Internet Providers Want Heavy Users to Pay More and More …

April 20, 2009

(ChattahBox)—Internet cable providers, already fattened by high profits from soaring monthly fees, as the cost of equipment and technology is falling, now want to fill their coffers even more by imposing additional fees on heavy Internet users. Time Warner Cable recently backed off from its attempt to impose “usage-based pricing” of its Road Runner service in several regions of New York, after Democratic Senator Chuck Schumer strenuously opposed such a plan. But cable companies will continue to push its heavy usage penalties, until regulation is in place to stop them, say consumer rights critics.

The battle between consumers, Congress and the cable companies is about to get bloodier, as the Federal Communications Commission is preparing a study of cable companies for Congress, due next year. The commission will evaluate pricing, speed, affordability and availability, and the cable companies are terrified federal regulations are on the way.

Currently, there are no U.S. federal regulations controlling the cable Internet industry, allowing the industry to run roughshod over consumers, who have no cheaper alternatives.

The U.S. Internet providers enjoy a relative monopoly with little competition from smaller upstarts, charging significantly more than providers in other countries, where competition and regulations are in place. Companies like Time Warner Cable are trying to hike its pricing structure now, before expected regulations are imposed on the industry.

Time Warner Cable executives are insisting, despite evidence to the contrary that heavy Internet users who download a lot of movies, cost the company more than users who just check email and surf the web. Landel C. Hobbs, CEO of Time Warner likened the company’s argument to splitting a lunch bill, when one diner orders a salad and the other a steak, claiming heavy usage fees are a question of fairness.

However, critics say heavy users don’t cost cable companies more, because their networks are designed to always handle peak usage. Users just surfing the web or others who download movies all day, cost the cable companies the same.

Additionally, the cost of equipment to upgrade Internet capacity is falling rapidly and is about to fall more with new high-speed technology, called Docsis 3, which will increase capacity and offer speedier downloads. Unlike other countries, U.S. Internet companies are promoting Docsis 3, as a way to charge customers more for the increased download speeds that approach 50-megabits-per-second.

Time Warner will be charging $99 a month and Comcast $139 a month, for its new 50-megabit service. Comcast currently charges approximately $45 a month for 8-megabits-per-second downloads. Countries like Japan that have competition between its Internet providers, charge $60 a month for 160-megabits-per-second.

Comcast recently revealed to its investors that the hardware to provide 50-megabits-per-second service costs much less than the older equipment offering 6-megabits-per-second, and yet the company is gauging its customers even more.



2 Responses to “Internet Providers Want Heavy Users to Pay More and More …”

  1. Old Man Dotes on April 20th, 2009 9:54 am

    No, ISPs who are also cable TV companies want to stifle competition by making it too expensive for their cable TV customers to get video over IP (such as Hulu, YouTube, and so forth). The entire TWC debacle was a blatantly transparent attempt to lock out the competition. The end result will be legislation that prevents such moves in the future. The immediate result is the exodus of Internet users from TWC to ISPs who are not also cable TV vendors.

  2. olivia on April 20th, 2009 10:47 am

    What is unfortunate is that in many areas of the US that are not on the ‘main’ city list find it impossible to get coverage from smaller ISP’s anymore, at least if it isn’t dial up. I would love to have someone other then Qwest or Comcast, two toxic companies, to cover me. But I am in an area of Utah that seems to fall out of availability areas for anyone else I find.

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