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American Cable Association Wants Bandwidth Caps

By - Source: Tom's Guide US | B 149 comments

The American Cable Association said that, like it or not, metered bandwidth Internet pricing is coming, and will be a necessity.

As displeased as internet users are (as in those who actually use the internet) about bandwidth caps, it seems that cable companies on the whole want consumption-based billing policies.

Cable executives who met for the American Cable Association's (ACA) annual summit expressed feelings that metered internet billing would be a part of the business future.

According to Broadcasting & Cable, ACA President Matt Polka said that metered pricing will be a necessity going forward for cable companies as they become broadband companies.

Polka gave that example of his heating bill in Pittsburgh, where he would love to pay the same flat rate all year-round for heating, but instead must pay more during the winter months. With all the network expansion and new internet services such as Netflix streaming, Polka said that cable companies won’t be able to provide service for just $40 per month.

Patrick Knorr, general manager of Sunflower Broadband, which has had bandwidth-based billing for four years now, said that a grandmother who just wants to read e-mail should not have to subsidize the college kid who downloads HD movies to watch later.

Knorr added that metered billing is the only way to manage infrastructure and that charging a flat rate "is not a sustainable business model." Sunflower Broadband currently offers an entry-level 3 GB service tier for $27.95 per month (without video bundle discount). Those who crave the top-level service can get 50 GB for $59.95 (without video bundle discount) per month. Those who go over their quota will be billed at $2.00 per GB, though customers can buy more bandwidth in advance in 15 GB blocks for $10 each.

Sunflower Broadband tries to put its bandwidth caps into perspective using data from more than two years ago. As quoted from its service site: In April 2007, 98.9% of users had less than 40 GBs of bandwidth usage, 86.98% of used less than 10 GBs, 49.46% of used less than 1 GBs of bandwidth usage per month.

Knorr went on to say that, unlike satellite, broadcast, and cable, the internet is not a particularly efficient way to deliver high-res video.

We’re personally of the opinion that the internet is a very efficient way of delivering all sorts of data, video or not. What do you think? Do ISPs have to charge for bandwidth to sustain a business model, or are cable companies just trying to throttle back customers to keep them paying for traditional TV services?

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Top Comments
  • 31 Hide
    wormy , May 1, 2009 9:54 PM
    they can say that they NEED to...but thats not good enough...i want to specifically know why they NEED to...I wanna see some numbers...I wanna see their costs and profit margins!!!
  • 25 Hide
    kingnoobe , May 1, 2009 9:51 PM
    Let'em. I'm sure verizon.. Is just sitting back laughing knowning their gonna make billions stealing all these cable companies customers. Right now while there is incentive for fios.. This would be a huge incentive for verizon to really push vioz everywhere even in high competition as it would own them in every way.

    Effiecent.. Maybe not for cable.. Guess what cable is not the only high speed internet solution.. So sucks to be them.
  • 17 Hide
    chaosgs , May 1, 2009 10:13 PM
    I bet TWC paid them to say that.
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  • 25 Hide
    kingnoobe , May 1, 2009 9:51 PM
    Let'em. I'm sure verizon.. Is just sitting back laughing knowning their gonna make billions stealing all these cable companies customers. Right now while there is incentive for fios.. This would be a huge incentive for verizon to really push vioz everywhere even in high competition as it would own them in every way.

    Effiecent.. Maybe not for cable.. Guess what cable is not the only high speed internet solution.. So sucks to be them.
  • 31 Hide
    wormy , May 1, 2009 9:54 PM
    they can say that they NEED to...but thats not good enough...i want to specifically know why they NEED to...I wanna see some numbers...I wanna see their costs and profit margins!!!
  • 1 Hide
    The Schnoz , May 1, 2009 9:55 PM
    I think the internet is the best way to deliver high res video. It's the current infastructure of the internet that makes it inefficient. Whether cable or satellite companies like it or not everything is going the way of the internet, and the internet is going the way of wireless broadband. Those that need fiber will use it, because landlines will always have the fastest bandwidth, but after the launch of LTE bandwidth will be fast enough to carry HD content wirelessly and that will be enough for the mainstream.
  • 16 Hide
    Anonymous , May 1, 2009 10:02 PM
    GG. Verizon is going to get all the customers now.
  • 7 Hide
    joescalon , May 1, 2009 10:10 PM
    The problem with them trying to say that this is a better business model is the fact that the internet speeds aren't increasing. It might have been 40 a month for 4 years but have they increased the speed at all? Kinda like there electricity model, you pay by the meter but you aren't limited to half your appliances. If any ISP is going to charge me by the meter, it better fast as hell. Since I pay 65 a month for only 10meg, and to me the speed is more important than the quantity since I don't download Blueray movies or something..
  • 17 Hide
    matchboxmatt , May 1, 2009 10:11 PM
    If 50% use less than 1GB a month, then what would be the point of charging that much of a user-base S10 less?

    I don't believe those figures, and if they're real, they're on the verge of becoming outdated as online video content increases in popularity. The internet has become a necessary service for most of our generation. Abusing the rate of its growth would be holding everyone back.
  • 17 Hide
    chaosgs , May 1, 2009 10:13 PM
    I bet TWC paid them to say that.
  • 5 Hide
    Anonymous , May 1, 2009 10:21 PM
    Competition is great but everyone needs to remember that there are many cable companies in the US that have little or no competition in certain communities. Like in San Antonio and Austin, there AT&T and Time Warner and that's pretty much it. Unfortunately, both of those companies are experimenting with caps. So, while everyone can say competition will succeed in preventing price gouging and metered billing by the cable companies, it's just not true everywhere. Some people have little or no choice and those people are going to feel the pinch in their pocketbooks. Bandwidth caps and metered billing overall are completely unfair unless they're the same for everyone but cable companies won't cap in areas that have good competition (like FIOS).
  • 14 Hide
    wormy , May 1, 2009 10:22 PM
    they are doing this bc services like netflix and anyone else offering online video content...especially movies...is killing the cable companies on making money off their movie channels...so they are killing the company thats killing them by destroying their customers' available bandwidth
  • 9 Hide
    formin , May 1, 2009 10:24 PM
    corporate greed is insane
  • 13 Hide
    Greatwalrus , May 1, 2009 10:25 PM
    Oh, wouldn't they love to go by the crappy, false "heating bill" analogy. This is internet service, not heating.

    If Comcast ever puts together a strict cap or consumption-based billing, I will find an alternative.

    By the way, the statistics on bandwidth usage were 2 years ago - April 2007, a lot has changed since then, I would say, with increased bandwidth usage and storage size.
  • 2 Hide
    Anonymous , May 1, 2009 10:25 PM
    Wow their heating bill analogy is bad. You pay for the gas you use to heat the house. Cable company don't provide us with the contents on the internet, so how does this analogy work here. We are paying our ISP for the use of infrastructure for us to receive the internet content, not for the content themselves.

    Also the argument about your grandma subsidizing anyone whose using more network bandwidth doesn't make sense at all. If someone is paying for 5mb/s and using 5mb/s to dl something then how is he being subsidized by your grandma?
  • 1 Hide
    Anonymous , May 1, 2009 10:32 PM
    If there are that many people use less than 1GB a month, maybe they should not get any "high speed" internet. They can live off of 56k and/or going to the library.

    I know in GA, at least, has the option of flat rate or adjust rate for heat. So do not go around and fool people, you big CEO.

    This is just like going out for dinner. You want all you can eat or a set meal?

    Smaller ISPs can make more money with this plan, and bigger ISPs, with TV cable service, can make more money, plus driving companies like Netflix out of business (cost to join Betflix plus paying for downloading movies).
  • 4 Hide
    Sicundercover , May 1, 2009 10:34 PM
    Either way its starting to look like they are going to do this and its going to suck hard. These guys want to find a way to bleed their customers and they will for a time. However my hope is that someone will come along and see how they can get the entire base by offering a sevrice the same as current.

    Of course at that time the other ISP's will start crying, there will be law suits, and when their companies begin to fail because of bad business models they will start begging for Tax payer funded government bail outs.

    This is problem #1 in modern business, "Get as much money as you can, as fast as you can"; this almost always leaves the company dead and many people unemployed.
  • 2 Hide
    mediv42 , May 1, 2009 10:36 PM
    their argument would be far more believable if the grandmother who checks her email once a week (you know, the one they are protecting from the college students) didnt still have to pay $30 a month. Maybe $5
  • 3 Hide
    rbarone69 , May 1, 2009 10:39 PM
    You have to remember the ISPs get bandwidth in bulk from the other carriers (Level3 etc...). Their purchasing power can pull down the per megabit prices considerably. The problem I have with this is the bandwidth costs are going down as technology grows. At a small data center I can purchase a 10Mbit committed 100Mbit burst for roughly $200 / month. Mind you, this is quality bandwidth peered with the major ISPs. Now this is a small amount of bandwidth purchase... I'm positive TWC, Comcast, Verizon would be able to get closer to the $2-5 per Mbit... (if someone knows different I would love to hear).

    Let's do a little math on the 10Mbit commit and see what kind of charges I would incur.

    10Mbit = ~1.1MByte /sec (effective)
    66MB / minute
    4GB / hour
    95GB / day
    2.851TB / month

    My Cost: $200 for 2851GB
    Their cost (I'll estimate $10 per MBit): $100


    Ok... You tell me that this is complete BS... I understand there's a need to make margin on this, and there's a need to re-invest in tech, but there are simply better ways to control high bandwidth usage. I can bet that bandwidth is the lowest cost item for these companies. Highest cost items would be their employees, infrastructure and head equipment.

    I would rather see the cable companies come out and say we'll give you 2MB of gauranteed bandwidth for $50, you can burst up to 10, but they may cut this back at most to 2MB during periods of high demand or if the user is using too much (> 95th percentile?). This would be reasonable with no supprise bills and allow good burst speeds for the movie watchers and downloaders.

  • 5 Hide
    falchard , May 1, 2009 10:49 PM
    90% of fiber-optic lines were paid for by the government. Most of the bandwidth these cable companies lay claim to was subsidized to them by the government, meaning we the consumer actually paid them to charge us for cable internet.

    The thing thats insulting about the metered approach isn't really the tact. Its a logical approach when you charge 1~10 cents per gigabyte, but the rate they want to charge is too much. Also the reason for these bandwidth caps is that the cable companies are refusing to upgrade and build their fiber-optic network with the profits they generate to do just that. Only a handful are investing in that sort of technology.
  • 5 Hide
    SAL-e , May 1, 2009 10:52 PM
    NocturnalOneCompanies can offer their products pretty much at whatever cost structure they want. It is indeed not reasonable for Joe-average to subsidize Marky-hacker who's got his pron torrents running day and night. You've got to pay to play.

    Light and cheaper plans are already available, but COX and TW are hiding those plans on their web sites. They will offer those plans only if the grandma ask for it and threatens to quit. So do not work for the cable propaganda. Grandma don't need 10Mbps download speed to read her e-mails. She will be just fine with 1.5Mbps or slower. All BS about the cap is about the Videos. They are very use to old practice to rip us for programs that we don't want. The crappy analogy about the heating bill is even more manipulative. The gas company provides the natural gas. The electrical company is producing the electricity. The GB that I receive or send over the Internet is produced by me or my friends: Pictures, Videos, etc. They don't have right to tax me for that. They provide the pipe and I will pay for the pipe. If someone want big pipe he will pay more.
    The size of the Internet pipe is measured in Mbps not GB.
  • 5 Hide
    Dyseman , May 1, 2009 10:55 PM
    Quote:
    Polka gave that example of his heating bill in Pittsburgh, where he would love to pay the same flat rate all year-round for heating, but instead must pay more during the winter months.


    Well no Crap! Using Natural Gas, Propane and even Electricity requires fuel, resources etc. So yeah, it will go UP in the winter.

    Internet is on a friggin' network of ping ponging signals. I can understand if their Electric company charges more because electricity went up, we should help cover the electric bill.

    But why cap? There's no need to cap. A cable hub, server, etc, probably uses the same energy whether they are Idle or running full tilt. So whether I just check mail 1 month and watch Netflix on Xbox360, use vonage phone and play MMORPGs for a month shouldn't even make them blink. If they want to limit us, limit us by Mbps, not by how much we transfer! Hell, how much Bandwidth is eaten from the CableModem sitting ilde w/o a computer even turned on just staying active to the network? What if you watched everything you did to Try not to hit the cap, but Pop-ups, Block Ads, hell, even Windows, Anti-virus and other stuff self updating and self checking for updates eating away GB's you don't even know. Yeah, they won't even eat 1MB, but in a month's time all updaters that can be run on a machine adds up. Multi computer home? wow! Myself 2 computers. Wife 2 computers. 2 kids with computers and school wireless notebooks. Wow. So I'll get to cancel Netflix, Gold Membership on XBox. 4 EQ2 Accounts. Vonage Telephone and just go Cell. Screw sending the family our pictures and baby's first words.

    Makes me want to go back to Dial up on principle (Just a hell of a lot faster).

    Look up Greed in Dictionary... A.C.A.

    Need a new Internet Transit system!
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