Internet Users Roar. Cable Giant Blinks.

Time Warner Cable on Thursday afternoon shelved its plan to impose excessive Internet fees against those who use the Web for more than email and basic surfing.

The cable giant backed down under intense public pressure that bubbled up from the grassroots and culminated in calls by leading politicians to end the price gouging.

Time Warner Cable had been testing new Internet use penalties on people in Beaumont, Texas, and planned later this year to launch trials in Rochester, N.Y.; Austin and San Antonio, Texas; and Greensboro, N.C. If successful, Time Warner Cable execs planned to impose this cost structure upon the company's 8.4 million broadband subscribers in 32 states.

Smothering Internet Video

The scheme would have forced consumers to pay up to $150 a month for full access to the Internet -- an inflated pay-per-byte rate that the company hoped would dampen popular enthusiasm for online video watching, and stem the migration of viewers from cable television to online video sites like Hulu.com.

As justification, Time Warner Cable execs trotted out a tired argument about looming Internet brownouts that gave the impression that broadband was an evaporating commodity to be rationed at increasing costs. (A notion that holds about as much water as Exxon's efforts to disprove global warming).

Other cable Internet providers have been paying close attention to Time Warner's market tests with a mind to impose similar pricing penalties on their subscribers and effectively smother Internet video in the cradle.

Companies like Comcast, AT&T and Cox Communications were eager to see Time Warner's metering trials to go well. They didn't.

We're Not Guinea Pigs

The company buckled under a withering barrage of negative press and consumer complaints.

Free Press activists sent more than 16,000 letters urging Congress to investigate Time Warner Cable. One grassroots group, www.StoptheCap.com, served as a clearing house for outraged customers.

Rep. Eric Massa of New York last week promised legislation to curb such ill-considered metering. And on Thursday, New York Sen. Charles Schumer came to Rochester, one of Time Warner's test markets, in support of local opposition to the plan.

Schumer told Time Warner Cable that he didn't want his constituents to be used as their Internet guinea pigs. By the end of his visit, the chastened cable execs announced their intention to scrap the trials.

Public outrage should serve as a lesson to other Internet service providers looking to pave a similar path. Consumers are not going to stand by idly as companies try to squeeze our use of Internet video and overcharge for access.

There's little doubt cable providers will be back soon with some new scheme. But the answer is not to concoct scarcity, penalize innovation and ration access for profit. The answer is to build capacity to meet exploding user demand.

Comments

[Citizen54]

It's a great moment for consumers.

But as the writer points out, they who control delivery will be back with some other scheme. Resist!

(Kudos and thanks to Timothy Karr and his group for their good work and vigilance.)

[weeshee]

As an employee of a small ISP that competes with TW, Comcast, and ATT for local business I can't help but chuckle at their efforts. Let them meter, and people will start switching to ISPs that do not meter... :)

For some reason they tend to forget... they do not OWN the spectrum, they just rent space on it.

[Tyler-Durden]

a MOST intelligent comment on this topic. thank you!

what we are observing is the effects of not enforcing anti-monopoly laws. companies get so big they can just manipulate the public and the market. just like these banks. it's crap, because the good part of capitalism is being overriden by corporatism, which is that little companies that provide better service will take over. right now, the credit unions and other small banks would have made a lot of business if everyone moved their accounts from the BoAs and Citi's. Same thing with this. Your ISP would have blown right up if TW tried this greedy move.

[oustfan]

Well, why should those of us who only use the internet for email and basic surfing have to pay the same amount as the guys hogging the neighborhood's bandwidth?

[totalliberal]

You know that your company has cable-light options mister cable company flack.

[weeshee]

The biggest "hogs" of bandwidth are people that use email as a file transfer tool (ie. large picture attachments, video attachments, forwards, SPAM-wards), and those that are not savvy enough to properly configure their equipment so that lechers cannot piggyback on their connection via a wide open wireless router.

And as to your question of why you have to pay the same... it is because the original billing structure is similar to their phone service (ATT). Whether you make 1 call or 100 calls per month, you pay basically the same price for standard telephone service.

[ramblingjohnny]

Cable provider are all the same. You get amazing advertised speed at three in the morning when nobody online but lousy average speed the rest of the day and they sure as hell don't advertise that part!

[weeshee]

This is due to the fact that cable internet is basically a "party line" connection. There is ONE box in the area, and ALL the customers for a particular provider are "plugged in" to that same box... hence, at 3am you get amazing speed because there are less people online at that time in your area... This is why although an over all slower speed, DSL is a more consistent service speed wise, as it is running over your "private" line, rather than being a shared signal.

[JScott]

Another vision about all the B of D in their morning meetings of corporations like this and one item on their agenda is 'how to nickel and dime our customers to make as much money as possible as quick as possible with out drawing the ire of congress and regulators­'.....c'mo­n YOU KNOW THEY DO THAT!

[JScott]

Seems I remember this same thing happening at the beginning of the internet, Compuserve was going to try and meter internet use I think......but that was back in the early 90's and is Compuserve still in business?