Telecom Timeout

Apr 17 2009   3:00PM GMT

Time Warner Cable turnaround: No caps for you

WPeterson William Peterson Profile: WPeterson

Time Warner Cable is canceling its trial plans for what the company termed “consumption based billing,” citing consumer confusion, as notes. I think a likelier culprit is the threat of legislation from the likes of Senator Chuck Schumer and Congressman Eric Massa, as well as a heap of bad publicity Time Warner Cable got as a result.

Is it really Time Warner Cable’s fault?

“The issue here is that 90% of the people writing about this topic are writing stupid, self-serving, cowardly bull,” Tom Nolle, president of CIMI Corp. and SearchTelecom blogger, told me when I first began interviewing him on the subject. In Tom’s eyes, and the eyes of much of the industry, the current model is simply not going to work, and it’s not fair to either the majority of customers or the carriers that some “freeloaders” can drain as much bandwidth as they want, while paying the same amount as the proverbial grandmother who checks her e-mail twice a week for pics of her grandkids.

Tom may be right, but he also argued that Net Neutrality was a “hopeless dream,” and if it is, it’s still a dream very much alive as carriers have backed away from direct packet shaping towards CDNs and other, less obviously non-neutral strategies, if they’re doing anything at all.

Tom also predicted what would happen if such tiered-pricing strategies fell apart, like it appears they have: An Internet access bubble similar to the real estate and financial bubbles the U.S. is currently going through. I have my doubts, even though Tom says his numbers bear him out.

The one piece I really don’t understand in all this is how the companies are going about it so wrong-headedly. There is little wrong with testing new revenue models, but why, in test markets, are all these tests bungled so badly? Comcast shot itself in the foot time and again by lying about the extent of its traffic shaping, while Time Warner Cable priced their tiers so far apart that you were either getting marginal service at a low cost or paying through the teeth. Haven’t they yet come to a conclusion that mostl customers are willing to pay roughly $40 a month for Internet, and that doubling that overnight will likely cause a backlash?

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