What is the problem with the Time Warner usage caps?
There are two main issues with Time Warner’s proposed usage caps.
The first issue is that the caps are so small that it will be very easy to exceed them, without doing anything unusual. The base cap is a mere 5GB per month. Just watch a few YouTube videos and you could exceed that in under a week.
The second issue is that once you go over the cap, additional bandwidth is charged at an incredibly expensive premium rate.
Why are Time Warner introducing bandwidth caps?
The official position is that the caps are required to slow down the growth of bandwidth demand, so that Time Warner’s network doesn’t get overloaded.
How fast is Internet bandwidth usage growing?
Recent estimates put it at a manageable 50-60% per year.
Don’t Time Warner need more money to upgrade their cables to deal with that?
No. According to the New York Times, Upgrading to DOCSIS 3 and 160mbps broadband cost Japan’s J:Com just $20 per home. All it takes is a new modem at both ends of the existing cable, and Time Warner could be offering 160mbps connections, instead of today’s maximum of 10mbps. That should handle demand for years.
Aside from that, we already paid AT&T to upgrade their network to fiber. You ought to have 45mbps fiber Internet to your home right now, given that $200 billion of taxpayer money was given to the telecoms companies to pay for it back in 1996.
What about backbone bandwidth from Time Warner to the rest of the Internet though?
The Internet backbone has seen steadily decreasing bandwidth costs. In Q3 2008, ars technica reported that 10Mbps backbone transit prices had dropped 38% YTY, to just $10 a month.
So Time Warner are paying about 3¢ per GB for backbone bandwidth to the rest of the Internet. They’re planning to turn around and sell that bandwidth to you for $1 per GB.
Update 2011: In case you’re wondering, backbone transit prices have been dropping since 2009. So 3¢ per GB is a conservative overestimate.
So if it’s not about controlling demand for bandwidth, what’s the real reason for the caps?
Time Warner’s CEO has expressed concern that increasing numbers of people are watching TV and movies via the Internet (Hulu, Netflix, iTunes) instead of via cable TV.
A TV episode downloaded from the iTunes store in HD is around 1.5GB. A movie is 3-4GB. It’s pretty obvious that the proposed caps will make it impossible to rely on the Internet for TV, without paying hefty surcharges to Time Warner.
In addition, some people have speculated that once the caps are in place, Time Warner will approach companies like Google and demand that they pay a fee in order to have their traffic exempted from the caps. That is, if Google paid protection money, Time Warner would allow you to watch all the YouTube you like without hitting your usage caps. This is mere speculation at this point, of course.
Is it true that 20% of Time Warner’s customers are eating up 80% of the bandwidth?
Undoubtedly. It’s called The Pareto Principle, it’s a basic fact of economics. Similarly, 20% of their customers are responsible for 80% of the total customer TV-watching hours.
There’s nothing unusual or unexpected about this. Your mobile phone company knows that 20% of their customers use 80% of the total airtime. The city water supply is 80% used by 20% of customers. Even the ER has just a few “customers” who use massive amounts of their resources.
But isn’t it reasonable that heavier users of the Internet should pay more?
Maybe it is. On the other hand, consider your TV service; you pay the same amount for that whether you watch 2 hours of TV a week or 22 hours. Remember the phrase “information superhighway”? Generally you don’t pay more for highways based on how much you drive down them; tollbooths are relatively rare.
Even if you accept the idea of paying by the gigabyte as being reasonable, Time Warner’s proposed fee of $1 per GB is outrageous, given that the same bandwidth is costing them around 3¢. If they were planning to charge overuse at (say) 5¢ per GB, there probably wouldn’t be so much complaint.
Countries like Australia have always had usage capped Internet, haven’t they?
Yes, but countries like Australia rely on expensive backbone connections. Australia’s main link to the rest of the Internet is via San Francisco, a distance of over 11,000km. That’s where they connect because Australia is an English-speaking country and they want English-language content.
In contrast, chances are that if you’re an English-speaking American, almost every web site you visit on a daily basis is somewhere else in the mainland USA, or occasionally in the UK.
If you want to compare Internet prices internationally, you should remember that the USA has relatively slow broadband (on average). People in Japan might pay more, but their connection is 10× faster too.
Do I need to worry? Is it likely I will exceed Time Warner’s data limits?
Here are some legal ways you might blow through your Internet use limits:
| Episode of Lost | 1.1GB |
| Episode of South Park | 0.5GB |
| Netflix movie | 1.7GB |
| An hour of Skype video chat | 0.2GB |
| Team Fortress 2 download from Steam | 2.0GB |
| Call of Duty: World at War download from Steam | 6.0GB |
| Windows service pack | 0.5GB |
| Mac OS X update | 0.5GB |
| OpenOffice | 0.2GB |
| New release of iTunes | 0.1GB |
Also, it’s reported that leaving a Windows computer idle chews up 2GB a month.
So if I don’t do anything high bandwidth, I don’t need to worry, right?
There are three additional scenarios you should bear in mind.
Firstly, if you share an Internet connection with roommates, you’re going to have the fun of trying to work out who is responsible for how much of your data transfer. Either that, or you’ll likely end up splitting $75 of overage fees evenly every month.
A second issue is that if your computer gets infected by malware and becomes part of a botnet, you could easily hit the maximum data overage and not even realize it. If your machine is blasting out spam 24/7, it could start to cost you real money.
A third and related problem: if some malicious person knows your IP address, he can blast you with data in order to run up your Internet bill.
How can I contact Time Warner to tell them how I feel about this?
They have set up a special e-mail address realideas@twcable.com for your feedback. Please try to be polite.
If Time Warner go ahead with the caps, what are my alternatives?
- SpeakEasy offer residential ADSL, with a 6Mbps/768kbps rate similar to Time Warner’s standard RoadRunner service. Cost starts at $59.95/month. They serve Austin, with their nearest POP to their fiber backbone being in Dallas.
- EarthLink high speed cable provides service in Austin. As part of the regulatory compromise which allowed Time Warner to purchase AOL, Time Warner cable are required to allow EarthLink to make use of their cable. However, Time Warner have claimed that they will be capping the Internet service of EarthLink customers, and as yet nobody credible from EarthLink has denied this.
- AT&T Uverse is available in parts of Austin. This is a hybrid service, where DSL is used for the “last mile” that connects you to AT&T’s fiber network. AT&T are testing 150GB caps in some areas.
- Grande Communications offer uncapped cable Internet, and say they have no plans to introduce caps. They are probably your best bet, if you’re in a part of Austin that they serve.
(To save you the bother of asking, Verizon FiOS is not available in Austin.)