[governance] Cost of access - the meters ticking

[Yehuda Katz]

Time Warner Cable tries metering Internet use
By PETER SVENSSON
http://ap.google.com/article/ALeqM5jwm8wu3jZWZLcKfIlycqFqFegknwD9126HN8A 

NEW YORK (AP) — You're used to paying extra if you use up your cell phone
minutes, but will you be willing to pay extra if your home computer goes over
its Internet allowance?

Time Warner Cable Inc. customers — and, later, others — may have to, if the
company's test of metered Internet access is successful.

On Thursday, new Time Warner Cable Internet subscribers in Beaumont, Texas,
will have monthly allowances for the amount of data they upload and download.
Those who go over will be charged $1 per gigabyte, a Time Warner Cable
executive told the Associated Press.

Metered billing is an attempt to deal fairly with Internet usage, which is very
uneven among Time Warner Cable's subscribers, said Kevin Leddy, Time Warner
Cable's executive vice president of advanced technology.

Just 5 percent of the company's subscribers take up half of the capacity on
local cable lines, Leddy said. Other cable Internet service providers report a
similar distribution.

"We think it's the fairest way to finance the needed investment in the
infrastructure," Leddy said.

Metered usage is common overseas, and other U.S. cable providers are looking at
ways to rein in heavy users. Most have download caps, but some keep the caps
secret so as not to alarm the majority of users, who come nowhere close to the
limits. Time Warner Cable appears to be the first major ISP to charge for going
over the limit: Other companies warn, then suspend, those who go over.

Phone companies are less concerned about congestion and are unlikely to impose
metered usage on DSL customers, because their networks are structured
differently.

Time Warner Cable had said in January that it was planning to conduct the trial
in Beaumont, but did not give any details. On Monday, Leddy said its tiers will
range from $29.95 a month for relatively slow service at 768 kilobits per
second and a 5-gigabyte monthly cap to $54.90 per month for fast downloads at
15 megabits per second and a 40-gigabyte cap. Those prices cover the Internet
portion of subscription bundles that include video or phone services. Both
downloads and uploads will count toward the monthly cap.

A possible stumbling block for Time Warner Cable is that customers have had
little reason so far to pay attention to how much they download from the
Internet, or know much traffic makes up a gigabyte. That uncertainty could
scare off new subscribers.

Those who mainly do Web surfing or e-mail have little reason to pay attention
to the traffic caps: a gigabyte is about 3,000 Web pages, or 15,000 e-mails
without attachments. But those who download movies or TV shows will want to pay
attention. A standard-definition movie can take up 1.5 gigabytes, and a
high-definition movie can be 6 to 8 gigabytes.

Time Warner Cable subscribers will be able to check out their data consumption
on a "gas gauge" on the company's Web page.

The company won't apply the gigabyte surcharges for the first two months. It
has 90,000 customers in the trial area, but only new subscribers will be part
of the trial.

Billing by the hour was common for dial-up service in the U.S. until AOL
introduced an unlimited-usage plan in 1996. Flat-rate, unlimited-usage plans
have been credited with encouraging consumer Internet use by making billing
easy to understand.

"The metered Internet has been tried and tested and rejected by the consumers
overwhelmingly since the days of AOL," information-technology consultant George
Ou told the Federal Communications Commission at a hearing on ISP practices in
April.

Metered billing could also put a crimp in the plans of services like Apple
Inc.'s iTunes that use the Internet to deliver video. DVD-by-mail pioneer
Netflix Inc. just launched a TV set-top box that receives an unlimited stream
of Internet video for as little as $8.99 per month.

Comcast Corp., the country's largest cable company, has suggested that it may
cap usage at 250 gigabytes per month. Bend Cable Communications in Bend, Ore.,
used to have multitier bandwidth allowances, like the ones Time Warner Cable
will test, but it abandoned them in favor of an across-the-board 100-gigabyte
cap. Bend charges $1.50 per extra gigabyte consumed in a month. 

On the Net:
http://www.timewarnercable.com 
http://www.bendcable.com

-30-
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