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TW Cable Plays With Fire in Texas

June 3, 2008 11:59 AM

Time Warner Cable confirmed to the Washington Post today that it is conducting a test in Beaumont, Texas, to measure cable users’ uploads and downloads of Internet data, and to charge more to those subscribers who are heavy Internet users via cable modem.

TW Cable acknowledges that, like most multiple system operators, 5% of its subscriber base takes up half of the cable line capacity. The test will be watched widely, as most MSOs would love to do the very same thing.

On the surface, this sounds fair. Wireless telephone providers charge more if subscribers go over their monthly phone minutes. We’ve all been hit there.

But TW Cable is playing with fire here, because its telco competitors, which also provide high-speed Internet service through DSL, do not have those technology concerns and have no plans to charge more to broadband hogs.

This new log on the campfire could heat up competitive wars between cable and telco providers, but cable doesn’t have much choice, given its technical limitations.

I predict TW Cable’s test in Texas will be a litmus test and one that could lead to widespread changes for cable modem users, as well as subsequent brushfires in the competitive wars.

Agree?


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Comments (4)

Kathy:

I agree that they are playing with fire... if they find that they can charge heavy subscribers for usage, this could be the beginning of a rule change. But I'm thinking it will bring about unintended consequences for the MSOs. And it will certainly give the telcos a leg-up in the marketing war.

Marianne :

Hi Kathy,
Since I posted, thought a lot about the repercussions. If you're a heavy TWC user downloading video, you are going to get burned big time. Might cost you a lot to download a video, God knows how much.

That's a concern the cable guys should be thinking about. I have DSL, so I don't care. My husband has a cable modem, he might if I remember to tell him what's afoot.

Thanks for weighing in,
Marianne

Jeff Mulligan:

Marianne --

How quickly we forget that the original online services back in the 300- and 1200-baud days charged users by the minute online. That was in dial-up days. But now that we're always online, it doesn't seem an outrage to charge for uploaded bits or some other volume metric that captures more revenue in return for the greater value extremely heavy users get from their usage. How else to offset the greater capacity investment such users require a broadband provider to make? Competitively, cable could be shooting itself in the foot, as you note. So let's hear it for competition, the benefits of which will help spur the search for new solutions to capacity problems.

Jeff

Marianne :

Hi Jeff,
Thanks for the trip back to the horrible dial up days. But here's the problem: How will cable compete with the phone companies, that probably have the better technology, for now at least?

I have DSL. My husband has a cable modem. Don't asky me why, but we do. Long story.

However, neither of us really downloads hog video shows or movies, that would hike the price up for him, not me.

BTW, TWC is not the only MSO testing this stuff. Some MSOs will just cut you off if you are a broadband hog. Think about this, some businesses are actually hogging the pipe with their high demands. They should pay.

Thanks for the post,
M

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