I meant to post about this earlier this month when it happened, but did not have time due to it being midterms at school.
Some of you may be aware that Rochester is apparently a test market for Time Warner. Recently they announced that they would be starting a new business model where they charge internet users according to their how many GB of data they use per month (http://www.businessweek.com/technology/content/mar2009/tc20090331_726397.htm?campaign_id=rss_daily). Time Warner planned to begin monitoring usage in April 2009 with implementation slated for September. The article states that they were thinking of 4 tiers with caps at 5, 10, 20 and 40GB per month.
So here’s my problem with this idea. First of all, I think these levels are too low. It might be fine for a small household or one where the internet is mostly used for generic browsing. But as soon as you start talking about a household with multiple family members, or heavy users who like to download music, watch streaming video, or play online games, your usage goes through the roof.
Now, don’t get me wrong. I actually do sympathize with the plight of the providers a little bit here. They are a business and can’t afford to keep upgrading infrastructure with no money to pay for it. The little gem I have yet to mention is that the above article also states that Time Warner plans to charge $1 for each GB over the cap, which is absolutely ridiculous. So if you get a family of four with a couple of teenagers who download all of the items mentioned above, particularly movies, that’s going to cost an arm and a leg.
With the current state of the economy and the way Americans are trying to think of more ways to save money, this is the worst time to implement something like this. Internet access is not a necessity like food or shelter, or a utility like heat, water or electricity. Families who are already struggling to make ends meet that see this rate hike are just going to cancel their Road Runner until happier times roll around again, which will just hurt Time Warner’s bottom line more. The other thing Time Warner should consider is that they are really the only broadband provider in the area right now. If they force enough of their customer base to leave they encourage competitors to break into the Rochester market. Again, this would be bad for their business.
What they should do is implement a tiered structure, but with higher caps and a MUCH lower overage fee, say 25 cents per GB over your cap. This would probably have a minimal impact on customers but would get them acclimated to the idea. TW could then raise the prices a bit at a time down the road.
As it turns out, I had to call Time Warner on an unrelated matter a few days after this story was released, and I asked the customer sales lady about it. She told me that the news people are lying to us (her exact words) and that they (Time Warner) don’t have any idea of the pricing or tier structure yet, or when it will be rolled out. She also mentioned that the prices being reported are from the Texas trial and are not necessarily true for the Rochester market, since they are only announcing that they’re beginning a testing phase here. Of course, she also told me rebooting my modem occasionally would make my internet connection faster, so take that into consideration. Granted, that CAN be true if the modem is having problems, but is ridiculous if you’re not having any problems with your connection.
…That’s what I meant to post earlier this month. However, today it turns out that we don’t have to worry about this yet because enough people were alarmed that the politicians got involved – senior NY Senator Chuck Schumer no less. As a result of all the pressure, Time Warner has announced today that they are canceling plans to go forward with this pricing structure “while the customer education process continues” (http://www.democratandchronicle.com/apps/pbcs.dll/article?AID=/20090416/BUSINESS/90416024). They also report that they first plan to introduce measurement tools that will allow users to know what their current usage is. Sounds to me like they should have thought of that before they released the statement in the first place. This is a classic case of poor business decision making. I guarantee there was a situation behind the scenes where somebody said something like “we should plan this out better, maybe educate the users first” and an executive decided it was more important to make the announcement NOW.
Dumb…really dumb…
