Given cable's long history of exorbitant rate increases and atrocious customer service (it's routinely ranked one of the very worst industries in the US), it's hard to blame people for being skeptical about cable's moves to start capping broadband access—especially when costs are dropping and revenues are rising. But the head of cable's Washington lobbying effort tells Ars that cable isn't out to price-gouge its way to massive profit margins. Instead, the industry seeks to provide Internet access in a way "that's best for the consumer."

And everyone who has already decided that it's "flat rate pricing or bust!" needs to pipe down, adopt the scientific method, and wait until all the data is in.

Running the experiments



Kyle McSlarrow heads up the National Cable & Telecommunications Association (NCTA), a post that often finds him glad-handing legislators, testifying at Congressional briefings, or signing off on documents for the FCC. He has been on the job since 2005, having come over to the private sector from the Department of Energy, where he served as a deputy secretary. McSlarrow has an impeccable Republican pedigree—he was the national chairman for Dan Quayle's 2000 presidential bid and has worked for both Bob Dole and Trent Lott—but he also spent enough time outside of government to do an Internet startup called Grassroots.com.

He's now putting the best face possible on the cable business, and he sat down with Ars during a recent trip to Chicago to talk metered broadband, the illusory death of cable TV, and cable's terrible customer satisfaction numbers. We'll bring you more from those conversations in future posts.

According to McSlarrow, there's no particular rush to pick one business model, and the industry has no "grand plan" hashed out by cigar-smoking executives in clubby back rooms.

In the wake of Time Warner Cable's failed attempt to expand its capped Internet offerings, though, Internet pricing models are now on everyone's collective mind. Is metered and/or capped Internet the future? Plenty of critics say that it's not, that it represents nothing more than a cash grab that will have huge negative effects on how Americans use the Internet.

McSlarrow doesn't defend any model; he's not even partial to metering, having happily lived under flat-rate plans himself for many years. He also won't defend particular business plans, like those advanced by Time Warner Cable. But what he will defend is cable's right to experiment.

"I've lived under a flat rate plan," he said, "but I don't assume... that's it's necessarily impossible to believe that you could have a different model in the future."

That means experimentation, and lots of it, done in the most transparent way, with full input from consumers. Without even doing the tests, McSlarrow says there's simply no way to know whether certain business models will work better than others. He uses a thought experiment to take on those who object, a priori, to all data caps.

"Well, OK," he says. "Always? At any cap? What about the fact that it's clear, and there's probably 100 years of economic literature on this, that in flat-rate pricing plans low-end users are essentially subsidizing high-end users? Is that necessarily fair? Is that fair in a world where those low-end users are actually 95 percent of the customers?"

ISP data shows that most users transfer only a few gigabytes of data a month. The argument is that these users might be better served by a cheap plan with a low cap, while heavier users pay more. It has a certain logic to it, but even McSlarrow admits that Internet pricing doesn't exist in some simple relationship with "amount of data transferred in a month" or "number of users." But the premise of such an arrangement is that the low-cap plans would be dirt-cheap, something that consumers clearly didn't think applied to the Time Warner Cable plans.

According to McSlarrow, there's no particular rush to pick one business model, and the industry has no "grand plan" hashed out by cigar-smoking executives in clubby back rooms. In his view, though, cable needs to do the experiments to make sure that the Internet survives the coming bandwidth apocalypse.

"As demand goes in a certain direction," he says, "someone's going to have to build a network" to deal with "not just instantaneous peak but, more importantly, average peak usage. The whole point is to do it in a way, and to serve your customers in a way, that they have a great experience. If you fail on the network side to do that, particularly with our shared network, that's a real problem."

This future, robust, consumer-friendly network will take plenty of cash to build, and McSlarrow says that observers simply can't look at current costs in order to criticize the experiments. But in our conversation, it's never quite clear why everything in the future is about to get so much more expensive, when all the current cost numbers are trending the other way even as traffic surges and DOCSIS 3.0 upgrades are cheap.

In any event, cable is certainly well-placed to deliver the Internet. A cable company with reasonably upgraded 750MHz plant can deliver about 5Gbps across all channels (nearly 40Mbps per channel). But how to charge for it? McSlarrow says that we need to trust the market's wisdom. (And yes, before you ask, he does argue that cable companies face real competition.)