American Cable Association Wants Bandwidth Caps

By Marcus Yam
published

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?

Marcus Yam
Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
149 Comments Comment from the forums
  • kingnoobe
    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.
    Reply
  • wormy
    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!!!
    Reply
  • The Schnoz
    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.
    Reply
  • NocturnalOne
    Companies 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.

    Meanwhile competition will do it's thing. If it's possible to deliver more for less then someone will jump in. I left Comcast cable and went to ATT DSL because of quality issues. Bandwidth was fine but too many packet drops were killing my Vonage phone and VPN to work. Now I have less bandwidth but latency is lower and reliability is better.

    People that don't have a choice are screwed but that's nothing new. ISPs can already adjust their pricing based on perceived lack of competition.
    Reply
  • GG. Verizon is going to get all the customers now.
    Reply
  • joescalon
    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..
    Reply
  • matchboxmatt
    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.
    Reply
  • chaosgs
    I bet TWC paid them to say that.
    Reply
  • 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).
    Reply
  • wormy
    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
    Reply