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Mark McKinnon

Internet Consumer Groups Should Put Consumers First

Written by Mark McKinnon
4/29/2009 7 comments
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When it comes to the future -- the future of content distribution, the future of the Internet, the future of technology -- no one is exactly sure what will work and what won't. The best way forward is experimentation: a marketplace of business models.

Hulu versus Netflix, iTunes versus Rhapsody, fiber to the home versus Docsis 3.0, LTE versus WiMax: Only time will tell which technologies work best for consumers and will thrive.

Even within a single company, experimentation is necessary for figuring out what works best. Should an ISP offer a single, flat-rate price for broadband? Should it consider double- or triple-play packages? Should a telecom company offer its own IP voice package? Should a cable company follow suit? These are just some of the many questions companies consider as they determine how best to invest, expand, and innovate. The fact that they have been relatively free to experiment with these options is part of the reason there's so much choice for consumers.

That's why it's a shame to see that Time Warner Cable Inc. (NYSE: TWC)'s recent plan to roll out usage-based broadband pricing in additional test markets was hobbled by political opposition before it was able to reach consumers. (Tests in Beaumont, Texas, underway since last year, have continued.)

Two groups opposing the plan most aggressively were Free Press, which petitioned Congress to investigate the "price-gouging scheme," and Public Knowledge, which called Time Warner's decision to shelve the plan "yet another victory for the netroots!"

But that was a change in tune for both organizations. Last year, Public Knowledge's Gigi Sohn said she was "delighted" about Time Warner's test of metered billing because "it provides both transparency and certainty" for consumers and "makes unnecessary controversial 'network management' decisions." Free Press's Tim Wu had a similar take, telling The Washington Post, "I don't quite see [metering] as an outrage, and in fact [it] is probably the fairest system going."

It's certainly the fairest system going for many Internet users.

One of the more interesting things Time Warner planned to offer in the new test markets was a 1-Gbyte consumption tier (representing speeds up to 768 kbit/s) for just $15 a month, with only a $2-per-Gbyte overage fee. For people who only use the net at home for light Web surfing or email, this would have been a far preferable option to a $50 per month all-you-can-eat buffet of Internet downloading service.

As Time Warner pointed out, nearly 30 percent of its customers download 1 Gbyte or less per month. Those customers could have saved $420 a year by only paying for the bandwidth they consume, rather than subsidizing heavier users. And for only $10 more a month, users could have had a 10-Gbyte plan, saving $300 a year over the one-size-fits-all approach.

But apparently those savings constitute "highway robbery."

Sure, there may have been kinks in the plan that needed ironing out -- such as finding the right service tiers and making sure that the pricing doesn't discourage the use of new, innovative Internet applications; under the fiery rhetoric, these were the critics' main concerns. But one of the best ways to figure out where the problems are would have been to include additional test markets, which is what Time Warner proposed.

It's unfortunate that so-called consumer advocates reflexively criticized the plan without considering its potential benefits before Time Warner could even finish figuring out how to bring the best set of options to consumers.

It may very well be that Time Warner's plan for usage-based billing wouldn't have worked out. But consumers -- not professional advocacy groups and politicians -- should be in the driver's seat picking winners and losers in the digital society.

— Mark McKinnon has worked for both Democratic and Republican political campaigns, including Texas Governors Mark White, Ann Richards, and George Bush, Louisiana Governor Buddy Roemer, and, in 2006, Senator John McCain's candidacy for President. He is a co-chairman of Arts+Labs and serves on the board of the Lance Armstrong Foundation.

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bugmenot
Rank: Web master
Thursday April 30, 2009 9:18:41 PM
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NetMeter is an excellent tool for keeping track of your usage. It keeps totals by day, week, and month and has other very useful features.

http://www.metal-machine.de/readerror/index.php?page=10

pabarge
Rank: Cave Painter
Thursday April 30, 2009 6:40:45 PM
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Why would we listen to someone who was so instrumental in seeing Republicans defeated in the last election cycle and setting back two party government by decades.

 

DavidSilversmith
Thinkernetter
Wednesday April 29, 2009 6:48:53 PM
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While I agree with the overall assessment, I'm not sure that Time Warner should come out smelling like a rose.

Given that they are currently monitoring the usage, Time can put together plans that would allow for fair payments by all.  But I doubt that any of Time Warner's plans include them making LESS money - they are also looking to make more money.

Any company selling services in price levels is counting on a large portion of the consumers picking the wrong level.  Has Time Warner offered to make sure that no customer pays more than necessary?  Automatic downgrades to a lower service when it is in the customer's best interest?

I know that there are many reasons for Time not to make those offers - but it points out that there is more Time and similar companies could do if they really wanted to make this change.

 

 

Chris Poley
Thinkernetter
Wednesday April 29, 2009 2:37:56 PM
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Your right Mark, putting the comsumer first would be a step in the right direction.  Because you'll never have the ISPs doing that.  Atfer that toothless piece of crap legislation called the 1996 Telecommunications Act, we're worse off than ever.

 

Joss
IQ Crew
Wednesday April 29, 2009 11:59:09 AM
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I already have a metered data plan. It's the Verizon Wireless Card in my MacBook. 

For $70/month, I get 5 GB of usage. When I first considered the card, I thought that 5 GB was a skimpy amount. I use it all day long when I am on assignment and have never come close to 5 GB of usage. Even given that, I am cautious when downloading SDKs or OS updates when using the card. I wait until I get home.

The fact is, I have no idea how much bandwidth I consume from my home office. It is packed with a Dell Win server, a Mac Pro, a MacBook Pro, a ThinkPad, my kid's laptop my wife's work laptop and a Dell XPS desktop.

I listen to streaming talk radio all day long. But I don't surf the Internet much. I have bookmarks for the news I want. Facebook, of course. Email by the buckets. I publish changes to my websites as part of the development cycle. 

I wish my cable modem had a little LCD that would tell me what my bandwidth consumption is. And I wish my router had a way to tell me consumption by computer working from it. That way, when metered usage becomes a reality, I would know what a "good deal" would be. 

Most consumers are, like me, clueless about their usage. I use more than most, I believe. I am willing to pay a premium if I am a hog. In exchange, I want faster speeds on priority routes. It's a fair trade and an incentive for my Internet provider to create service levels based on the personality of their consumers.

 

cjon316
IQ Crew
Wednesday April 29, 2009 10:40:05 AM
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I think that the point of consumer advocacy should be aimed at helping consumers, not stifling entrepreneurship or business creativity.

I also believe that the revenue model of charging X because we can does less for consumer satisfaction than in a model of pay as you go which could save many customers money over the high priced subsidy plans.

Satisfied customers are always good for business. Generally, consumers who feel they are paying a fair price for good quality are more satisfied.

Consumer advocacy only gummed up the works in this case.

Great article Mark!

Monticlair22
Rank: Cave Painter
Wednesday April 29, 2009 10:16:04 AM
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Good article Mark, I couldn't agree more an ala kart or usage based pricing success or failure should be decided by the consumer.

But that doesn't bring in revenue as you pointed out it saves the consumer money. Which some would say isn't very good buisness.

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