Time Warner Cable Experimenting With Overage Charges For Top Users

from the bait-and-switch dept

Broadband Reports notes that internal memos from Time Warner Cable suggest the company is experimenting with overage fees for their highest bandwidth users in Beaumont, Texas. If those overage charges work, the idea, of course, would be to then roll them out nationwide. On the whole, overage charges are a lot more palatable than unpublished traffic shaping rules or "fuzzy caps" where the top users are cut off without any explanation of what line they crossed. The key, of course, is that with both of those latter "solutions," the subscriber is told they're getting unlimited service, but the reality is different. Assuming that the overage charges and the rules surrounding them are clearly communicated, such charges are more reasonable. However, there are still questions about how consumers will react to such a change, especially after being sold on an "unlimited" service. The bigger issue is that capping bandwidth usage is a way to slow down internet-based innovation. If there had been overage charges a few years back, services like YouTube might never have caught on, as people would be too worried about how much bandwidth it would suck up. If the cable companies can't provide enough bandwidth, that's clearly an issue -- but most reports suggest that claims of a bandwidth crunch are overblown. Update: Just saw Adam Thierer's amusing pre-emptive reply to me on the topic. I'm not as against the idea as he suggests, though I do think, in the long run, it's not a very good solution.

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  1. identicon
    Anonymous Coward, 17 Jan 2008 @ 3:04pm

    Metered Usage

    I use my internet connection and I think metered usage would be OK if it were priced fairly according to cost. In that case, each customer would be charged a base price based on capacity provided and then an additional charge for usage. Since most of the cost seems to be from creating capacity and little from usage, I don't think there would wind up being much difference in the end.

    The problem is, that's not the way market economics work (notice that I didn't call it a "free market" because it isn't). Things aren't priced on cost, they're priced based on what the market will bear. And with the lack of broadband competition that exists in the US, I'm sure the providers would just use metering to gouge consumers with few alternatives.

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