Paying per byte; the impact of Time Warner's new pricing
What will it mean to pay per byte while surfing the net?
You've no doubt seen the news about Time Warner Cable changing their broadband pricing structured from a flat-rate plan to a tiered plan. Their claim is that this system will give 'light users' a break in the amount they pay for broadband.
If you haven't followed the story, let me bring you up to speed. First, here's an online statement that TWC directed Wired to. And here are two of Wired's relevant articles: Time Warner Cable Earnings Refute Bandwidth Cap Economics, & Bowing to Pressure, Time Warner Alters Broadband Caps. For a real-world example of how the pricing changes will impact a typical young family, check out Lara Crigger's article at Gamers With Jobs, The Meter Is Running (though note that Ms. Crigger wrote her piece before Time Warner tweaked their pricing).
OK, all caught up?
I've been trying to wrap my mind around the ramifications of this kind of pricing scheme, and every time I think I've got a handle on them all, more pop up. Putting a price on transferring a bit of data...that changes everything. There's really no analogous service that most of us pay for. You might think about your electricity or water bill, and they are close, but since they're necessities there's only so much impact pricing changes would have. The cost of electricity would have to really skyrocket before we all decided to start using candles instead of lights at night (and the government would step in well before things got to that point). Also there are no 'caps' on these services. You don't worry about exceeding your electricity limit and having to pay a premium surcharge for every kilowatt hour you go over.
The closest service I can think of would be a cell phone plan where we're billed by the minute and do pay a premium price for every minute after our plan's allotment. But a minute is easy to keep track of, and easy to control. If I talk to you for 10 minutes, I know I've spent 10 minutes of my allotted time. There are no surprises or 'hidden minutes' to worry about. When I go to a web page, I don't know how much bandwidth that's going to use. I can guess at the content of the actual page, but what about all those flash ads? What about the flash ads that stream audio and/or video? Suddenly I'm paying to download those (while the ad-serving company is paying to send them to me).
So the very first thing that is going to happen is that everyone is going to get really smart about ad-blocking software. This is going to have a direct impact on the publishers of online content, such as ITWorld. I know, dear reader, that you probably hate ads so see this as a good thing, but the fact is that ads help pay the bills. With more people blocking ads (and for good reason, since now they're paying for the ads to be delivered) online publishers are going to have to scale back or find some other way to make up that lost revenue. A way that doesn't involve pushing more extraneous content to the reader. The only solution that springs to mind for me would be charging to access the content, and no one wants that.
This new pricing also comes at a time when digital distribution of content is starting to go mainstream. iTunes, Apple TV, Steam (that one is for gamers), Hulu, Netflix Watch Now...the list goes on and on. Looking at a mid-tier package at the current Time Warner pricing, $50 gets you 40 gigs of bandwidth, so you're paying $1.25/gig. I just checked the file size for "Marley & Me" in Widescreen from Amazon's Video-on-Demand. The movie costs $14.99 to buy, and is 2.5 gigs in size, so it'll cost $3.13 for the download bandwidth, assuming everything goes as planned. So the price is $18.11, a hefty 'download tax'. Well, $18.11 plus the cost of the bandwidth for navigating through the Amazon pages. What if we get half-way through the download and it hangs. Will Amazon reimburse us for lost bandwidth? Will Time Warner?
And you'd better start making good backups because if one of your drives fail and you need to re-download a large amount of content, it's going to have a very real impact on your wallet.
I could go on and on, but the bottom line is that putting a concrete cost per gigabyte of bandwidth will have a profound impact on the way we use the web (and how are we going to measure this bandwidth, anyway?). Suddenly every service is going to have to make clear how much bandwidth it uses. Best Buy and Game Stop will be delighted, of course, as digital downloads are going to take a big hit. Cloud Computing is going to become a dirty word; we won't want to pay every time we save to, or load from, the cloud.
Let me remind you of a quote from the first Wired article I linked to:
For 2008, the most recent period available, Time Warner Cable reported that its high-speed data costs actually declined by 12 percent to $146 million. Meanwhile subscribers increased by more than 10 percent to 8.4 million, and high-speed data revenues climbed to more than $4 billion.[Source]
This is not the action of a company struggling; this is an example of corporate greed having a direct impact on the technological progress of our society. Thankfully for now only one company is following this path. Comcast has a bandwidth cap of 250 gigs, which is large enough (for now!) that most users will never hit it. And Verizon's FIOS continues to expand its service, offering an alternative. I fervently hope all impacted Times Warner customers have the opportunity to take their business elsewhere. Because you know that if Time Warner has success with this plan, other providers will surely follow. And when that happens, the web is going to undergo a dramatic change, for the worse.