Time Warner brings tiered caps to Austin.

That sound you’re hearing is the screaming of my soul being crushed.

All great journalists can maintain complete objectivity in the most trying of circumstances. I am merely a good journalist.

Well, I’m adequate.

But I think I should disclose my biases here, as this is an issue that affects me personally.

DSLReports.com reported that Time Warner has decided that Austin will be one of four “trial cities” to test out their new “Tiered Bandwidth” plans – which are essentially paying roughly the same amount of money you were before (give or take about $5) plus $1 for each gigabyte of data you transfer, over a set cap. The highest plan will be 100GB. Omar Gallaga over at the Statesman worries that the top plan it might not be enough for him and his family – I know it certainly won’t be enough for me.

The New York Times once estimated the wholesale cost of bandwidth to Time Warner at something like $0.10 per GB. At $1/GB, that’s a markup of 1000%

So I got upset. The Internet isn’t just how I make my day-job livelihood, it’s also what I use to transfer and upload the high definition videos that I put out on the Web for my moonlighting. It’s how I send raw footage to documentary collaborators. Since YouTube is the only affordable outlet for my work at this time, a bandwidth cap will make it cost prohibitive for me to continue as an independent filmmaker.

Best estimate yesterday was that I was I was using 400GB a month, and that my Internet service would increase 650%. Since then, I’ve actually looked at my home traffic data for the past 15 days. I’m happy to report that I’m only using 300GB a month, and at $1/GB, the bill would only go up about 500%.

(I could go for go for business service, which has no caps, but the equivalent of my current “Turbo” service, which provides 15Mbps down and 2Mbps up, would cost $280/mo. There are plans at $120, which is merely a 200% markup, but the $120 business class service provides only 10Mbps down, and 512kbps up.)

But what was even more upsetting was that I couldn’t figure out what was going on at first. I first found out about the story from DSL Reports. Calling up Time Warner customer service, they told me there was no plan for tiered bandwidth in Austin. Chatting with Time Warner tech support, they said it would start this month.

The actual truth is that monitoring end-user bandwidth will begin this month in Austin, but we won’t be charged for bandwidth until a couple months down the road.

But I didn’t know that until I literally had Alex Dudley, VP of Public Relations at Time Warner Cable on the line.

Time Warner is a monopoly in my apartment complex. I have checked – AT&T, Grande, Verizon – none of them offer service to my apartment.

I like my apartment. My apartment is very close to work, it has a nice swimming pool, and there’s a 100% lack of cockroaches. Essentially, I can’t justify staying there if I’m going to be paying $300/mo (or even $120/mo) for Internet service, compared to $60/mo elsewhere. In essence, I’m being kicked out of my home by Time Warner. (If one of your bills shot up 500%, you’d move too.)

I’m just lucky that my lease ends around the same time that TWC will be instituting these caps. It would have been cheaper in the long run to break my lease otherwise.

So journalistic impartiality? Well, I give it my best shot, that’s all you can ask of me in this situation.

One last thing before we get to the interview: We’ve covered bandwidth caps from Time Warner and others before in this publication. I really hope that if you’re interested in this subject, you read “Bandwidth Caps and the Cognitive Surplus.” In short: The Internet has finally given people something better to do than watch “whatever’s on” TV, and it’s creating a more participatory culture. Bandwidth caps are an attempt to stuff the genie back into the bottle. There’s more to it, of course, which is why I suggest you take a look at the full article.

A transcript of the interview with Alex Dudley – which at times seemed more like a debate – is below.

[The following transcript is mostly verbatim. A few words have been changed (ums, some interruptions, confused & corrected technical terms such as saying “gigabyte” when meaning “megabyte” and vice versa, etc.) so that the interview reads more clearly. Reporters following up on this story who need to verify the accuracy of the transcript are welcome to contact brian.boyko@netqos.com for details.]

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Brian Boyko, Network Performance Daily: As you know, I’m a customer of Time Warner in Austin. I have the biggest bandwidth plan, I think the Turbo…

Alex Dudley, VP of Public Relations, Time Warner Cable: Turbo, yes. You like it?

NPD: Well that entirely depends on the answers to some of the questions that I’m about to ask you!

Dudley: [Laughter] It always does, it always does.

NPD: It does, you know? We’ve actually covered a lot of this stuff, like for example, when Beaumont, Texas came out with the 40 gigabyte plan. I actually did a couple of back-of-the-envelope calculations, and – I can’t give you an exact number, but I’m pretty sure I would probably go over the largest limit – which was 40 gigabytes – just myself personally. So, I’m wondering – let’s just talk about the largest plan, 40 GB – how much after that, per gigabyte does the Beaumont plan cost?

Dudley: A dollar.

NPD: A dollar per gigabyte. Here’s one of the big things. I called up Time Warner in Austin, through the [customer service] number – that’s the customer service for Austin – everybody I’ve talked to says there are no plans to do monitored bandwidth, or metered bandwidth, or data caps, or however you want to call it – there’s no plan to charge per gigabyte. I called up – or rather, I chatted online with a representative – a technical support representative for Road Runner, and he said that the plan would begin for Austin residents in April. So this is conflicting– the first question is obviously, what is the story with regards to Austin, Texas, and I assume the other plans in Greensboro, and San Antonio – is it Richmond? Let me check my notes.

Dudley: Rochester, New York. So, the plan is a little bit different in some of those places. In Austin, we are going to begin metering usage in April. But we are – let me back up. The best way to think about this is that we kind of do it in three steps. The first is that we get our technical house in order so that we can actually do this. And we start metering bandwidth. And we give customers a three month grace period, so that they can see what they’re consuming, get used to the new plan, figure out the right plan for them without being charged. After which, we begin to mail the first bills. So – we are going to be technically ready to meter usage in Austin in April, and we’re going to begin doing so, but we are not going to begin the grace period for a couple more months. Probably early Summer. So the first time that people in Austin see a bill is likely to be Fall. Septemberish.

NPD: I was a little concerned about that – when I heard that metering would begin in April, I thought that you would start charging in April. And – I guess not. And that was exactly what I was hoping that you’d say, actually, and I didn’t expect you to say it. Because, I called up, I tried to find out my usage over the past three months exactly. I couldn’t do that.

Dudley: Yeah – that’s – you know, look, that’s one of the keys to this. We understand that this is basically a wholesale change in the way that people talk about the way they use the Internet. We get that, that this is hard. So, what we want to do is make it as clear as possible. So – in addition to the three month grace period, we’ve also created what we call a gas gauge that will rest on your RoadRunner home page, so you can get instant up-to-the-minute calculation of how we are measuring your usage. And that will launch at the same time that we begin metering.

NPD: The only problem is, and as I’ve said, these are all back-of-the-envelope calculations – I don’t have hard numbers, but personally, I’m not only a journalist, I’m also a filmmaker. I make short documentaries for the Web. And the idea is that– Essentially, I’m sending 250 megabyte files over and over and over, so one video could take about 2 gigabytes themselves. And I’m downloading stuff like the Prelinger archives – for stuff to use – public domain footage to use in my video, I wouldn’t be surprised, if you add in things like Netflix, (I’m a Netflix subscriber,) YouTube, Hulu, things like that – I wouldn’t be surprised if I ended up being one of the highest usage customers in Austin. Probably – if I had to guess, maybe 400 Gigabytes – and that would cost around $400 a month – which is about… my rent.

[Ed. Note: I’ve since checked my Internet usage over the past 15 days based on what Vista’s Network connection reported during that time. A more accurate estimate would be 300 GB/mo.]

Dudley: Yeah, I think there’s a number of different things that you can do. First and foremost, we are going to introduce a 100 GB plan. Kind of as a response to the folks who feel that the caps are low – we’re going to offer that. We haven’t finished pricing it yet, so I don’t know what it’s going to cost. That said, I mean, if you are using, consistently, 400 GB a month, then clearly, you’re a target of what’s going on here. And basically, what we’re saying is – because of consumers that are using amounts like this, what we’re seeing is a need for network expansion. Basically what we figure is that the top 25% of users use 100 times more network bandwidth than the bottom 25%.

NPD: Well that’s just standard bell curves.

Dudley: I’m sorry?

NPD: Well, when you put any system on a graph like that, I mean, that actually seems a little low because of the 80/20 rule or the Pareto Principle or whatever it’s called. When you put something on the bell curve, of course the top 25 are going to use the most bandwidth because they’re the top 25. The lowest 25 are going to use the least amount of bandwidth. It seems like – funny numbers.

Dudley: Let’s use a metaphor then. You live in a small apartment. And, you’re on the same electric grid as a very fancy neighborhood with big houses. And the guy in the big house leaves every light in the place blazing all night long – has a bunch of lights outside, spotlights on his beautiful house. And you have to subsidize his electric bill, just because you happen to share the network with him.

NPD: Right… but that doesn’t…

Dudley: You conserve energy; you live in a small apartment, that’s what we’re saying. As we need to make improvements in the network to accommodate the increased demand, we can do one of two things. Either we can just charge everybody more, and we let the smaller user subsidize the top users, or we could create a plan that has a consumption element to it that asks people to pay for what they use.

NPD: Right, but that’s kind of a false choice in that– haven’t you considered using — it’s kind of a false choice because what you can do is – first of all, when you talk about something like that, with congestion, the problem with the electric grid – using that as a metaphor – is that there’s a finite amount of oil in the world. There’s a finite amount of output. With a cable company, what you’re really talking about is bandwidth, and bandwidth is simply a measure of how much you can have over time. So when you’re charging for the data, basically, to use your metaphor, I think it’s particularly unfair to charge more for the person who is using 40 gigabytes after letting a download go off overnight, compared to a guy whose using, maybe, under his cap, but he’s doing it the most congested part of the day. And, what I’m thinking might be a solution without caps – and I was wondering if you ever considered this – is simply tracking the high-end users, and when they’re downloading a lot and the line is congested, and only when the line is congested, then perhaps, throttling back their service using QoS priorities. Giving them…

Dudley: That’s exactly what Comcast did about a year ago, and it caused a complete outrage and the FCC hauled them before the committee and told them they had to stop doing it.

NPD: Actually, I covered that. That’s actually the result that Comcast applied after the FCC asked them to choose a different system. You’re talking about the Sandvine stuff that was sending forged RST packets and the issue there was that the RST packets looked like they had come from the sender itself, which was essentially kind of a classic “Man In The Middle” attack. A kind of a fraudulent thing.

Dudley: So here’s what I’d say about that, then. What I’d say is that there are a number of ways you can address this problem. And the way that you’ve mentioned is certainly a possibility. We think this one also has some merit, and we’re going to test it. And we’ll see what happens.

NPD: Well, I can tell you right now that it probably won’t work as far as congestion is concerned, because you’re not attacking congestion. You’re attacking data, while data is unlimited, while bandwidth is finite. And I’m already paying, as I said, I’m a Turbo customer – I’m already paying more for more bandwidth. If you want to charge me more for that bandwidth, I can go down to a lower tier in order to have it remain affordable. But, one of the things that I really can’t do is, I really can’t cut back on my consumption, because I do need this for both of my jobs – both this job as a journalist and as a filmmaker.

Dudley: Then it sounds like you should be a commercial customer, then, which is also possible. You know, for $140 bucks a month, you could be a commercial customer. And then there’s no cap.

NPD: And can you give commercial customer service to residences?

Dudley: Yes.

NPD: That’s good. That’s a little bit more reasonable. Here’s what I’m wondering. If a bill for a month goes consistently over, 140 GB a month – or rather the bill ends up being more than what it would cost for a commercial customer – let me start over. Basically, will customers be notified when it seems like they’re going over and maybe they should upgrade to a bigger plan? Like a lot of the cell phone companies do, if they see you have like $30 worth of overage charges in a month, they’ll tell you, “If you’re going to keep doing this, you really should upgrade to the higher plan?”

Dudley: In the early parts of the trial, we are going to try to do that – try and alert folks when they’re getting close, get them into a proper plan. But look, someone in your scenario, if you’re really consuming 400GB a month, then that’s not – we’ll work with you on ways to curb your consumption, but clearly, if you’re dependent upon it for work, you’re not going to be happy with any of those discussions. So I think that for someone like yourself, a commercial account is probably the best option.

NPD: What about families that perhaps have multiple users. For me, I understand that I’m a high user, because I do videos. But the thing is, especially with services like Hulu and Netflix, and things like that – a lot of families could end up paying for one account, and everybody thinks that they’re fine because they are only downloading 20 gigabytes which is half their cap, but if there’s four people in the family, downloading 20 gigabytes – you start to have a problem. Will this negatively impact those larger families that need the Internet more?

Dudley: Well, I think that what you’re failing to account for is that even in Beaumont, where the trial is active, 86% of our customers are unaffected.

NPD: Right, but 14% are!

Dudley: And by customers, I mean households, I don’t mean individual people. So, the assumption is that the family may need more, but we haven’t found that. Basically, we’re targeting the highest end-users, to pay their share. So, I think that what we found is that for the majority of customers – for the overwhelming majority of customers, it’s not even an issue.

NPD: Right, but 14% is a significant minority, and, I mean, my publication’s called “Network Performance Daily,” Chances are that my readers fall into that 14 percent. A great deal – and as time goes on, more users use the Internet for different services, and people get more Internet savvy, that 14% is just going to keep on growing. I mean, to me…

Dudley: But there’s nothing to say that the plan couldn’t grow with it, either.

NPD: Well, can I get your promise on that? That the plan will grow over time as Internet consumption increases overall?

Dudley: [long pause] That’s a tricky spot for me. No. You can’t. I don’t make that decision. But what I’m saying is that there’s nothing inherent in the capped levels that prevents us from doing that from an engineering perspective.

NPD: Alright. I just have to ask this stuff, and I’m sorry for putting you on the spot like that, but you know…

Dudley: Nah, this is okay. This is what I do. I’m happy to have a debate, so, it’s not – no big deal.

NPD: Well, there is another aspect to this, and that is – Time Warner is a cable company that not only sells Internet service but also sells cable service – and I’ve mentioned services like Hulu, YouTube, AppleTV – those services – couldn’t this be seen as anti-competitive? That all of a sudden it costs – you not only have to pay a dollar for a movie rental, but you also have to pay Time Warner a dollar and a half on top of that, for the extra bandwidth to make the movie rental – can’t that be seen as anticompetitive?

Dudley: [pause] Only as much as it’s anticompetitive for ExxonMobil to charge you the gas to drive down to Blockbuster to rent your video.

NPD: Right, but if you walk to Blockbuster, you’re fine. I mean…

Dudley: That’s right, and if you stay under your cap, you’re fine.

NPD: I – well you’re still, if you stay under your cap, you’re still charging per gigabyte – it’s like… if you

Dudley: No we’re not. We’re charging for an allotment of gigabytes. We’re charging for a monthly plan.

NPD: Right, but what I’m trying to say is…

Dudley: It has a limit. Much like you’re – look, I don’t know why this is such – why this is foreign to folks. You know, you’re either paying for consumption… I mean, the concept of paying for what you consume is not a foreign one. I understand that it’s different from the way we’ve charged for the Internet in the past, and we admit that. But the concept that you pay for what you use is how you buy just about everything.

NPD: Yeah, what I’m trying to say is that there’s a way to pay for what you use and tackle consumption, without a data cap which has all these other side-effects.

Dudley: It’s not a cap – you’re thinking about it wrong. I mean we’re calling it a cap, but it’s not a cap. We don’t stop you from consuming after you go over that cap, we just charge you differently. It’s the same thing with a cell phone plan.

NPD: Yes, but it’s effectively – it’s a de facto cap. The argument is entirely that you are doing this entirely to get users to change their behavior. And what I’m–

Dudley: No we’re not. We don’t care – use as much as you want. All we’re asking is that you pay for what you use. We’re happy when you use – I mean, if you want to use 400 GB a month, and pay for it, we love you.

NPD: So this isn’t a congestion solving problem?

Dudley: It is in — it’s a congestion solving problem in one of two ways. Either it will provide us with the revenue stream needed to beef up the network, or folks will change their consumption habits, which is entirely possible. But – it’s not – that’s not to say that– it’s completely content and protocol agnostic. We don’t care what you download from where.

NPD: And that’s great. I love that.

Dudley: I’m sorry?

NPD: I love protocol agnostic solutions – I think they’re great – I just think that there are other protocol agnostic solutions that, perhaps, would be better than what you’re doing.

Dudley: And if there are, and we will certainly look at all of them, then we will naturally be incorporated into this. And again, this is just a trial, so… I understand that as a heavy user, you’re concerned – and your readership maybe heavy users too, and they’re concerned about their personal skin in this game, and that’s understandable. But I think that basically, it would be hard for anyone who consumes 400 GB a month to say that that doesn’t cost us as your network provider a lot to service you. And it doesn’t impact the levels of service on those with whom you share your bandwidth.

NPD: Right, but the point that I’m trying to say is that I’m perfectly fine for you charging me more, but charge me more based on the bandwidth I use, not on the data I download. You can use QoS policies – because I can’t filter how congested the lines are on my end. You guys have to do that on your end. I’m just – what I’m trying to say is – yes, I’m a heavy user, but the heavy user isn’t making problems for his neighbors if he’s doing it when none of his neighbors are using the Internet.

Dudley: Hmm – and I don’t disagree with that point, that that doesn’t impact… I mean, you can’t impact service on someone who is not online. And I don’t disagree with that. But it still costs us money – the increased usage still costs us money to make the network able to accommodate that. And that’s just a fact of business.

NPD: But you’ve already charged me more for my Turbo plan… You’ve already established, that “if you want this level of service, if you want this level of bandwidth, you’re charging me for that Turbo plan.” Now you’re also saying, “In addition to that, you’re going to also charge me for consumption?”

Dudley: That’s exactly what we’re saying.

NPD: Alright. No disagreement here. I know. I’m being rough. I don’t like to be rough.

Dudley: No, it’s okay. Look, I understand. This is a very passionate issue. It’s very close to people like yourself that are heavy users. I get it. It’s fine.

NPD: This corporate plan that you’re talking about, how is it different from a personal plan? So, let’s say that I do decide to go to the $140 a month plan.

Dudley: Just call us and ask for a business class account. And basically we come and hook up a corporate connection. It’s a different customer service queue too. There are other advantages for you.

NPD: This is interesting – can we resell that? I know that residential services, you are not allowed to resell that, there was an article about someone who was trying to pull a fast one and resell 35 cable modems – with business class, am I restricted? Because I’m thinking – if it’s going to be like $140 a month – that’s still a pretty penny, and if I can get my neighbor to go with me on it, if he’s got a Wi-Fi – if we can work out some sort of sharing deal, I have the landline so I’ll maybe pay a little bit more – sort of like, “Internet Roomies.”

Dudley: I don’t know if that’s possible or not. I’m not familiar with the service agreement on that. But they’ll – just give us a call and the people that sell that service can answer that question. I mean, look, we’re not interested in folks reselling our services, so I think that’s what we’re trying to prevent, but whether you guys could link as one business account, I don’t know. I don’t think it’s outside the realm of possibility, but I could be wrong.

NPD: Well, thank you very much for talking – I know that I talked a lot – is there anything else you’d like to add?

Dudley: No, I think – for your readers it’s different, but for the vast majority of our customers, they won’t even notice a difference, and I think that – and I know that’s probably not music to your ears, but at the same time, what we’re doing is trying to ensure that we’re maintaining a level of service that folks are happy to pay for, and if we don’t make some sort of investment in this, or if we don’t at least acknowledge that there’s an issue here that needs to be addressed, then by the time we need to do it, it’ll be too late. So this is an experiment. One of the things we’re going to measure is customer reaction, so, you know, it’s an important part of the process and we’re happy to listen to our customers. But, you know, so far, the reaction has been what we’ve expected, fairly even across the board. So we’ll see what happens and we’ll make decisions based on what we see.

NPD: Alright, well again, thank you for your time.

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5 Responses to Time Warner brings tiered caps to Austin.

  1. Scott Cranfill April 2, 2009 at 12:19 pm #

    To all readers: I’ve posted my polite letter informing TWC of my intent to discontinue service if this rolls out with the currently-proposed pricing. Visit my website linked to my name below if you wish to appropriate it for yourself.

  2. cathryn April 2, 2009 at 3:52 pm #

    Great interview!!! I read the entire post on my bb so that depicts my intrigue for the post. =)

  3. Kyle Flaherty April 3, 2009 at 1:18 pm #

    Brian, great interview, I thought it was very fair and actually heard some interesting items from the TWC side that I wasn’t expecting to hear. I have to wonder if the Sandvine issue has clouded some of the SPs in that they aren’t willing to look at different ways to solve this issue?
    Thanks for doing so much legwork getting this info, nice work.
    /kff

  4. David H. Deans April 7, 2009 at 11:09 am #

    A “Boyko Boycott” of Time Warner Cable is a honorable cause, IMHO. We need to raise awareness, and we can all do our part by linking to this post and spreading the word.
    Frankly, this is part of a sad trend (a downward spiral), directly associated with the continued lack of meaningful competition between broadband service providers. FYI, Brian, my most recent post on this bigger topic is here http://dhdeans.blogspot.com/2008/10/global-networked-economy-20.html
    Mr. Dudley needs to know, and so does TWC as a corporation, that mainstream subscribers in Austin do care about this topic, that Americans already don’t appreciate being second-class broadband users — relative to the leading nations of the world (in Asia-Pacific and Europe) — and that tiered bandwidth is a short-sighted fix to a much greater issue. Americans pay more for less, FCC commissioners have acknowledged the problem, and now it’s time for the government to pro-actively intervene — in the public interest — to create a progressive competitive playing field in the U.S. market.

  5. Geeks are Sexy April 7, 2009 at 1:37 pm #

    Awesome interview Brian.
    With the increased use of rich media on the web, I think that this change of plan is really an outrage. I mean, Our unlimited cable plan here near Montreal is worth around $80, CND.