Ars Technica breaks down the cost per GB of TW caps

Ars Technica does a fairly good job of breaking down the TWC pricing costs per GB with the proposed caps. Unfortunately the article author and the editor of the trade publication DSL Prime are woefully ambivilant to the concept of capping altogether and seem to buy into the spiel that the Internet can't grow anymore without caps. Nevermind the fact that the lack of caps is what has spurred the incredible growth over the past 10 years.

I'm going to try one more stab at why usage caps don't address the perceived bandwidth problem. This time we'll compare Internet access to time shares.

Internet service providers have a fixed amount of bandwidth available to them to resell to customers. Let's say for the sake of this example they have 100Mbps connection to the Internet.

In a time share scenario, the ISP could divvy up that 100Mbps however they wanted but once they run out of bandwidth, they can't sell anymore. Perhaps at time share-style ISP would sell 10 customers 10Mbps connections and that's it.

Time Warner and all modern ISPs realize that's an inefficient use of the available bandwidth because not everyone uses their 10Mbps connection all the time leaving a lot of "empty" bandwidth. So instead, the ISPs sell 100 people 10Mbps expecting that not everyone will be online using their full bandwidth at the same time. When that happens however, everyone's connection slows to a crawl because they can each only get at most 1Mbps.

The usage caps do not change this scenario in terms of how much bandwidth is available or sold. Instead it creates a disincentive for you to use your full bandwidth because you have a limit on the amount of data you can download. If you use your full bandwidth frequently you'll exceed your limit and pay overage fees.

This is like the time share you've purchased (2 weeks in August in the Florida Keys) and one week into your stay the owner calls you up and tells you to be out by 5pm or he'll charge you an additional fee for every night you stay. Most people would find this behavior outrageous since you've already paid for then entire two weeks, but your usage of the 2 week access time is capped to only 1 week.

In this way, ISPs essentially scare people into not using their Internet connection as frequently so as to help avoid the network slow-downs that occur when everyone is using it.

Clearly this method of selling bandwidth doesn't guarantee any particular performance for your money and with the caps may actually punish you for using your full bandwidth.

Additionally in the case of Time Warner one of their talking points is the promise to bring even higher speeds than they have now. However, higher speeds just means you can reach your cap faster so that's not much for "helping people save money".