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American cable firm postpones pay-as-you-go broadband trials because of public outcry
16 Apr 2009 | 17.58 Europe/London
We all thought we'd left pay-as-you-go Internet behind back when we said goodbye to dial-up connections. But over in the States, if Time Warner Cable (TWC) has its way, what it's now calling "consumption-based billing" could be making a comeback. But there's a problem: people just don't want it.
TWC is having difficulty finding volunteers in the U.S. to try out its new billing scheme, which will charge users by the gigabyte. It wants to launch it in cities in New York, South Carolina and Texas. Alexander Dudley, a TWC spokesman, claims "there's a vocal minority of heavy bandwidth users for whom this plan is unappealing, but we're not hearing from the overwhelming majority of our customers who will be unaffected by this." But it's not just a vocal minority of hardcore Internet users who are up in arms - in Rochester, New York, for instance, it's the mainstream press that's complaining.
You may be wondering why TWC wants to bring back pay-as-you-go Internet in the first place. Well,this is the reason. Advertising income is faltering and experts say online video content constitutes a threat to Pay TV, which is a major money-spinner for cable companies. Changing Internet service subscription fees to a pay-as-you-go system could be a simple way to boost revenue.
"Internet usage is skyrocketing, and consumers have grown accustomed to an all-you-can-eat broadband subscription, so the cable companies are looking for a way to put this genie back in the bottle," Michael Greeson, president market research and consulting firm The Diffusion Group, told the Wall Street Journal. "Cable operators know it's only a matter of time before broadband access reaches the TV set, and that could be a disaster for the industry under its current pricing model."
But perhaps we shouldn't be getting worried just yet. A leaked memo from TWC suggests consumptive billing is the company's attempt to curtail the five per cent of its userbase that's using 50 per cent of its network capacity. U.K. internet service providers to date have been happy to slow down the hardcore users' connections. And the British broadband market is very different to that of the United States: in places like Rochester TWC is seen as having a "functioning monopoly" over the broadband connections because its only rival's service is so slow - most of us over here have more choice.
TWC separated from Time Warner last May because it wasn't making enough cash and Time Warner already had a division that specialised in that particular role: AOL. While Time Warner received over $9 billion as part of the deal, TWC has continued to struggle to make money. It says it will now delay its consumption-based Internet trials in Texas until October.
[ Wall Street Journal | The Register | Zero Paid ]
TWC is having difficulty finding volunteers in the U.S. to try out its new billing scheme, which will charge users by the gigabyte. It wants to launch it in cities in New York, South Carolina and Texas. Alexander Dudley, a TWC spokesman, claims "there's a vocal minority of heavy bandwidth users for whom this plan is unappealing, but we're not hearing from the overwhelming majority of our customers who will be unaffected by this." But it's not just a vocal minority of hardcore Internet users who are up in arms - in Rochester, New York, for instance, it's the mainstream press that's complaining.
You may be wondering why TWC wants to bring back pay-as-you-go Internet in the first place. Well,this is the reason. Advertising income is faltering and experts say online video content constitutes a threat to Pay TV, which is a major money-spinner for cable companies. Changing Internet service subscription fees to a pay-as-you-go system could be a simple way to boost revenue.
"Internet usage is skyrocketing, and consumers have grown accustomed to an all-you-can-eat broadband subscription, so the cable companies are looking for a way to put this genie back in the bottle," Michael Greeson, president market research and consulting firm The Diffusion Group, told the Wall Street Journal. "Cable operators know it's only a matter of time before broadband access reaches the TV set, and that could be a disaster for the industry under its current pricing model."
But perhaps we shouldn't be getting worried just yet. A leaked memo from TWC suggests consumptive billing is the company's attempt to curtail the five per cent of its userbase that's using 50 per cent of its network capacity. U.K. internet service providers to date have been happy to slow down the hardcore users' connections. And the British broadband market is very different to that of the United States: in places like Rochester TWC is seen as having a "functioning monopoly" over the broadband connections because its only rival's service is so slow - most of us over here have more choice.
TWC separated from Time Warner last May because it wasn't making enough cash and Time Warner already had a division that specialised in that particular role: AOL. While Time Warner received over $9 billion as part of the deal, TWC has continued to struggle to make money. It says it will now delay its consumption-based Internet trials in Texas until October.
[ Wall Street Journal | The Register | Zero Paid ]