

Time WarnerCable’s hasty retreat from a plan to charge broadband customers by the byte will delay but likely won't kill efforts to replace all-you-can-eat plans with so-called metered billing arrangements.

In the end, the company's greedy rates, unpersuasive congestion arguments and relatively low threshold caps may have played a bigger role in derailing the plan than adamant consumer opposition to pay-as-you-go broadband at any price.

Still it’s unlikely that any large ISP will try to switch to cell phone-style billing again anytime soon.

"Time Warner Cable has raised the government and consumer flags too high for anyone else to do this anytime in the near future," Pali Research analyst Richard Greenfield said. "They created a PR nightmare for no reason."

That nightmare is actually a good thing for the net since broadband caps, even high ones, inherently discourage internet usage. In early April, Time Warner Cable proposed a four-city trial of 5 to 40-GB caps for $30 to $55 per month, with an extra charge of $1/GB. (A standard definition movie is about 2GB and Microsoft software updates often around half a GB).

That proposal came as government agencies began taking steps to make broadband expansion part of the national economic recovery plan.

The two weeks of outrage that followed have made it clear that U.S. consumers do not want to have to calorie-count their internet usage, especially in age where users are adopting such bandwidth-hungry video innovations as the Roku box, Hulu.com's online television shows and net-centered home media portals like Boxee.

But, for instance, there has not been too much of a backlash against Comcast’s 250-GB a month cap, which, by comparison, seems quite reasonable – even to consumer advocacy groups. So Time Warner Cable could give subscribers broadband meters for a few months – as they promised to in their surrender letter – and then offer simplified tiers with substantially higher caps.

Still, a move to cell phone-like billing doesn’t make much sense when cable companies have long distinguished themselves from DSL providers by offering higher speeds. It will also be a difficult model to offer in any market where providers go up against Verizon’s fiber optic network, FIOS.

Jim Blackley, a vice president at the nation’s fifth largest cable company Cablevision had it right when he dismissed tiered plans early this month, saying “we think [broadband] is a pretty powerful drug and we want people to consume more of it."

Large network operators protest that traffic on their networks keep going up at 30 percent a year, and they needs to stop bandwidth hogs, lest the internet experience "brown-outs" in the future.

Unfortunately, TWC was ill-prepared to explain exactly why the solution was to charge by the GB, given that its cost to send its customers’ data across the net's backbone fell in 2008, and most of its expenses aren’t closely tied to the amount of data any particular user downloads.

Like nearly all ISPs, TWC doesn't make public any usage information about its network.

That lack of data made it impossible for outside observers to judge whether the company was actually trying to fix an inherently broken billing model, experimenting with confusing billing options that cost subscribers extra, or trying to make it too expensive for users to watch video online, rather than through a cable television subscription.

Those suspicions got New York lawmakers Rep. Eric Massa and Senator Chuck Schumer to pressure TWC into abandoning its proposal.

That's a shame, according to a blog post from Kyle McSlarrow, the president of the National Cable & Telecommunications Association.

“[I]t is entirely appropriate for any actor in the Internet eco-system to test and examine new ideas and approaches that promote consumer choice and enhance the Internet experience for broadband users before making any permanent decisions,” McSlarrow wrote. “The whole point of tests, it seems to me, is to learn what works and what doesn’t, and the details matter a lot.”

Not everyone is convinced that large ISPs won't try again.

"If the motivation was to change user behavior and user psyches, they will come back to it," said Derek Turner, the research director at the consumer-advocacy group Free Press.

Even when the company bowed to pressure and added a low and top tier to its plans, the point seemed clear – discourage internet video.

TWC's lowest proposed tier ($15 a month for 1 GB with a $2/GB

overage fee) effectively told subscribers never to watch a movie online, Turner argues, and even its $75/month top tier plan is only unlimited once users have paid another $75 a month in overage fees.

Not surprisingly, Art Brodsky, a spokesman for Public Knowledge - an interest group that opposed TWC's plan, agrees.

"Something will come back," Brodsky said. "We have infinite faith in the cable industry."

Still, he hopes that ISPs start becoming transparent and find fair solutions to network congestion.

"Every company manages their network," Brodsky said. "Now the goal is have them do so in a non-discriminatory manner, in as open a manner as possible, and with as much control to the consumer as possible."

Transparency is the lesson in this episode for any ISP that wants to impose caps on usage or actively manage its network – say by speeding up video calls and slowing down file-sharing during peak hours – or.

For instance, a wireless internet service in rural Wyoming may have technically sound reasons why it needs to limit BitTorrent or sell its services in tiers, but these limitations need to be made clear and transparent to users.

Richard Bennett, an engineer and network consultant, bemoaned the death of Time Warner Cable’s experiment, writing that the current billing model is unsophisticated.

“No fair-minded and rational person can look at the costs of operating a network and conclude that flat-rate pricing for a single Quality of Service level is the best we can do,” Bennett wrote.

That might be true, but right now no fair-minded and rational person who doesn’t work for an ISP can actually see what the network’s problems are or what the solutions actually do.

And until that transparency happens, broadband subscribers should rightfully remain wary of any ‘solution’ ISPs offer to network congestion problems – unless that solution involves a fatter pipe or a fiber cable to your house.

Photo: Flickr/Hisa Fujimoto

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