A Meter On Your Internet Service?

Just as Internet video is starting to take off, one of the nation's largest broadband providers is experimenting with a pricing plan that could make it very expensive.

Last week Time Warner Cable started testing a $29.99 a month plan in Beaumont, Texas that gives users only 5 gigabytes of data to download or upload. Users who pay $54.90 a month have their service capped at 40 gigabytes.

Trouble is, a single standard definition movie takes up between one and two gigabytes and a high-definition movie could eat up as much as eight gigabytes. That means that users who pay about $30 a month could be restricted to two or three movies a month and those willing to pay about $55 would be limited to just a few high-definition movies such as the ones you can now download to Apple TV. Users who go over their limit will pay $1 for each additional gigabyte which could amount to between $1 and $8 for each movie you watch in addition to whatever you're paying to rent or buy the movie itself.

For my new weekly Tech Talk radio feature that "the real issue is that a small percentage of users (5 %) are using a disproportionate amount of bandwidth – upwards of 50%." But why punish the rest of us to get at that 5%? Dudley pointed out that "if they are a family that likes to view a lot of high definition video then they'll chose a different plan than those who are less likely to do that." He also said that "95% of our customers use less than 40 GB."

That may be true now, but if Apple, Netflix, YouTube and all the other companies that are experimenting with video have their way, it won't be for long. These companies have all released set top boxes that bring Internet TV sets. I recently reviewed the Netflix Playerwhich now features only standard definition films. But the company has plans to add high-definition full length movies which could take require as much as 4 to 8 gigabytes of bandwidth – possibly causing a customer to exceed the cap on Time Warner's $30 service before the credits of a single movie scroll by.

The implications of this possible pricing model are disturbing. If the Internet is to deliver the promise of allowing people to get their media and bypass gate keepers – like the very cable companies that are experimenting with restricting bandwidth – then what is needed is not new restrictions but higher bandwidth at a reasonable price. Is that too much ask? Not really. All you have to do is move to Japan or South Korea where you can get up to 100 mbps – many times the speed offered by U.S. broadband companies – for less than most Americans pay for DSL or cable.
  • Larry Magid

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