As Costs Fall, Companies Push to Raise Internet Price

[onehandle]

Source: New York Times

Internet service providers want to end the all-you-can-eat plans and get their customers paying à la carte. Faced with rising consumer protest and calls from members of Congress for new regulations, Time Warner Cable backed down last week from a plan to impose new fees on heavy users of its Road Runner Internet service.

The debate over the price of Internet use is far from over. Critics say cable and phone companies are already charging far more than Internet providers in other countries. Some also wonder whether the new price plans are meant to prevent online video sites from cutting into the lucrative revenue from cable TV service.

Cable executives say the issue is not competition but cost. People who watch or download a lot of movies and TV shows use hundreds of times more Internet capacity than those who simply read e-mail and browse the Web. It is only fair, they argue, that heavy users should pay more. “When you go to lunch with a friend, do you split the bill in half if he gets the steak and you have a salad?” Landel C. Hobbs, the chief operating officer of Time Warner Cable, asked recently in a blog post defending the company’s now abandoned plan.

Still, critics say the image of Internet providers as restaurants about to go broke serving an endless line of gluttons simply does not match the financial or technological realities of the industry. They point out that providers’ profit margins are stable, and that investment in network equipment is generally falling. These plans to charge for above-average Internet use “are unjustifiable for almost everywhere in the country except for rural America,” Richard F. Doherty, the research director of the Envisioneering Group, a consulting firm that studies cable technology.

Read more: http://www.nytimes.com/2009/04/20/business/20isp.html

[MADem]

1. They're full of shit. It's more like a water bill.

Generally speaking, there's a "baseline" charge for water. If I have a holiday home and I pay five hundred bucks a year for water at a place we use maybe six or eight weeks out of the year, total, you'd think my next door neighbors, who live there year round, and have a ton of kids, pay more. Well, no, they don't. You get a shitload of "free" (read, not metered) water as part of your fees and you really have to be a water pig to go over your "limit" of allowed gallons.

Now, if someone is hogging bandwidth 24/7, continuously downloading around the clock, sure they should pay more. But there should be a healthy amount of "free" bandwidth to enable the average family to have a nice "bath" or "shower" in their bandwidth every day (several hours worth of movies or whatever), without incurring additional fees.

Actually, if they want to be nice, they should offer cheap internet for the email readers--say, five dollar dial-up for those types. That would be helpful.

[ejpoeta]

4. good luck with that. they seem more interested in starting out high,

even for folks who just read email and then going up from there for people who like to watch their shows online if they miss them. i was so happy to hear of sites like hulu.com where if I missed my show i could still catch it later. i do prefer to watch it on the tv, but it's a nice alternative to just missing the show altogether. cable companies think they can get away with this because we have no real alternative to them. that's the joy of a monopoly. they can do whatever they want.

[MADem]

13. I know. They're usurious bums. nt

[Born Free]

33. Nothing to do with actual amount of bandwidth used..

As more and more people learn they can get more programming value via Netflix for less then $10.00 a month then they do from premium channels that cost twice as much they drop those expensive cable provided pay channels and this is hurting the bottom line of the cable companies, so the answer is find acceptable ways to increase the prices of the network bandwidth. The cable broadband providers want to use their monopoly to protect their cable tv business, they may have dropped it this time but they have not given up. As more and more customers drop the expensive cable channels for alternatives such as Netflix, expect more and more talk about raising broadband rates because too many customers are "abusing" their broadband connections, likewise watch for ways to throttle back connections so the alternatives don't work as well. it's all about monopoly power protecting itself, and it is also reason the government regulators needs to keep an eye on it. OH, and get ready for the piracy issue, the cable providers will also say the bandwidth is being used up doing illegal piracy, they will claim they only want to protect us from those terrible pirates that steal movies and music on line - they will claim they are not doing it to protect their own interests or admit it's because of lost revenues as people drop their overpriced premium channels.

[crikkett]

36. Sounds like Netflix needs to get into the cable business. n/t

[hugo_from_TN]

20. Every house I've ever owned, I paid for water by volume.

Not sure what kind of screwy system you have.

[MADem]

21. There's a baseline cost at three, no, four locations I've lived in.

Anything OVER that, you pay by volume....but I never came close to "using" my baseline allotment at a vacation home, ever. The cost is the same every year, because I never get past that "pay as you go" point. And it ain't cheap.

[Demit]

25. We have that 'screwy system' in Philadelphia too. All depends on your municipality.

Perhaps every home you've owned is in Tennessee?

[ixion]

2. no one asked cable companies to become ISPs... they did it on their own

so if they don't like it now, they should exit the game, rather than trying to ruin it.

[FreakinDJ]

3. This is why Media diversity is necessary

This is why you don't allow a single corporation to control all the news content OR communication means for a single metropolis.

[groundloop]

5. Or else allow a WELL REGULATED monopoly

Which the cable companies currently are not (not well regulated anyway). In most places they are a monopoly, but are free to run up costs pretty much at their own whim.

[MADem]

22. I remember when MA BELL was a well-regulated monopoly.

I was paying close to five hundred bucks a month for long distance and overseas calls. It's way cheaper now.

Some monopolies are not so good.

[LiberalFighter]

6. As costs fall... companies push to raise internet fees?

Cable systems in the United States use the same technology and have roughly the same costs. Comcast told investors that the hardware to provide 50-megabits-per-second service costs less than it had been paying for the equipment for 6 megabits per second.

Let's see... I don't pay extra for tv no matter how many hours I watch. I don't pay extra for newspapers no matter how much content I read.

[Hugin]

7. Do you figure they are trying to find a way to get a hand in, say, Google's pocket?

or the like...

I know many many people who use the Internet on a regular basis... But, I don't know any Individual who uses the kind of bandwidth they're talking about here.

or is it a 'Foot-in-the-door' maneuver?

[Dappleganger]

8. I wish they would allow a la carte for tv

There's a hell of a lot we don't watch and I hate paying for it.

[onehandle]

9. I hear you. And with digital, it's possible. They could let you pick and choose.

We only watch maybe 10 stations, most very rarely.

If they want to charge us piecemeal, then do it for everything.

[Amonester]

11. They'll double or triple the fees so you'll end up paying more...

even if you watch less...

Mark my word.

[dysfunctional press]

15. a lot of the stations you don't watch may 'subsidize' the ones that you do.

if they ever went to 'ala carte',it most likely wouldn't mean much of a savings to most people.

[w4rma]

10. Con-artists who see an opportunity to leverage their oligopoly status to force larger profits. (nt)

[mbperrin]

30. Shhhhh...the poor beleagured babies work night and day to provide us with

quality programming like "Two People in Arkansas Fucked So Much They Can Have Two Basketball Teams" and "Your No Good Boyfriend Is Cheating on You and We'd Like Everyone to Share the Humiliation" and "Certainly Not News" Network.

They are the downtrodden - it's the evil consumers that want something for their money - how unreasonable! Now gedouddahere with that economics nonsense! Nobody wants to hear from somebody who knows somethin'!

[Waiting For Everyman]

12. The basic service should be dirt cheap by law.

Just for starters. And it should include C-SPAN and the news networks - the public should be informed as "public policy".

It's public airwaves the providers and media are profiting from, after all. It's a necessary utility today, and should be very affordable if not publicly owned. All utilities should be IMO.

[dysfunctional press]

16. "it's a necessary utility today..." hardly.

plenty of people get by just fine without it.

too many americans are spoiled brats when it comes to tv.

[NashVegas]

19. Yeah, Okay

So who's going to pay the reporters who make phone calls and go out chasing stories all day?

Who's going to pay the video technicians? Sound?

Who's going to pay the person who determines what commercials go in which time slots?

Who's going to pay the talent?

And who's going to pay the blood-sucking corporate stock-holders?

[mikelgb]

14. Steak/Salad it a stupid metaphor

it is more like you are all at a buffet, you all pay the same and pick what you want to consume some decide to have more than others, some hardly peck at their plate

[FudaFuda]

17. correct. nt

[NashVegas]

18. The Relatively Free Ride Is Going to Come to a Screeching Halt. Deal With It

While people all over had enjoyed abnormally cheap and easy access to traditional media outlets, as well as modern outlets not previously possible, traditional outlets increasingly cannot afford to pay substantial content creators a living, due to shrinking advertising revenue.

Meanwhile, modern outlets have users creating content on a free, voluntary basis. Which is great, except for the part about how users tend to abandon sites once they monetize.

[mbperrin]

23. So the inability of the companies to sell advertising is a reason to raise my

rates, even though I may not even watch their particular crummy channel?

In other words, another reward for failure.

America, 21st century. Motto: "Stupid, greedy, and politically strong wins the day!"

[NashVegas]

26. Ask YouTube

You know, that thing you people click and click and click all day for free programming that costs massive amounts of labor to put together.

Yeah.

[mbperrin]

29. You people? Programming? You call cell phone videos and outtakes from

TV and movies programming?

Interesting......how you people think....or not....

[JackRiddler]

28. Major fallacy: Do you think the raised ISP costs will go to content providers?

Obviously not! Are you crazy?!

What TimeWarner wants is 100 percent scam. With the infrastructure built (much of it having been subsidized by YOU) and bandwidth at the present levels, the "costs" to ISPs of individual usage, whether they're visiting one page a month or 1000, are both nearly zero.

Now that there's been some consolidation of ISPs and thus less competition, the corporations smell a chance to charge more for that near-zero than the outrageous amounts they already do by pretending they suddenly need to meter the time or throughput.

This has NOTHING to do with content providers getting paid for their labors (which is either a titanic misunderstanding on your part or a truly shameless obfuscation).

TimeWarner is not going to take the extra windfall from higher ISP rates and dole that out to people uploading videos on Youtube, or reading the Washington Post.

And that wouldn't be a bad idea, if it were so. The way to save journalistic media would, in fact, be to nationalize ISP service and have the charges above the (now minimal) expenses of providing the service be doled out to content providers on a per-visitor basis. (It would be nice to figure out how to favor genuine reporters of first stories in such a system.)

Of course that ain't happening. Rational things never happen.

[NashVegas]

31. No

But that's not the point. One way or another, the price you pay for accessing information and media online is going to rise.

[JackRiddler]

32. Not the price I pay.

Until they establish a Chinese-type control of information (which doesn't work either) there will be ways to get online and get around the grasping, wishful plans of the Time Warners.

[NashVegas]

34. That's Great For You

But file downloading is increasingly difficult to defend in a www where Last FM, Blip, and Pandora exist, in addition to movies that are viewable online.

The only people making money off the internet are people who have something to sell. If you disbelieve, spend a little time on the great circle jerk known as Twitter, where people attempting to market their "personal brand" are all showing what great taste they have and how hep they are, are all spinning their wheels while the App store cashes in.

One way or another, cost of using the internet is going to start reflecting the cost of the labor it takes to create content, or all you'll be left with is an even bigger circle jerk than Twitter.

[JackRiddler]

35. Once again you promote the same fallacy...

What does an ISP raising its rates (a move not justified by their expenses) have to do with paying the content-producing labor?

You throw in a lot of irrelevancies (I will never spend time on Twitter).

But again, how do your two assertions fit?

1) Content producers aren't being paid.

2) ISPs raise rates.

The higher rates might correspond to what the content producers should get, but HOW DOES THIS GO TO THE CONTENT PRODUCERS? It doesn't! It's just a windfall for the fucking ISPs. It's as though you claimed higher interest rates on mortgages are good because that way the price of housing finally reflects its true environmental costs. Except the higher interest payments don't go to cleaning up the environment, they go to a bank. Duh.

Pandora pays for music, by the way.

[NashVegas]

37. Not Fallacy, Side Issue

To demonstrate why internet usage will become more costly in the future, regardless of what the ISPs do.

[JackRiddler]

38. No connection... again!

Are you somehow trying to excuse profiteering by the corporate ISP cartel? This has nothing to do with "true cost" measures for Internet content providers, and you continue to relate the two even as you admit there is no relation.

In fact, the more the ISPs grab of the consumer pie, very likely LESS will be left over for paying for content. People will feel the pinch of higher ISP rates and be less willing to pay actual creators.

Again, it's like pretending a rise in mortgage interest payments is good because people are underpaying the ecological costs of their houses. But the money goes to the banks, not ecological conversion.

[NashVegas]

41. Right

Boy, you really got me.

[yowzayowzayowza]

24. The 'salad eaters' deserve a price cut!!!

They're goin about this the wrong way. Rather than trying to push a charge on high usage, give a price cut to the low end users then later raise all the prices. Results in the same cost/price structure working with the market instead of against it. Just sayin. Don't think they could get away with the price increase tho.

[whoneedstickets]

27. Exactly, by his own analogy, he wants the salad eaters to pay for steak..

..and the steak eaters to pay for caviar.

[Uncle Joe]

39. I view this as a back door, surreptitious financial and informational threat

against the American People's First Amendment Rights, as a means to regain control.

The corporate media want to monopolize the Internet in the same manner as they have the conventional media.

The Internet represents too much freedom for their tastes because it empowers the American People to go around or through their editorial control.

Internet Neutrality and Internet Anonymity are critical to the free flow of ideas; the life blood of our democratic republic and the corporate media is trying to create damns in order to reestablish their own out sized political power and influence over the American People and their representative government.

They don't care about the First Amendment except as how it pertains to their own profession, that's why they lobbied the House to pass a shield law which only protects journalists; who make money as if exposing corruption must be a profit driven enterprise in order to be legitimate.


Thanks for the thread, onehandle.

[gamecock]

40. Not gonna work.

Everytime the internet companies try to raise the bill or cap services, it backfires on them and doesn't work.