far less than $50 and for about $100 per month, you can get 100 megabits/second. That's fives times faster for only about twice the price. Korea has even better Internet than Japan and is one of the most wired countries in the world in terms of broadband Internet access. Users in France can get up to 24 megabits/second Internet plus 60 channels of digital TV and free phone calls to anywhere in France and something like 70 other countries for 35 euros per month (or about $50US). And some of the providers even give you a wifi router at no extra charge. These are countries that have much smaller populations so they don't have anything like the economies of scale we have here in the US.

So our Internet in the US isn't great but it may be about to get a whole lot worse. Time Warner Cable, the 3rd largest Internet provider in the US, has been testing capping bandwidth in Beaumont, Texas and recently announced that they plan to put these restrictions in place here in Austin and San Antonio, and a few other cities as well. It is only a matter of time before these caps are rolled out to all Time Warner Cable customers around the country. What does a bandwidth cap mean? If you have their highest priced plan (like me), you would be capped at about 40 gigabytes of bandwidth per month. That sounds like a lot, but with streaming video it's really not all that much these days. That's about 4 hours of HD video per month. And that's for people like me with the highest priced Internet package. If you have a lower priced package, say $30US per month, the cap will be a paltry 5 gigabytes per month. And what happens if you exceed your cap? According to the Time Warner Cable representative I spoke with, you'll pay $1 for every gigabyte you use over the cap. Comcast, the second largest Internet provider in the US, already has a bandwidth cap in place but at least it's 250 gigabytes per month. You can read about it in the New York Times. I don't like the idea of a cap at all but 5 to 40 gigabytes is ridiculous.

So why is Time Warner Cable doing this? If their costs are going up due to an increase in bandwidth usage, a small increase in the rates would perhaps be justified. But that doesn't make sense. I believe the answer is that people are spending more and more time on the Internet and less and less time watching TV. Time Warner Cable,as well as Comcast, makes a lot of their money from TV. By capping bandwidth they are effectively blocking competition from on-line services like Hulu, YouTube and iTunes. They don't want you watching a movie or TV show on the Internet when you could be watching TV and increasing what they can charge for commercial time. If you're watching Hulu or downloading shows from iTunes, perhaps you'll cut back on your cable TV plan.

How can they do this? How can a company the size of Time Warner Cable be less competitive than much smaller companies in much smaller countries like Japan, France and Korea that provide better service for less money? They can do it because in many markets they have little or no competition. They are not announcing that this change will affect all of the cities they serve. I would be willing to bet my cable modem that they are only doing this where they are reasonably certain most customers are not going to switch to a competitor. In Austin, Time Warner Cable might say there is competition from AT&T and Grande Communications. The problem is that there are many places in Austin that are not serviced by these two companies. In places where there is no competition, Time Warner Cable effectively has a monopoly and they are abusing that power to block your access to their competitors. The time to act is now.

If you are a customer of Time Warner Cable in any city, please write to your state Attorney General and ask them to take action regarding Time Warner Cable's anti-competitive practices. If you don't know who your state Attorney General is, here's a list of them with contact information:

There is power in numbers. Call or email your state Attorney General and ask them to investigate Time Warner Cable's attempts to block your access to their competitors. If you're not sure exactly what to say, I'll make it easy for you. Here's what I wrote in my email to them. You can just copy this message:
Subject: Stop Time Warner Cable's anti-competitive practices

Dear ,

I'm writing to you because I have heard that Time Warner Cable is planning to put internet bandwidth caps on customers. Regardless of what they call it, this is effectively an attempt to block competition from sites such as Hulu, YouTube, iTunes and other on-line services by forcing users to limit their usage of these sites with arbitrary bandwidth caps. They are abusing what is effectively their monopoly status with regards to high-speed Internet access.

As a citizen of , a taxpayer and a voter, I urge you to do something about this.

You can also call or write to Time Warner Cable and complain about this. I wrote to my local Time Warner Cable office and told them that if these bandwidth caps are put in place, I will switch my cable TV and Internet service at the first opportunity.

Also, please forward a link to this blog post to anyone you know that might be a Time Warner Cable customer.

Make sure your voice is heard. You really can make a difference.


Anonymous said...

As much as I hate AT&T Uverse, I might have to change to it.

Stephane said...

I live in Paris (France) and now my DSL operator ( is turning my DSL 28MB down/2MB Up access into an optical fiber access (100Mb Down/50Mb Up) for the same price (30€/month), including free phone calls to up to 97 countries, and about 150 tv channels connected to up to 2 TVs.
Historically, our main infrastructure has been paid with public funds, then operators cannot do what they want. We have an independent commission that strictly regulates this activity; EU commission as well.

Anonymous said...

I read that Time Warner is coming out with a Studio Edition of their internet package that will include the bandwidth that you've been accustomed to getting, plus a bunch of other TW services bundled, but will cost 3 times as much. That should get you back in business.

Anonymous said...

TWC is a service provider. REAL sells unique software. IMHO it's a stretch to make a comparison like that.

Geoff Perlman said...

The difference is that Time Warner Cable is not adding any bundled services. And they are not changing their pricing in a way that lowers it for some customers. They are simply now saying that despite the fact that they charge a higher price because the service is "all you can eat", it's no longer "all you can eat".

Also bandwidth is a commodity. TWC is not doing something unique. And their claims that they should have done it this way to begin with don't make sense because there are other Internet providers that provide even more bandwidth for lower price.

If there was sufficient competition, they wouldn't even attempt this but in many places there is none.

Anonymous said...

Hummm.. Well I live in the UK. For my £17 a month I get an 8Mb download (the maximum available to BT/phone users). I also have 5Gb limit per month, but that's my choice. For anything faster I would have to switch to cable - and pay a great deal more.

cm said...

Since I believe the internet should either be based on paid access or metered, such as a utility, I've written my congressman.

kirkgray said...

I must admit that I find the outrage shown here to be a bit humorous, coming as it does on heals of effectively tripling the price of RealBasic Pro.

Yes, I know Studio adds all these wonderful things (that were available before, just separately -- and that I didn't want or buy then, and don't want now).

But the bundled stuff in Studio doesn't change the fact that to get all the Pro features available today for $500, after April 14 you'll have to buy Studio for $1500.

The irony and hypocrisy are quite funny. Thanks for the laugh.

Anonymous said...

I'm stuck with two way satellite service for $80 a month which gives me almost DSL speed sometimes. And there is a daily cap of 450 MB downloads or it goes down to pony express speeds with an old pony.

AT&T DSL is not available. AT&T cell service is only good if I stand in my driveway on a cloudy day. Their land line service works as long as it doesn't rain. There is no Cable TV or Internet service. HD antenna service is non-existent as we live in a dead zone with NO signal at all, so I have to use Direcway satellite and pay for tons of home shopping channels I don't want to get 10 channels I do watch. Don't know whose world they are delivering, but it isn't mine.

Bottom line is I pay about $150 a month for communications services and still have to drive 40 miles to download those big Security Updates!

Real competition is the only answer. The bigger the cable boys get the sooner they'll be "too big to let fail" and wind up with your tax money too, just like the bankers, insurance moguls, and auto industry. Write Congress.

Anonymous said...

Electricity, water and gas are utility services that are metered. If you use more, you pay more. There's no reason to think that Internet access should be any different. Having tiered levels of monthly bandwidth usage makes perfect sense.

There is no free lunch. Unlimited use of a fixed size resource is not a sustainable model. Unsustainable illusions like that are what cause bubbles in the economy to burst and the economy to nose dive.

You should expect to pay for what you use.

Geoff Perlman said...

Then why doesn't TWC charge me based on how much time i spend watching TV? In both cases, data is being transmitted back and forth.

And how it is that other, smaller countries seem to be able to provide far more service, all of which is unlimited (TV, phone calls, Internet) at a far lower cost?

I don't think the comparison of Internet to the utilities you mentioned is a fair one. In all three cases, there is direct cost associated with each unit produced. Internet access is straight technology that has a low, overall fixed cost that should drop as demand increases (unlike utilities). That's because Internet access benefits from economics of scale in ways that water, gas and electricity never will.

Anonymous said...

Maybe if you prepay for the next two years, TWC will give you the same bandwidth that you've been accustomed to.

Joe Huber said...

Hi Geoff

I don't know if you've been following the storm on the NUG...but the reason that TWC TV service isn't usage based is because it it broadcast to all their subscribers at the same time. All of that data (for all of the channels) is always reaching your TV. That may sound wasteful, but in fact it is the most efficient way to get that much data to huge number of people. Shared media, send it ONCE.

Your Internet access needs to be sent to you in addition to all of the broadcast channels. And of course your internet traffic is for your benefit alone. Cable TV networks are designed as huge broadcast domains so that everybody can watch the same channels at the same time. That's their most cost effective mode. The ability to send unique traffic to individual users was bolted on later and is a much more expensive proposition. Usage based billing for Internet services makes perfect economic sense.

Yes, other countries are ahead of us on Broadband deployments. For two reasons that I can think of; huge Government subsidies and much higher population densities. The Korean government saw DSL and Broadband as a big economic stimulus, educational growth and competitive differentiation opportunity and had strong funding programs to incent fast and ubiquitous rollout. Foreign governments are much more intimately involved in stimulating and controlling their industries than in the US.

Anonymous said...

I'm Belgian and Belgium is even worse! please have a look at

Anonymous said...

The argument that internet access should be a metered commodity like Water and Electricity is laughable.

You have already paid for the privilege of using it. You are paying for the electricity within your household for using it.

I use cable, yet I am not given a limit as to how much TV I can watch?!?!?!

Funny how so many eastern companies find it easy to provide superior internet at a fraction of the cost... Clearly share holders and their bonuses are the real key here! The fat get fatter, the rich get richer and the customer gets screwed.

Keith Stone said...

I'm not necessary opposed to metered usage as the means that it's being implemented. Essentially what they're trying to do is make any non-TWC VOD services cost-prohibitive and forcing work from home people to business class for 5-6 times the cost. It's a naked money grab.

Anonymous said...

Some countries also have better connectivity because they've only recently established broadband capacity. American's were first, but now we have older technology and it's time to upgrade. And, of course, that's not going to happen for awhile unless there's profit in doing so.

I'm ok paying for Internet access just as long as I get what I'm paying for. Throttling and traffic shaping are ridiculous.

Geoff Perlman said...

Time Warner Cable has shelved plans to implement bandwith caps:

Joshua Smith said...
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