Wednesday, April 22, 2009

Cable Giants Continue Hoping No One Will Notice

Cable Giants Continue Hoping No One Will Notice Their Attempts to Destroy the Internet
By Tana Ganeva

Last week, a full-on customer revolt forced Time Warner to cease their metered billing program — a system in which Internet users sign up for differently priced broadband plans and pay extra if they exceed their bandwidth limits. The plan was an infuriating inconvenience (e.g. rip—off) premised on the ethical business concept that you can arbitrarily jack up prices on a product if a heavily-monopolized marketplace leaves customers with little in the way of consumer choice.

Seems like a sweet idea. Except that Time Warner customers, media reform groups and tech bloggers inundated both government Representatives and the company with complaints. Soon, members of Congress were winning easy points by vocally criticizing Time Warner. On April 15th, CEO Glenn Britt announced that the company was dropping metered billing.

Anyway, not having learned anything from Time Warner’s epic fail, AT & T continues to maintain metered billing in Reno, Nev., and in Beaumont, Texas., which signals the cable giant's hopes that the infuriating, universally despised program might just work for them. Except that AT&T risks becoming even more hateable than Time Warner.

As Stacey Higginbotham reports on Gigaom,
there is evidence that AT&T doesn’t even bother informing their customers of the usage caps until after they have signed up for service:

The smaller cap for lower speeds is disheartening, but what’s more disturbing is that the customer was able to sign up for broadband service without ever knowing they existed. The ISP makes no mention of caps in its online marketing materials or terms of service (screenshots below), and a sales representative said the carrier had no caps when the customer called in to ask. A week after she ordered her service, the customer said she received a letter from AT&T via express mail detailing the metered broadband limits.

I’ve reached out to AT&T to understand why it was pushing a smaller caps and to also figure out if this particular subscriber’s experience was common.
Update: [AT&T spokesman Seth] Bloom says visitors who get their information from can access terms of service information that notes the trial, but we were unable to find the info when visiting from
As Time Warner’s experience has shown, metered broadband isn’t something that the public is happy about. By not informing customers of the trial when they’re signing up for service, and by detailing one plan before the FCC then implementing another, AT&T is pulling a bait and switch with consumers and possibly regulators.

What’s especially galling about metered billing is that the cable giants, who are obviously looking to spike up revenue by charging extra for Internet use (and, in the case of Time Warner, decreasing online viewing of their video content — really, the sinister motives behind metered billing are endless), count on an uninformed populace to buy the following bullshit: that metered billing and pay caps are necessary due to the increase of video and audio content on the web. Beware -- next time you stream too much Lost, you might make the Internet explode.

But many experts point out that the cable giants are being disingenuous in their public assessments of the problem.
As Saul Hansell writes in the New York Times

Hard numbers are not that easy to come by, but I’ve found a few. I see no evidence that the pace of spending to expand network capacity has increased at all. Indeed there are a lot of areas where new technology is radically cutting the cost of Internet bandwidth.

For those that want to understand more about what drives these costs, here is some of the hard data I’ve found. (As always, Bits readers are a knowledgeable bunch, so if you are in the network business, please share your own experience in the comments.)

I’ve mainly been looking at the costs that will increase as the bandwidth used by customers goes up. So I haven’t looked at overhead, marketing, customer service and so on. All of the discussion of cost is complex because much of the infrastructure at these providers is shared between video, phone and Internet service.

Still, there seem to be two major buckets of expense to consider: the cost of local networks that connect to people’s homes and the cost of the bandwidth that link those networks to the Internet. The local costs are larger, but falling faster with new technology.