Time Warner Cable and Consumption-Based Billing


Time Warner Cable has had quite a bumpy ride for the past couple weeks.  Having announced earlier a plan to conduct trials of a consumption-based billing policy, in which users would be charged based on the amount of data they download and upload, by week’s end the company was obliged to suspend the trials altogether.

What happened in between were the protests of some customers and bloggers, the usual mischief of some of the “public interest” lobbies (they’re from Washington and they know what you want), and most importantly, the intervention, as critics, of a congressman (Massa) and a U.S. senator (Schumer).

Aside from the fact that broadband users who consume unusually large amounts of bandwidth, downloading movies and the like, would have to pay more, it’s not immediately clear what’s wrong with consumption-based billing.  That is, after all, the way we pay for most things, and it protects those who use less from having to subsidize the payments of those who use much more.

No matter.  In an age when information “wants to be free,” and everyone is entitled to everything, arguments based on marketplace economics are probably not going to persuade a lot of people, and certainly not grandstanding members of Congress.

Which is why, at the end of last week, Glenn Britt, Time Warner Cable’s CEO, announced a suspension of the trials scheduled for later this year in Rochester, N.Y., Austin and San Antonio, Texas, and Greensboro, N.C.

In a display of their usual savoir-faire, several of the “public interest” moguls were full of gloating, like that of Timothy Karr of Free Press: “We’re glad to see Time Warner Cable’s price-gouging scheme collapse in the face of consumer opposition.  Let this be a lesson to other Internet service providers looking to head down a similar path.”

Only slightly less tiresome was the statement of Gigi Sohn of Public Knowledge: “The company properly listened to its subscribers, the public and policymakers, all of whom (emphasis added) were highly critical of the proposition in the first place.”

The celebrations, however, may be a bit premature.  What Time Warner Cable said was that it was suspending the trials, not abandoning consumption-based billing, and that in the meantime it was going to deploy measurement tools, a kind of “gas gauge,” that would allow users to see how much bandwidth they were using each month.

Assume that some months from now it transpires that the vast majority of users consume bandwidth in amounts that would qualify them for the lowest and cheapest tiers, while only a small minority would have to pay at the highest rates.  Now that would be awkward, wouldn’t it?

A Disappointing Delay on Cross Ownership

Since January we’ve heard a lot of talk about changing the way the government does business.  At the FCC, however, it looks like it’s still just talk.  When it comes to the newspaper-broadcast cross ownership rules, at least, the times … they definitely are NOT a-changin’.

This week the U.S. Court of Appeals for the Third Circuit said it would put off a decision on whether to lift a stay on the FCC’s modest attempt to loosen the rules until after the Obama FCC has a chance to review the revisions.

This comes after acting FCC chairman Michael Copps announced that the Commission would no longer oppose a petition by activist groups to put the case on hold until the new FCC leadership was in place.  

Let’s add this up.  The usual suspects in the activist realm (Media Access Project, Free Press, United Church of Christ, etc.) try to stall a court action that might loosen the cross ownership rules.  They know that if they can stall until a Democratic-majority FCC is in place, the changes are as good as dead.  The acting FCC chairman, who favors that outcome, goes along with the idea.

So it’s business as usual at the FCC.  But we expected more from the federal judiciary.

The court’s decision was unfortunate.  The judges should have acted decisively and immediately to lift the stay – as a matter of principle.  The ban on cross ownership makes absolutely no sense, neither in this digital age, nor in this recession.  The ban should have been abolished in its entirety years ago.  Some relaxation now would at least be a step in the right direction.

As for the activist groups and the acting FCC leadership – shame on them.  Has nobody among them noticed that in recent months newspapers have been biting the dust at an increasing rate that is nothing short of alarming?

If these policy watchers and makers truly cared about the public interest and a diversity of media voices, as they purport to do, they would be doing everything possible to help newspapers survive.  

It’s true that the problems facing the newspaper industry go well beyond the scope of the newspaper-broadcast cross ownership rules.  And it’s true that repealing the rules will not, by itself, restore the industry to robust health.

But getting rid of the rules – or even relaxing them a bit as the previous FCC chairman had proposed – might just help a little around the edges.  And if even one newspaper were able to keep publishing as a result, wouldn’t the public interest be better served?

That would be a change we could believe in.