Tuesday, April 7, 2009

Price Gouging for Internet Use: Coming To a Town Near You?

Price Gouging for Internet Use: Coming To a Town Near You?

By Tana Ganeva

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Last January, Time Warner announced the launch of a new "tiered" pricing system in several markets across the country. Internet use would be monitored and priced much like cell phone usage is now, with customers paying different rates based on how much bandwidth they consume. Those who were to exceed the usage caps for their chosen tier would be charged $1 per extra gigabyte.

On Sunday, the Greensboro News Record posted a story showing just how damn annoying these usage caps are:

When Time Warner announced the plan this week, customers blogged, called and visited the local office to complain. Many customers said they would defect to slower, phone-line based Internet service. Some even complained to city government. I’ve gotten a lot of calls about it,” said John Gribble, franchise administrator for the city of Greensboro.

The company insists that their motives are totally non-sinister, and that caps are the only way to manage the explosion of video and audio content on the web. But shockingly, many customers remain unconvinced that Time Warner is acting from necessity and goodwill.

I can watch all the high definition television I want through the same cable service, order on-demand movies and watch all day, and they have no problem with that,” said Jennifer Sanders-Melvin, a Time Warner customer who said she’s looking for other options. “But if I want to do the same thing on the Internet, through the same cable, they have to limit what I can use? Sanders-Melvin said the company’s real motivation is curbing Internet television viewing — now free on many network Web sites and video sites like Hulu and Netflix — to preserve Time Warner’s cable television business.

But the ISP is sticking to its talking points. According to PC Magazine, Time Warner Cable's chairman and chief executive Glenn Britt said:

We have to provide people with choice, which is how our economy works ... And there is a cost to consuming a lot more bits. It's not just speed, it's how you consume, and if you download movies all day, it costs more. If all you do is sign on and read e-mail, it costs less.

This counterintuitive PR spiel raises several questions, not the least of which is: who only uses the Internet to check email?

As far as Britt's use of consumer "choice" -- that great engine of capitalism -- to justify the policy? Shouldn't "choice" in this scenario reference a customer's option to go elsewhere? Isn’t the point of a "free-market" economy that if one seller fails to adapt to changing demand, customers can "vote with their wallets" to put them out of business?

Or, does Time Warner hope their strategy of ripping off customers (instead of, say, investing in ways to increase capacity) will be so efficacious that it will tempt competitors into adopting a similar policy? (and by competition, I obviously don’t mean competition in the classic sense of multiple companies duking it out to provide the best product — you know, that thing that exists only in econ books and conservative propaganda — I mean competition between the tiny handful of giants that monopolize broadband).

Of course, there's also the fact that many markets are entirely dominated by one ISP, so consumers don't even have the choice to switch to another corporate behemoth for their service -- Time Warner is obviously counting on that little quirk of our broadband distribution system.

Anyway, when Time Warner first announced the new policy, StopTWC! was formed to channel user rage into action by including information on the change as well as some useful Time Warner email addresses. StopTWC! has a list of reasons for "why this is bad" (the basic gist being that the whole Internet thing seems to be evolving towards people using it more, rather than using it less ... ) and "what you can do":

Why this is bad

  • More and more content is being delivered online

    This content ranges from online radio to downloading high definition movies.

  • Physical Media Is Being Replaced

    More and more applications are being delivered online. These programs can range from games to office software.

  • Increasing File Size

    As internet speeds get faster, hard drives get cheaper and media gets easier to distribute having a finite cap on the amount of data you can transfer per month will slow the adoption of new technologies.

  • Online Content Consumes More Bandwidth

    Streaming just 9 hours of high definition content a month is more than 40GB. Consumers are shifting from watching media on TV to watching online. This is being made possible with technologies such as iTunes, Netflix, X-Box Live, PlayStaton 3 Marketplace and many others

  • Computers are not 100% safe

    Many people have programs installed on their computer that they do not know about. These programs may be communicating with a remote server and consuming bandwidth without the owners knowledge. This policy may charge the user for something he or she may not even know is happening.

What you can do

1. Call your local TWC phone number and express your dissatisfaction with the new pricing and bandwidth caps. Remember to be polite and persistent!

2. Email your complaint to realideas@twcable.com. This email address was set up so TWC has a single place to check for everything related to the new tier policy.

3. Share this site with your friends! Use the links on the right side of this page to promote this cause. TWC knows about this website and they know that we, the consumers, are not happy with these changes. The more people that get involved the better! Webmasters: we greatly appreciate all the links we are getting to this page and invite anyone with a website to link to us!

4. Contact your local government representatives. In most of the areas affected consumers do not have a choice between broadband providers. If this 40GB cap goes through as planned these people will be forced to change the way they view and acquire content online.

5. Browse our delicious links and email us at info@stoptwc.info with websites related to this issue. We are constantly updating this list of bookmarks and are building a great collection of information.

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