Mini Exposé - The American Consumer Institute: Center for Citizen Research

You may not have heard of this organization before, but it's called the American Consumer Institute: Center for Citizen Research and it came into existence around June 2005.

The organization is the creation of Mr. Stephen B. Pociask a frequent consultant for the telecommunications industry who spoke out against Net Neutrality in August 2006 and whose team of "experts" is now speaking out in favor of broadband usage caps as a benefit to consumers.

Here is the full text of the ACI About page for your reference:

The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute founded on the belief that consumers’ interests are not satisfactorily represented the wide variety of advocacy and consumer organizations that often represent small subsets of consumers and special interests; ignore distant, collateral and unintended consequences of importance to consumers; and too often mirror advocates’ political views rather than an empirical analysis of consumers’ economic welfare.

The Institute focuses on economic policy issues that affect society as a whole, and we seek to be a better and more reasoned voice for consumers by using economic tools and principles to show that markets work best for the benefit for consumers. We are committed to use of generally accepted quantitative, cost-benefit analyses of policy alternatives and their transparent application to assure that our methods can fully and fairly evaluated on their own terms by those who may disagree with our conclusions. We use economic analysis to empirically measure “consumer welfare,” rather than relying on conjecture, opinion or political leaning to judge what benefits or harms consumers.

Mr. Pociask is a rather inconsistent fellow it seems. Below is a timeline of his activities and those of his organization(s). See if you can spot the inconsistencies of his stance on the Internet and telecommunications in general:

• October 2005 - Pociask and the ACI report their findings that older Americans are overpaying for their cable TV bills because of lack of competition.
  
• August 2006 - Pociask and the ACI report their findings to Congress that Net Neutrality is only being pushed by the "financially powerful [who] earn supracompetitive returns and have significant market power" to the detriment of the consumer and the poor telcos.
  
• October 2008 - Pociask advocates his 'study' findings that telecommuting and other Internet-based activities (such as email and downloading movies) is a benefit to the economy and the environment:
  
  


• April 2009 - Larry F. Darby, an 'expert' at ACI, states that usage-based caps are beneficial to the consumer.
  

Despite his varied history and the eclectic suggestions of the ACI several sites suggest that the ACI has become a source of astroturfing for the telecommunications industry.

Astroturfing refers to political, commercial, or public relations campaigns that feign grassroots behaviors to promote a specific view. However, since it is deliberate and is essentially "faking" being grassroots, it got the name "astroturfing" after the artificial grass, AstroTurf.

When ACI came onto the scene against Net Neutrality (NN) all the cable operators and NN opponents jumped on board the ACI bandwagon and used it successfully to derail any NN legislation.

Once again the ACI is popping onto the scene conveninently just when Time Warner backs away from consumer uprising over its usage cap plan and waving a "study" that finds usage caps to be beneficial to consumers.

The statement from the ACI was made by Larry F. Darby, one of their residents "experts" - an economist who once was a vice president in Lehman Brothers - that shows a woefully inadequate understanding of what bandwidth and capacity mean in relation to usage. Even in his statement he fails to make a conclusive connection between capping usage and solving this alleged bandwidth problem.

As we've discussed before, usage caps do not fix a capacity problem.

It's left as an exercise to the reader to decide whether or not the ACI is to be believed as a credible group focused on the best interests of the consumer.

Open Letter to Larry F. Darby of the American Consumer Institute

This letter is in reply to an Open Letter to Senator John F. Kerry by Larry F. Darby of the Amercian Consumer Institute

---

Mr. Darby,

I appreciate your concerns and agree with several of your points in your letter, however I am concerned that you may be taking Time Warner Cable's word from their press releases as solid fact including their own confusion about bandwidth capacity versus Internet data consumption.

Please allow me to offer a simple comparison to help illustrate the difference between capacity and usage.

Webster's dictionary gives one definition of capacity as:

"the maximum amount or number that can be contained or accommodated <a jug with a gallon capacity> <the auditorium was filled to capacity>."[1]

Using this definition as it relates to the Internet and data, we say that the capacity of a network connection is equal to it's bandwidth, for example 10 megabits per second (Mbps). Likewise Webster defines bandwidth as:

"the capacity for data transfer of an electronic communications system."[2]

Please note, I take exception to their example as it is contrary to the definition.

Other things we are familiar with that have capacities are rooms (maximum capacity), highways (maximum number of cars at a time), and pipes (maximum amount of fluid that may pass per second). All of these capacities refer to simultaneous usage, not total usage.

The capacity of a room is not diminished when one person enters and subsequently leaves. It is only reached as they remain in the room. Likewise a highway's capacity for traffic is not reduced as cars enter AND leave, rather it's reached only when cars enter and remain.

So-called bandwidth caps as proposed by Time Warner Cable, AT&T, Comcast and others are actually not related to bandwidth at all. They do not limit the speed of your network connection - the maximum simultaneous data transfer - they limit the total amount of data.

That limit is akin to specifying a room has a maximum capacity of 1,000 people and after 1,000 people have entered (and left) the room no more may do so. Or in the case of Time Warner, any additional people to enter the room will pay an additional fee.

This extra fee does not do anything to alleviate the problem of having too many people in the room at once. It only discourages people from going into the room in the first place for fear of being the one that goes over the 1,000th person limit.

I hope this illustrates for you how "bandwidth" caps as proposed are not a solution to a capacity problem.

I agree that perhaps an emergency allotment of bandwidth should be set aside for highly time-sensitive information and services such as medical records or emergency services such as 911, but I strongly disagree with the notion that the access you pay for is somehow related to the amount of data you receive or send with that access. Additionally I strongly disagree that one subset of users are subsidizing another subset's usage.

I request that you publish the raw data used in the studies to which you refer so they may be reviewed publicly as a scientific paper would be reviewed by others in the field before it is accepted as credible and realistic.

Thank you,
Brion Swanson

[1] http://www.merriam-webster.com/dictionary/capacity%5B1%5D
[2] http://www.merriam-webster.com/dictionary/bandwidth

Here we go again

It's all over right? Time Warner gave in and the people's voice was heard!

Well, almost.

Time Warner has simply retreated a bit in order to regroup and attack again with their "consumption based billing" or CBB as we hip folks in the bloggerverse like to call it. CBB is by no means defeated. Indeed, what Time Warner has taken from this whole debacle is that people were simply not "educated" properly on the benefits of CBB and that's why there was so much outrage.

I'm sure it couldn't be because people just do like their freedoms to be limited in the good ol' U. S. of A. .... naaaaah.

If you can't tell, the sarcasm is dripping from my words off the screen and onto your desk. Consumption-based billing is not a solution to a capacity problem. It has many names though. In Canada, they're calling it UBB or Usage-based billing. Same rose, different name but not smelling sweet at all.

Since this seems like an incredibly hard concept to understand to folks like Time Warner and more recently Larry F. Darby, allow me to explain capacity as most people understand it.

The capacity of something is its ability to contain or accommodate a specific amount or number of something. Rooms, for example, have a capacity. Highways have a capacity. Pipes have a capacity. And finally, spoons have a capacity. Capacity deals with how much of something you can accommodate at the same time.

The amount of something is a measure of how much of that thing you have - either in a single moment or over time. As you can see in the explanation above, amount is a factor in capacity but does not define or modify it in any way.

If I have a teaspoon to use for eating soup and I have an unlimited amount of soup set before me, my capacity to eat any amount of soup is rate-limited by the size of the spoon. Having a larger spoon allows me to eat the same amount of soup faster than having a smaller spoon but does not affect how much soup in total I can eat - only how fast I can eat it.

Likewise, your Internet connection speed is your rate-limited capacity to access any amount of data on the Internet. Charging me extra money for having an extra spoonful of soup does not affect in any way the ability for others to eat soup with their own spoons.

To impact someone else's ability to eat soup you'd have to decrease the size of my spoon to make room for more people around the soup bowl. It would take me longer to eat the same amount of soup because I'm getting less content with each spoonful, but it does allow more spoons in the bowl at once. Remember, the soup is unlimited, only the access to the bowl is what limits who can get the soup.

We are paying for access to the bowl, to the Internet. We are paying for a specific spoon size and we can be expected to take a full spoonful with each pass. We are not expecting to be able to take 100 spoonfuls and then be charged per spoonful after that. Since the soup is plentiful and the size of the spoon is the capacity we've paid for, what possible justification can there be to charge us for the amount of soup we eat? Did we not pay for an all-you-can-eat buffet?

With tongue-in-cheek I feel a bit like Homer Simpson when he gets kicked out of an all-you-can-eat buffet before he's actually had his fill and files a lawsuit for false advertising.

It seems to me that if capacity is a problem for Time Warner, they should simply reduce the connection speeds they sell (and reduce the price they charge subsequently as well) so that all our spoons are smaller and more people can fit around the bowl.

If amount of data used is a problem, I want to see the numbers and know how it's possible that content provided from another network simply traveling through Time Warner's network to my computer is a burden since the data come in single-file.

The biggest misleading notion that I keep seeing from Larry Darby at the American Consumer Institute and from Time Warner is that different types of data take up different amounts of bandwidth. This is blatantly false. You can download a 5MB photo over a 54Kbps modem just as you can an 800Kb email. The former will simply take you longer.

When more bandwidth is available (larger chunks of data can be downloaded at once), then better and more advanced technologies become available such as Voice over IP (VoIP) and streaming movies. But if you did not have the ability to watch movies while they downloaded because your bandwidth was too narrow (slow speed connection), you'd simply have to wait for the movie to download before you could watch it. It does not mean you couldn't watch it. It does mean holding a conversation online would become unfeasable, but that's a slightly different matter.

Time Warner doesn't care if you watch your movie online in a streaming fashion (while it's still downloading) or if you have to download it completely before you watch it -- they just don't want you to download it period!

That, my friends, is why caps based on how much you download is not acceptable, ever.

The Power of YOU

Today Time Warner announced that they will not be rolling out any sort of usage cap in Rochester, NY at this (or any foreseeable) time.

Well done to everyone!

Potent Quote of the day
(shamelessly stolen)

"All this consumer demand making a difference... Brings new meaning to "The Power of You" -- TWC's slogan" - elvo86

Reality check: Do Time Warner's new plans make sense?

Let's face it, Time Warner Cable's newly proposed Internet usage caps have caused a lot of controversy. Opponents say the changes will cost the average user more money while Time Warner Cable representatives claim it will save some people money and not affect at all the majority of everyone else.

In an effort to understand Time Warner's side of the story, I sat down with a big mug of hot tea, some relaxing music, and loaded up their 2008 SEC Annual Report (linked on the right side of this blog). In it, most everything about the company is explained in legalese but enough English for the average person to muddle through.

The Annual Report discusses the structure of Time Warner Cable as they relate to Time Warner Incorporated, Time Warner NY Cable Incorporated, and Time Warner Entertainment. It's a fascinating bit of reading of you can stay awake while reading it. The report also defines the services Time Warner Cable provides, what its revenues were year over year from 2006 to 2008, its costs, and its perceived threats to the business.

Below you'll find an interesting and poignant fact from the report and placed next to a statement made by Landel Hobbs, the Chief Operating Officer of Time Warner Cable.

I've also created what I consider to be a common use scenario, relative amounts of bandwidth for said activities and how they stack up against each usage plan.

He Said, They Said

Landel Hobbs (4/9/2009)

With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That’s a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we’ve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.

SEC Filing (12/31/2008)
(Capital expenditures, pg. 73)

Year Ended December 31,
(in millions)	2008	2007	2006
Customer premise equipment	$ 1,628	$ 1,485	$ 1,125
Scalable infrastructure	600	604	568
Line extensions	350	372	280
Upgrades/rebuilds	315	315	151
Support capital	629	657	594
Total capital expenditures	$ 3,522	$ 3,433	$ 2,718

Landel Hobbs (4/9/2009)

Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more.

Old TW Plans vs. Proposed TW Plans
(from web statements on a.longreply.com, Twitter from AlexTWC, and the original BusinessWeek article)

Existing Plans*
Monthly Price	Speed Down/Up	Data Limit	Cost per GB
$15 Lite	768 Kbps/128 Kbps	NONE	negligible
$25 Basic	1.5 Mbps/384 Kbps	NONE	negligible
$35 Standard	10 Mbps/1 Mbps	NONE	negligible
$45 Turbo	15 Mbps/2 Mbps	NONE	negligible

* - Internet-only subscribers pay $10 more at each tier

Proposed Tiers
Monthly Price	Speed Down/Up	Data Limit	Cost per GB	Overage Fee per GB
$ 15	768 Kbps/128 Kbps	1 GB	$ 15	$ 2
$ 30	10 Mbps/1 Mbps(?)	10 GB	$ 3	$ 1
$ 45(?)	10 Mbps/1 Mbps(?)	20 GB	$ 2.25	$ 1
$ 50(?)	10 Mbps/1 Mbps(?)	40 GB	$ 1.25	$ 1
$ 55(?)	10 Mbps/1 Mbps(?)	60 GB	$ 0.91	$ 1
$ 75	10 Mbps/1 Mbps	100 GB	$ 0.75	$ 1
$ 99	50 Mbps/5 Mbps	150 GB	$ 0.66	$ 1

(?) indicates these are guesses because no actual numbers have been released at the time of writing

Realistic Usage Scenarios

Under the new pricing plan (regardless of the costs to TWC), customers have to choose between how much data they consume, how fast they want their connection, and how much they are willing to spend but no matter what they can't have what they have now.

There simply is no exact equivalent to any existing plan. So-called "light" users will perhaps choose a low plan like the $15/month one, but be saddled with DSL speeds, an impossibly low 1GB monthly usage cap and an exorbitant $2/GB overage fee. However a so-called "moderate" user who might have standard RoadRunner now at $40/month will pay the same amount but potentially hit their cap (10 or 20 GB) and incur up to $75 in overage fees bringing the grand total to $115/month.

Below are what I consider to be common usage patterns or scenarios and the associated conservative bandwidth usage followed by the current cost to a user of that scenario and the cost in the tiered system.

"Light" User Pattern

A "light" user varies between someone who uses the Internet daily for email and little else, to someone who does not use the Internet much at all during a month's time frame. For the purposes of this scenario I will select the following characteristics of a "light" user:

• Checks email at least once daily including attachments (~ 1MB per day)
  
• Browses the web four times a week for 1 hour each time (10 - 50MB depending on the sites)
  
• Gets OS updates once a month automatically (50 - 400MB)
  
• Very infrequently downloads music or watches video online (5 - 30MB)
  

Given the above, a "light" user may use approximately 658 MB per month. An existing RoadRunner Lite subscriber pays $15/month. In the new tier, the same "light" user could subscribe to the $15/month tier and pay the same.

The difference between existing and proposed is the new system would penalize the user if he or she managed to use twice as much data in one month at a minimum overage fee of $2 or 13% of the cost of the plan.

"Moderate" User Pattern

A "moderate" user varies between someone who uses the Internet daily for email and web browsing to a person who also occasionally watches TV shows on Hulu.com or subscribes to Netflix and occasionally watches a movie on the computer instead of the DVD player. This is a general representation of your modern-day networked person who does not use the Internet excessively, but doesn't shy away from it either. For the purposes of this scenario I will select the following characteristics of a "moderate" user:

• Checks email at least once daily (~ 1MB per day)
  
• Accesses the web at least once daily and may spend up to three hours each time simply "surfing the web" including accessing sites such as the Yahoo! home page portal for news and entertainment (53 - 263MB)
  
• Gets OS updates for their computer a few times a month. This may also include getting Antivirus software updates. (100 - 450MB)
  
• Posts a small amount of personal pictures online with sites like Flickr.com and Picasa.com (60 MB)
  
• Uses a form of social networking such as Twitter, Myspace.com or Facebook.com (20 - 100MB)
  
• Occasionally downloads music from online retailers such as iTunes Music Store or Amazon.com MP3 Downloads (25 MB)
  
• Occasionally plays online games on a computer, Xbox Live, Wii, or PS 3 (50 - 200MB)
  
• Occasionally watches videos on sites like YouTube.com or Vimeo.com (100 - 300MB)
  
• Occasionally shops online from sites like eBay.com, Amazon.com or Newegg.com (10 - 50MB)
  

Given the above, a "moderate" user may use approximately 2.3 GB per month. An existing RoadRunner Standard customer pays $35/month. In the new tier, the same "moderate" user could subscribe to the $30/month tier and save $5/month.

The difference between existing and proposed is the new system would penalize the user if he or she managed to use five times as much data in one month at a minimum overage fee of $1 or 3% the cost of the plan.

"Heavy" User Pattern

A "heavy" user varies between someone who exhibits the behaviors of a "moderate" user and also exhibits several of the following behaviors:

• Spends more than three hours a day each week online (+300MB)
  
• Downloads a large amount of music and/or movies from iTunes Music Store or Amazon.com MP3 Downloads (+575MB)
  
• Downloads video game demos for the computer or gaming consoles (+2 to 10GB)
  
• Uses Internet telephony such as Vonage or Skype with some regularity (+100MB / hr)
  
• Uses Internet video chat with a web camera (+300MB / hr)
  
• Watches three or more streaming movies per month through video services such as Netflix (+18GB)
  
• Regularly watches TV on sites such as Hulu.com or abc.com (+500MB / hr)
  
• Watches and/or uploads videos regularly from sites such as YouTube.com or Vimeo.com (+600MB)
  
• Does a lot of online shopping at sites such as eBay.com, Amazon.com and Newegg.com (+100MB)
  
• Regularly plays games online using a computer or a gaming console (+100MB / hr)
  
• Uploads large amounts of photos to sites like Flickr.com, Picasa.com, Facebook.com or MySpace.com (+3GB)
  
• Frequently spends time on social networking sites such as Twitter.com, Facebook.com, or Myspace.com (+300MB)
  
• Listens to streaming Internet radio from such sites as Last.fm and Pandora.com (+50MB / hr)

Given the above, a "heavy" user may use approximately 75 GB per month. An existing RoadRunner Turbo customer pays $45/month. In the new tier, the same "heavy" user could subscribe to the $75/month tier and pay an additional $30/month.

Additionally in the new system the user would be penalized if he or she managed to use an additional 25 GB in one month at a minimum overage fee of $1 or 1% the cost of the plan. The new plan also provides slightly slower speeds -- 10 Mbps/1 Mbps vs. 15 Mbps/2 Mbps.

Other Considerations

While the above scenarios do indeed punish heavy users as Time Warner aims, there are several factors that may significantly play into making the "light" and "moderate" users use much more data per month possibly incurring overage fees or requiring a higher, more expensive tier:

1. These are conservative estimates based on my own experience. While I'm a heavy user, my daily average usage currently is around 2 GB. On "light" days I still manage to use about 500 MB of data just checking email and using Facebook. Also the sites you visit will make a big difference on how much "surfing" will cost in terms of data. Sites like YouTube and Flickr.com, even without watching any videos or loading full-sized images, are implicitly "heavy" sites and will use far more data that a text-only site with few or no images. Quick indicator: moving or dynamic pages are "heavy", static and sometimes boring-looking pages are "light".
   
2. These numbers don't factor in malware and viruses. If your computer manages to contract a virus or get malware on it that malicious software will most likely send and receive data constantly without your knowledge and artificially inflate your data usage incurring overage fees or requiring you to move to a higher tier.
3. These numbers don't factor in spam and other unwanted junk mail. Although a much more slight factor, unwanted e-mail is still downloaded to your computer when you check your e-mail and that download uses up part of your allotment.
4. Time Warner expects Internet usage to grow at least 40% each year**. This means the "light" user above may use 921 MB next year; the "moderate" user may use 3.2 GB next year; and the "heavy" user may use 105 GB next year.
5. Unsecured wireless home networks may be used by unscrupulous "war-drivers" who drive (or walk) around and use these networks as their Internet access on your dime. War-driving's legality is not entirely clear, but the financial impact on you if you stumble into an unscrupulous war-driver is clear.
6. The maximum overage fee is $75 if you really exceed your cap. This means your damages are limited, but it also means you may be paying up to three times as much as you do now for "unlimited" service.
   

** - per Landel Hobbs in the above-quoted statement

As you can see, there are many factors that may adversely affect the conservative numbers presented here. The caps as stated place everyone in a tight-fitting shirt that will shrink when it goes through the wash and won't fit next year.

Data caps in general create a disincentive to use the Internet for fear of reaching or exceeding the cap an incurring overage fees. No matter how high the cap is, given time technology will rise to exceed it under normal circumstances.

Hopefully this article provides some concrete examples of how the tiers will work and who will be most impacted. The best way to get an accurate feel for how much data you or your household uses is to monitor the so-called "gas gauge" Time Warner will be enabling later this summer.

You will have two months to determine how much data you download and one additional month after the caps go into effect where you will be warned about any overages but not charged until the following month if your usage remains the same.

It's your choice - raise your voice or accept your limits.

Eric Massa Town Hall Meeting Full of Surprises

Last night I attended a Town Hall style meeting with New York's 29th congressional district representative Eric J. J. Massa held in Pittsford, NY. It appears that these town halls are somewhat regular and a place for constituents to air their complaints to Washington via their conduit Mr. Massa. Tonight was no exception.

There were probably around 40 to 50 people in attendance and many topics of discussion were raised including the future of Medicaid and concerns about the shootings in Binghamton earlier in the week.

Then a student (presumably from RIT) broke the ice with regard to Time Warner's proposed usage caps. This got the room buzzing. Eric Massa re-iterated his stance that he is doing and will continue to do everything in his power to prevent the caps from being put in place. He feels it will hamper the area's economy in a time when the last thing we need is to slow down an already stagnant economy.

I stepped out for a moment to answer a phone call and 30 seconds after I returned three representatives of Time Warner Cable stood up and identified themselves. One representative (shown on the right in my friend Randy's blog post) attempted feebly to assuage the sudden air of rage that seemed to fill the vast auditorium by announcing that very recently they have released an updated statement with "improved" tiers after listening to customer feedback.

Two gentlemen near the front center were practically ready to jump out of their chairs and throttle this Time Warner executive and I don't blame them. Mr. Massa did what any diplomat would do and attempted to difuse the situation by volunteering to set up an open discussion with Time Warner and all stakeholders including Frontier and the people of Rochester. I'm looking forward to that meeting with great anticipation.

The elderly gentleman in front of me turned around at one point and stated he was surprised at the turn in conversation -- he didn't expect the Time Warner issue to come up at all much less be a big deal.

The best part however was even face to face with the Time Warner exec, Eric Massa stood tall and strong and firmly stated that he would bring down the full power of 100+ members of Congress to prevent Time Warner from implementing these caps unless they can address the concerns of himself and all his constituents to his and our satisfaction.

Well done Mr. Massa. Well done!

Abuse version 2.0

Yesterday evening Time Warner released a second statement regarding their bandwidth tiers and pricing. Time Warner claims in it,

We’ve heard the passionate feedback and we’ve taken action to address our customers’ concerns.

Oh goody! They've gotten rid of the caps (or at the very least significantly increased them) right?
Not exactly. Here's the breakdown of the "new and improved" tiers:

• A new "lighter Internet user" tier will exist providing 1 GB per month at speeds of 768 KB up/128 KB down for $15 per month.
  Overage charges will be $2 per GB per month.
  
• Bandwidth tier sizes are increasing to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively.
  Package prices will remain the same.
  Overage charges will be $1 per GB per month.
  
• A new 100 GB Road Runner Turbo package has been added for $75 per month at speeds of 10 MB/1 MB (very notably slower than RR Turbo now but $20 more expensive). Overage charges will be $1 per GB per month.
  
• Overage charges will be capped at $75 per month.
  That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.
  
• Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August.
  
• DOCSIS 3.0 will be launched sometime in the future [editorial: 2090?] with a 50/5 MB speed tier for $99 per month [editorial: with an unknown cap].

If you were like me you laughed, you cried, and you hurled. Then after you finished watching Wayne's World you read this memo and your jaw hit the floor.

I'm not exactly sure who Time Warner has been listening to because I'm quite sure I didn't hear anyone, anywhere say, "I wish there was a low-end tier with next to no usage and double the overage fee for slower than DSL speeds." Or maybe the execs over there have some really powerful drugs.

Time Warner Doesn't Get It

They just keep missing the point. People don't want usage caps....PERIOD. We're not shouting up and down about how slow Road Runner is and how we need DOCSIS 3.0 for 50Mbps download speed. (Well, ok some people are, but they're a very small minority at the moment - DOCSIS 3.0 is just good business sense for them no matter what.)

Laughingly Time Warner refers to two studies Conducted by Nemertes Research about the pending so-called 'exaflood' wherein the demand for Internet services exceeds capacity and people start experiencing "Internet brownouts" where speed unexplicably is reduced at times.

The first study conducted in 2007 stated in its conclusion,

We conclude that the evidence is good that demand for Internet and IP services is increasing exponentially, while access investment is proceeding linearly.
[...]
The next Google, YouTube, or Amazon might not arise not because of a lack of demand, but due to an inability to fulfill that demand. Rather like osteoporosis, the underinvestment in infrastructure will painlessly and invisibly leach competitiveness out of the economy.
[...]
There is, however, another gap that is within scope for us, as researchers, to address, and that is the data gap. We have several times noted that the best available data (chiefly that from CAIDA and MINTS) is exceedingly limited, due to the unwillingness of service providers to share details on their infrastructures and capacities.

What I take from that study is that it says our infrastructure is limiting our access and by doing so having an adverse affect on the ability for online businesses to thrive and move forward.

Additionally it says that companies like Time Warner are stingy with their data and this report could be highly flawed due to "exceedingly limited" data.

A second study the following year repeated the same message: capacity (i.e. bandwidth) is not keeping pace with demand and that needs to change for Internet businesses to be viable.

There have been accusations that Nemertes is simply astroturfing for the industry, but whether they are or aren't, it seems to me their warnings are going unheeded by TWC. Indeed, TWC is attempting to address the "problem" by limiting usage instead of building out infrastructure.

Time Warner hasn't done themselves any favor with this latest memo. I know it's simply renewed my efforts to get the word out and bring people's attention to the fact that not only are these caps ridiculous but that TWC has seen fit to move the date up to August from the original planned start date in September...but just for Rochester and Greensboro. That's probably because we're simply the loudest two test sites and they want to silence us first by capping our usage and making it unfeasible to continue fighting online.

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".

A Civil Conversation With Time Warner Cable

This evening I called Time Warner Cable's customer service number to talk with them about their company's plan to implement usage caps and my resolve to cancel 10+ years of service should that happen.

After bypassing the annoying menu system, I reached a service representative who introduced himself as Gordon. I began by saying, “Good evening Gordon, how are you tonight?” I think this caught him off-guard a little and his reply sounded somewhat disarmed.

I introduced myself and told him I was calling to find out more about the proposed usage caps I'd been hearing about. Intentionally my tone was kept calm, soft, and my language civil. He asked if I had read the open letter written by their Chief Operating Officer Landel Hobbs. I had. I informed him that I worked as a software developer, have a fairly complex home network set-up and am quite savvy regarding things computerish. I also mentioned that I have been a customer with Time Warner for over 10 years and overall have been very happy with the quality of the cable service itself. Next I expressed my concern at the concept of capping data usage as it does not reduce the possibility of a slow network if everyone is using it at once, even within their limits.

Our conversation went back and forth from me trying to explain bandwidth versus data using my water glass analogy and him repeating with some regularity how times have changed and the usage cap has nothing to do with speed. As a matter of fact he was happy to remind me that along with the caps there would be speed improvements. I guess it didn't occur to him that with more speed I can simply hit my caps faster.

I could tell at times he was flustered with my cool and technical questions and responses. I wasn't about to buy into his talking points I've seen so frequently that attempt to distract from the issue at hand:

• The Internet market is shifting, people are consuming so much data these days and TWC has to change their pricing structure to keep pace with it
  
• Everyone will be implementing these caps soon
• Frontier tried implementing a much lower cap last year [at which point I reminded him that it was not implemented due to customer backlash and exodus from their services -- he didn't respond to my comment directly but continued talking]
• Most customers will actually save money with this plan
• It doesn't make sense that people who only check their email should pay as much as someone who downloads movies all the time [again, at this point I interjected and suggested that people pay for the access speed so when they want to use it they can; if price were a factor they would be using DSL or dial-up]
• This is just a test of a new way to bill [this was kind of a slip-up on his part I think]

I attempted to ferret from him the exact problem Time Warner is attempting to address with these caps, but he just repeated the line about the Internet changing and Time Warner's business needs to change with it, etc.

The conversation continued for about 22 minutes and in the end I simply explained to him politely that he should make a note on my account that I will be canceling my service with Time Warner if they insist on putting these caps in place even for only a test. I told him if the test concludes and they remove the caps then I’d come back, but as long as there is any provider with an unlimited usage plan, that company will get my money for Internet access.

He was very cordial, if not somewhat flustered, and the conversation ended with a “Have a good night.”

I encourage everyone who opposes these caps to have a civil conversation with the customer service center of Time Warner. These are people who get dumped on all the time for the decisions of their bosses and higher. You're much more likely to be taken seriously and your viewpoints appreciated if you're not yelling in their face and casting obscenities at them.

Additionally, the decision to cancel one or more services now to show you're serious is of course up to you, but I prefer to provide a warning and be ready to follow through with action if the caps actually arrive.

One interesting thing to note from the conversation is that he very clearly repeated that the so-called "gas gauge" will not be available until September and the three month grace period will begin at that time. This essentially means by December 31st, 2009 we will either have caps or we won't.

I also encourage the use of DD-WRT or Tomato as open source router firmware that you can install (with some moderate risk of damage if done improperly) that will enable a bandwidth monitor that you can access without actually using any external bandwidth to read it. I have DD-WRT and it provides a built-in WAN and LAN usage monitor per month broken down by day. Other software includes MRTG which requires an SNMP-enabled router[1] but provides more bandwidth details on a web page hosted on the machine on which it runs.

---

[1] DD-WRT has SNMP support even if your router doesn't support it with the pre-installed firmware. SNMP support for Tomato is not default, but there are articles on how to get SNMP with Tomato

"Bandwidth Cap" is a misnomer... and it's illegal

The Wrong Term

For much of this debate about Time Warner's consumption-based billing plan we've been using the wrong terminology -- bandwidth caps.

If you consider my previous posts (yes, I mis-used the term as well), bandwidth is merely a measure of the network speed and that has always been capped. Time Warner sells access levels based on speed, standard and turbo at rates of 10 Mpbs and 15 Mbps respectively. By the very definition of access speed the bandwidth is capped at a maximum. So our focus isn't on bandwidth caps so much as it is on data consumption.

Consumption-based Billing Is Illegal

Further consider that Time Warner only has a right to charge fees for what it owns or is licensed to distribute. This means that Time Warner has the right to charge fees for access to its Internet backbone infrastructure, but only access. The content of the Internet may or may not be licensed to Time Warner and certainly everything found online is not owned or licensed to Time Warner.

According to various sections of the U.S. Copyright Law, it would be massive copyright infringement (punishable up to $150,000 per infringement and arguably on a scale large enough to be considered criminal) for Time Warner to charge subscribers for content from the Internet without either being the copyright holder or a licensed distributor.

It only follows that consumption-based billing is equivalent to charging for data, not access -- data for which Time Warner does not own or have a legal right to redistribute and charge a fee. Therefore consumption-based billing is outright illegal.

I am not a lawyer by any means. I have spent a fair amount of my life in the legal industry and have participated in several mock trials in addition to being an active proponent of open source software and Linux, so I am quite familiar with copyright law in the United States of America and I'm a bit surprised this hasn't been brought up before. I'd be interested in hearing the explanation from a judge as to how this would not fall under the purview of copyright infringement.

[Update 4/8/2009 12:07PM]

To clarify, I am saying that because Time Warner is effectively charging for content (data downloaded) and not for access to that content, they are in violation of the content owner's rights to monetize their own works since I'm sure TWC is not paying anything out to the content owners for the fees they collect in overage charges.

If TWC however changed their data usage cap to a time usage cap like AOL did back in the day, then they'd be in the copyright clear. You would now be limited by the amount of time you spent online, not the amount of data you download (which doesn't impact bandwidth at all and doesn't contribute to any perceived "crisis").

For example, the low tier might be 60 hours a month for $20 (about 2 hours per day) and the high tier would be 300 hours a month (about 10 hours a day) for much more.

People would at least know exactly what the caps mean and it wouldn't affect their bandwidth / connection speed. Maybe a discounted connection (< 10Mbps) could be offered for even lower, but quite frankly it's more profitable for everyone ("heavy" users and "light" users alike) to pay the same amount because TWC makes a huge profit off the "light" users since they rarely spend time using the bandwidth they're given.

A Thank You Letter to Congressman Massa

The following is a copy of a thank you letter I sent to Congressman Eric Massa (D-NY) for taking a stand against Time Warner's unfair and anti-competitive proposed bandwidth caps.

You can e-mail and thank Congressman Massa too

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Congressman Massa,

I want to thank you for taking a stand for the people of Rochester. In particular I'd like to thank you for speaking out against Time Warner Cable's predatory bandwidth cap proposal.

In Rochester, modern users are consuming more and more data from the Internet as more and more services and products move online. Time Warner's move appears to be a thinly-veiled effort to lock customers out of competition and stay within TWC's own product offerings. The products TWC provides that are most under threat are digital phone (Voice over IP or VoIP), video on demand (such as Netflix), and even their flagship product television with sites like abc.com and hulu.com providing the same content in high definition for free online.

The excuses Time Warner has made are laughable at best when compared to other cities where Time Warner must actually compete for business. While Frontier does offer some broadband Internet access, they are no strangers to suggesting a cap and their DSL technology is an aging one that is rapidly losing pace to cable and fiber technologies. Even wireless broadband is expected to exceed some DSL speeds in the near future.

Frontier is not a viable long-term option. Rochester needs more cable and Internet competition to keep the prices reasonable.

Thank you again for hearing the painful cries of Time Warner Customers in Rochester and for taking a stand against these unfair and anti-competitive proposals.

Sincerely,
Brion Swanson

Another Analogy for Bandwidth

I realize my previous water company analogy may not have been as all-encompassing as I'd hoped, so here's my second attempt at a simpler analogy.

Imagine a glass of water with straws in it.

Consider the width of the opening of the glass to be the bandwidth that Time Warner has to the Internet for everyone to use.

Consider the water in the glass to be the data that you want to download (by sucking it up through a straw).

Finally, consider a single straw as your connection to the Internet.

When there are only a few straws in the glass, everyone can suck up data as fast as their straw will allow them (that is, the speed of your connection in Mbps - also known as bandwidth).

Some straws represent more speed / greater bandwidth and are bigger than others. But there is only a limited amount of space in the glass to put straws. If you pack the glass full of straws to the point where you can't add any more, then you've reached the maximum capacity (bandwidth) of the glass (backbone Internet connection).

What Time Warner is proposing is that you will get a bigger straw for the top tiers, but you'll only be able to take two sips. Every sip afterwards will cost you extra money. Because you're straw is so big, you only get a few sips as opposed to a couple good slurps.

Time Warner's plan doesn't deal with the problem of too many straws in the glass. Indeed they're exacerbating the problem by making some straws bigger.

The people in the lowest tier will also receive the smallest straws and take much longer to reach their allotted number of sips because they don't get as much data per sip as the higher tiers / bigger straws.

Let me know if this is any clearer. I really want to help everyone understand why Time Warner's tiered Internet access by usage doesn't help anyone -- not even the light users.

I'm not the only one using water as an analogy for bandwidth.

Demystifying Bandwidth, or The Internet Is Not A Natural Resource

We need to get a couple things clear before this gets too out of hand.

• Bandwidth is not the data you consume or produce.
• Bandwidth is not a natural resource.

This seems to be of some confusion especially among Time Warner Cable executives. They continue to state incorrectly that some customers are "using up" more than their share of bandwidth. They also suggest that by sorting customers into tiers will alleviate the bandwidth problem because you'll pay for what you use.

Two Problems

There are two problems with that line of thinking and they go straight back to the two things I made clear at the top.

1. Bandwidth is the amount of data that can be simultaneously transferred across a network path (such as from your house to Time Warner's central office to the Internet). This means that if Time Warner's total bandwidth for a single connection from my street to the Internet was 32 Mbps (that's megabits, not megabytes per second) and only two people on my street were using a full 15 Mbps connection at the same time, Time Warner would still have 2 Mbps of bandwidth available for others to use.
   
   To that end, those two people could continue on transferring data at 15 Mbps forever and the remaining 2 Mbps would still be available. Nothing's being consumed except the space in which to transfer data. When one or the other stops transferring data their 15 Mbps of bandwidth frees up and now 17 Mbps is available for others to use.
   
   The problem Time Warner is running into is that it oversold its available bandwidth and now that more and more people are actually using their full connections there isn't enough space (bandwidth) for everyone to transfer at their full speed at once. As you can see, just because you pay more for more data usage doesn't mean there's going to be space for you to transfer that data if enough people are in the same tier as you.
   
   I'll revisit this idea in a moment.
   
   
2. When bandwidth is used it does not go away permanently. Unlike water, gas, or electricity -- all three of which must be produced or refined before (and sometimes after) consumption -- bandwidth does not require any pre- or post-processing before it's available to another user after being used.
   
   Bandwidth is replenished the instant someone stops using it. Think of it like a rubber band. This rubber band is special in that it cannot break, but it does have a limit to how far it can stretch. Now imagine pulling on that rubber band a little bit. How much it's pulled is analogous to how much bandwidth is being used. As more and more people try to pull it a little bit further it stretches to the point where it cannot stretch anymore. This is the "used up" point.
   
   As soon as one person lets go of their section of the rubber band it relaxes a little bit such that another person can pull on it. This is the elasticity of bandwidth -- it becomes available for another user immediately after it is released (not actively transmitting data). How does one meter elasticity? You're not losing or gaining anything, simply pulling and releasing. Bandwidth is not a natural resource and it does not get created or consumed in the same sense as a natural resource.

So now we understand that bandwidth provides us a means to transfer data, not a measure of the data we transfer (only the rate at which we do so). This means that a low bandwidth connection can transfer hundreds of gigabytes of data while still allowing many other people to do the same. Likewise, a high bandwidth connection will reduce the number of people who can simultaneously transfer data.

Time Warner Water Company

Question: If Time Warner Cable is concerned that the amount of bandwidth available will not meet demand at the access rates they sell (10 Mbps or 15 Mbps), they why aren't they building out their infrastructure to meet the demand?

Remember the first problem of oversold bandwidth? Let's revisit that...

Imagine Time Warner Cable ran the water utility (we'll call them Time Warner Water), then their story might be something like the following:

Time Warner Water (TWW) lays 12" water mains down each block of the city of Rochester in 1905 thinking pipes that size would be more than enough to meet water demand for the current residents. TWW charges each resident a flat monthly fee for unlimited water flow at a rate of 10 gallons per minute.

Most residents at the time did not use much water other than to run their tap and toilet and they were content. A very few residents used their water for gardening and cleaning, but they did not cause a problem for other residents because there was more than enough water pressure for everyone.

Over time houses are updated with appliances and additional bathrooms all of which use an increasing amount of water. Consequently, increased demand is placed on the common water main. Soon people start noticing low water pressure and poor rate of flow from their hoses when they're out watering their lawn in the evening at the same time as everyone else on the block.

Some residents complain to TWW and say they're not getting the flow promised for their monthly fee. TWW's solution to the perceived common problem is to roll out a tiered pricing structure whereby each resident will be charged a base rate for the amount of water they use plus additional charges if they go over that amount.

Some people don't see this as a big problem and fall under the low-use tier of consumers. Most of the rest of the block determine they are medium or high quantity users and pay for the middle- and high-end tiers.

One evening everyone on the block is out watering their lawn again and low water pressure again occurs even though they've all paid for their usage. In this scenario, we're assuming no one is going over their limit, they're simply all using the water at once.

Do you see how the tiers are not a solution to the problem?

Time Warner Cable's real solution

What hasn't been made very clear in Time Warner Cable's communications is that access speed will be determined by your tier as well. This means if you're in the bottom tier -- the less than 5 GB / month tier -- you will have a lower bandwidth (perhaps 2 - 5 Mbps). If you're in the top tiers -- the 40 GB or 100 GB / month tiers -- you will have the same bandwidth you're used to now (between 10 and 15 Mbps).

Oh ho! Now we start to see how Time Warner will try to make this work. They'll slow down the low-bandwidth users so they don't take up so much space in the "Internet tube" and give the high-bandwidth users more space to download data. The side effect of course is two-fold:

1. People who infrequently use the Internet now but see pages load very quickly will find their pages load much more slowly even though their monthly billed rate may not have gone down (or may have gone down only slightly).
2. People who frequently use the Internet will be able to download the same amount of data they do now but that amount probably far exceeds the 40 GB monthly cap leading to excessive overage charges.

In both cases Time Warner makes out like a bandit by degrading the speed of service for infrequent users and making it simple for frequent users to go over their cap and incur additional fees.

What Time Warner needs to do is stop overselling its bandwidth. If it can't service all of its customers at peak times at 15 Mbps, then it needs to lower the maximum speed to something it can handle at peak times or upgrade it's connection to the Internet backbone (make the water mains bigger).

Charging for data usage is simply ingenuous, inaccurate, and completely missing the point of bandwidth. What they're really doing is finding a way to charge you more for less, and I'd let them know what you think about that.

And by the way, this goes for Comcast, AT&T, Rodgers, Sprint, T-mobile and any other ISP or cell phone carrier charging for data transferred instead of access speed.

Open Letter to Time Warner Cable

This is a copy of an email sent to realideas@twcable.com

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To whom it may concern at Time Warner Cable:

It would seem to be quite clear that there is a very vocal section of the population in Rochester, NY, Greensboro, NC, Austin, TX, and San Antonio, TX who believe (correctly or not) that they will be adversely affected by your proposed bandwidth caps. I don't know for sure yet, but I have a very strong sense that I will fall well outside your 40 GB/month cap without considering myself an abuser of the system (I don't use BitTorrent or download anything illegal). I am, however an avid Internet media user including streaming tv shows and short video such as You Tube.

If as your trial in Beaumont shows that only 14% of the test population exceeded the caps, and only 25% of users take up the majority of bandwidth then what sense does it make to roll out this PR nightmare of a bandwidth cap plan? Why not simply address directly those users who are causing you problems? Perhaps some sort of arrangement can be made or network shaping can be used on those offenders instead of on the population as a whole.

I do understand from a monetary perspective implementing a cap with overage fees is of great benefit to Time Warner Cable. From a monetary perspective I think most cap and overage schemes are very beneficial, but from a goodwill perspective they can be extremely costly.

If I may, let's compare TWC's proposed plan to other existing capping plans that are either currently implemented or were implemented in the past.

• AT&T currently starts their lowest-tiered cap at 20 GB/month. This is 4 times higher than your lowest tier. Their highest cap is 150 GB/month; over 3 times as high as your highest tier. Additionally, their service pro-actively lets users know when they're at 80% of their cap versus placing the onus on each household to monitor their "gas gauge" with paranoid anticipation of going over their limit.
  (http://i.gizmodo.com/5075831/att-monthly-bandwidth-caps-are-here)
• Comcast currently places a generic 250 GB/month cap on all of their customers, no tiers. 250 GB is a lot of data even in a video-streaming, game-playing household. The major difference here is obviously no tiers and a somewhat reasonable usage cap across the board. Users are contacted by Comcast if they exceed their cap. For most people this wouldn't even be perceived as a change; far less so than a tiered system that requires they check a meter to see if they've gone over (and you know there will be low-use customers who continually monitor their gauge out of fear of going over anyway simply because they're not familiar with Internet quantities).
  (http://arstechnica.com/old/content/2008/08/its-official-comcast-starts-250gb-bandwidth-caps-october-1.ars)
• Verizon's FIOS of course is even higher speeds (upstream and down) than RoadRunner and it has no caps at all in terms of bandwidth. That's not to say they won't try in the future, but for the time being they are your biggest competitor in the nearby markets and thus must be considered.
• Frontier DSL attempted to place a 5 GB/month bandwidth cap on users in 2008 which was highly unpopular and resulted in their indefinite postponement of said caps. Customers didn't like caps then and have not grown a taste for them now. Changing the label from vinegar to wine doesn't make it taste better.
• Cell phone plans from the 90s and early 2000s used a cap system (heck, even AOL started with a cap by minutes) but all of these providers moved to larger and larger caps as their customer base grew eventually ending up with "unlimited" plans that we all now know and love. Why did they do this if it was problematic? Because that's what the customer wanted and they're willing to pay for it. Your plan does not reduce the price of the top tier which theoretically is infinitely lower than an unlimited plan and should at least be reflected somewhat in the price.

We now have some context of how TWC fits into the larger picture of markets with competition (obviously not Rochester, Austin, San Antonio, Greensboro, or Beaumont). I'm curious how your company ever planned on rolling out such draconian caps into competitive markets with Comcast, AT&T, or Verizon? If there is no plan to roll out caps into those markets then this action now more or less amounts to extortion of your captive audience.

Time Warner Cable has claimed these are just 'tests', but aren't tests supposed to be simulations of real-world environments to gauge the outcome? A real test would have been in a market with significant competition. If a test is not a prelude to a larger roll-out, then the use of the word 'test' is a lie and an excuse for uncouth behavior.

Having said all that, what would it take to make customers happy and stay with Time Warner Cable? What is the major problem you need to address? What changes can you affect that fix your problem without major impact to your existing customers?

First, what's the major problem? As I gather, it's a bandwidth issue. That is, there isn't enough for everyone to download Lost streaming from abc.com at the same time on one network. Additionally, some people "abuse" their unlimited plan by actually using it to their fullest advantage.

I propose that customers who purchased the high speed unlimited plans are not actually stupid and understand that they are high bandwidth users who are willing to pay a flat access rate for a particular speed. If I am not concerned with the speed of my network connection I can spend much less on lower-speed access, but I still expect that I will not be also limited by the amount of data I consume or produce - merely the rate at which I do so. Users who consume and produce the most are most likely to chose the highest speed tier because that enables them to be most productive.

As such, no amount of usage of an unlimited plan is abuse. Only the manner in which that usage violates the terms of service could it constitute abuse (such as downloading child pornography or other such materials).

What Time Warner Cable is saying now is, "No, you cannot do anything you want on the Internet because what you do overwhelms our bandwidth capabilities." Isn't that however, a problem with your sales practices or your hardware? If you do not sell more bandwidth than you have people could not exceed it or cause congestion. If you upgraded your hardware to expand the amount of burstable or sustained capacity wouldn't that solve the problem? What will TWC do with the money it receives from the $7.5 billion broadband expansion and infrastructure stimulus (with the understanding that $2-4 billion is earmarked for rural expansion) if not improve your hardware and infrastructure?

So what can Time Warner Cable do to improve their situation without alienating their customer base (even if they're captive)? Here's a few alternatives I've come up with:

1. Bandwidth Incentive Tiers

Instead of punishing those who exceed their bandwidth, reward those that do not use as much, but charge a single flat rate for Internet access. It would look something like this assuming a flat $55 / month access fee:

Monthly Usage	Incentive amount reduced from bill	Monthly total after rebate
60GB and up	No incentive reduction	$55
40 - 59 GB	$10 credit / rebate	$45
20 - 39 GB	$15 credit / rebate	$40
5 - 19 GB	$20 credit / rebate	$35
< 5 GB	$25 credit / rebate	$30

With this scheme, if your Internet access is $55 / month, low-usage users would receive credits or rebates on their next month's bill bringing the price back down to your economy tier (< 5 GB users pay only $30 / month). The advantage of this system is that it doesn't appear to punish anyone, only rewarding those who don't use much bandwidth. Obviously you can use your numbers to play with these levels to your greatest financial advantage, but you give the appearance of being benevolent instead of imposing.

2. Set a single higher cap like Comcast

Another alternative that won't ruffle as many feathers is to set a single much higher cap (nothing less than 200 GB) in the same manner that Comcast does. Time Warner Cable is one of the largest (if not the largest) cable company in the U.S. I have a hard time believing that Comcast or AT&T have more bandwidth available to them than Time Warner Cable does.

3. Deal directly with the 14% of excessive users

The last approach is more effort but also more engaging. Contact the 14% of users who use excessive amounts of bandwidth and find out what their usage entails. Perhaps they are simply an indicator of what's to come and can act as an early warning device to the "next big thing" online. This could be your golden opportunity to find out what's going to be big before it is and have time to prepare while at the same time keeping your customers happy.

In closing, I wish to say that Time Warner Cable is presently being perceived as nothing more than heartless money-grubbing creeps who are taking advantage of high-tech areas with no competition in hard economic times. I don't think that's the perception you want to maintain. If you go forward with this bandwidth cap, I will strongly and seriously consider canceling my 10+ years of service and move to your competitor not because they provide a better product, but because I don't want you to have my money.

Please consider this feedback seriously.

Thank you,
Brion Swanson

One giant leap for Time Warner Cable....backwards

Aaaarrrrrrrrrrggghh!

That about sums up my feelings for Time Warner Cable right now. Last year Time Warner Cable announced they would be conducting an experiment in bandwidth caps for their high speed Internet access in Beaumont, Texas. I thought that was a bad idea and setting a dangerous tone for the rest of TWC's customers, but not much was made of it and it sort of faded from view.

Now Time Warner Cable, a new company spun off from the old Time Warner conglomerate, has announced its intention to implement bandwidth caps in three more test markets: Austin, TX, San Antonio, TX, and Rochester, NY. All three markets conspicuously have no viable alternative to TWC for high-speed cable Internet access.

Comcast cable tried this last year as well and initially got the smack-down from the FCC. In the end though they kissed and made up by setting the top-most tier cap at 250GB / month which people vary rarely exceed at this time.

Being one of those who regularly uses the Internet a healthy amount I find myself in an incredible imposition. To be fair I've never liked Time Warner. Their service is so-so and their cable was overpriced and low quality. Even now when I watch "high definition" TV at someone's house with TWC and compare it to the HD TV that I get over the air for free it's plainly noticeable that TWC compresses the crap out of their HD and while it's still arguably better quality than SD, it's nowhere near the quality of OTA HD. The only benefit is having so many more HD channels with TWC.

I got to thinking, "Are the only ones really impacted just us geeks who use the Internet 20 hours out of the day?" and I've realized that no, not just geeks are affected. Consider the following Internet-based activities and see how many apply to you or your family:

• Watching YouTube (or Break.com or Vimeo.com) videos
• Watching Hulu (or ABC.com or CBS.com or NBC.com) tv shows
• Playing games online with your XBox Live, Wii, PS 3, or computer
• Surfing the web on "rich content" pages - those with lots of pictures, flash animations, advertisements, or music
• Working from home via VPN (your company probably doesn't pay for your Internet usage)
• Downloading large OS updates (like service packs) for your computer (Windows, Mac, and Linux all do this now)
• Using an Internet-based telephone service (sometimes called "Digital Phone" or "VoIP")

Most items on that list are not uncommon and arguably many of them are behaviors that are gaining popularity such as online gaming.

Consider also that when you're connected to the Internet you have a public IP address and that address is almost constantly bombarded by Internet denizens and bots that are trying to gain control of your system (you do have a firewall don't you?). Those attacks still take up bandwidth and over time it can be significant. Is TWC going to count that against your usage as well? If so, that's just plain robbery.

So I cannot fathom why Time Warner Cable would, at a time when many people are struggling to make ends meet and willing to reduce or cut out unnecessary expenses, increase the potential cost to customers who use a decent amount of Internet bandwidth doing the above list of things. Add to that the fact that the Obama administration just signed into law a huge $7.2 billion stimulus package for broadband and TWC's move can only be construed as blind corporate greed.

What are the limits you ask? Here's the breakdown as it's been discussed:

• There will be four speed tiers: 5, 10, 20, and 40Mbps
• The cheapest plans will be $29.95 /month and the most expensive will be $54.95 /month
• Overage chages if you exceed your cap will be $1 /GB
• There will be an additional "super tier" of 100Mbps later on with no pricing information at this time.
  

According to TWC's study about 14% of users exceeded their cap and the average overage charge was about $19 /month. Get that? Your bill isn't actually $30 or $55, it's $50 or $75 if you are part of the average user that exceeds your cap? If this is common (and 14% of a 1 million customer market is fairly common in my opinion), then doesn't that suggest that your caps are too low?

An alternative approach suggested elsewhere is for Time Warner Cable to set bandwidth boundaries under which you receive a reward for reducing your bandwidth usage. So for example:

Tom pays $40/month for his TWC High Speed Cable Internet with unlimited bandwidth. If Tom uses 20GB /month or more he gets no discount. However, if he only uses 10-19.999GB /month then he gets a $5 rebate bringing his total to $35/month. This continues on down the tiers:

Usage Range	Incremental Rebate
20+ GB/month	No Rebate
10-19.999 GB/month	$5
5-9.999 GB/month	$10
< 5 GB	$10

This means an infrequent Internet user will pay only $15 /month for access.

TWC has stated that they will roll out a "gas gauge" for customers to determine their usage levels for the three months leading up to the late summer roll-out. This is useful to a point, but unless it's updated very frequently (once per day is not "very frequently") it will be misleading. It also doesn't take into account that usage can fluxuate wildly during a month or from month to month. A "gas gauge" shows me a snapshot in time of my usage, not a history of my usage (like you get with the electric or gas utilities). It brings me back to thinking Internet access is becoming more and more like a utility and should be treated thusly - but that's a post for another time.

Psst, TWC....Sprint tried this cap before with their "Fair and Flexible" plan, it was abandoned very rapidly in favor of unlimited usage plans for a little more money.

While there is no comparable alternative in Rochester, NY to TWC's highest level of residential service (called RoadRunner Turbo) there are a few alternatives that do not have bandwidth caps (yet) though the overall speed is lower: EarthLink High Speed Cable and Frontier High Speed DSL (keep in mind Frontier tried this cap last year and failed public opinion but haven't dismissed the option). I recommend letting TWC know how you feel and use these two competitors to your advantage in convincing TWC to keep you as a customer by getting rid of this ridiculous cap.

Oh and for those thinking of Clearwire wireless broadband, better read the fine print. It seems to imply caps and overage fees of $10 /GB which makes Time Warner Cable look positively saintly!

Update 4/2/2009 12:31 - TWC Clarifying: At this time, there are no plans to put caps on business class service. If you want to look into it, call 1-866-TWC-4BIZ

Here's some more resources for your fight (updated as I get them):

• http://stopthecap.com
• Write to your local officials: http://www.votesmart.org/official_local.php
• Tell Alex Dudley, VP of Public Relations for TWC how you really feel: alex.dudley@twcable.com
• TWC is on Twitter! @AlexTWC (Alex Dudley, VP of Public Relations), @jeffTWC (Director of Digital Communication), and @MsmarTWC (PR Coordinator with TWC)