Consumers Push Back, Time Warner Retreats
Many reports have warned the public about the threat of tiered pricing for internet service. It may be falling on deaf ears except those who were exposed to the idea for real by Time Warner. If you remember the days when AOL was one of the few ISP’s when all was dialup that did not require long distance charges this should get your attention.
AOL is owned by Time Warner. Many who remember the less than inspiring service from AOL in the dialup days should not be surprised by their parent corp making this move.
“Cable operators know it’s only a matter of time before broadband access reaches the TV set, and that could be a disaster for the industry under its current pricing model,” said Michael Greeson, president of The Diffusion Group, a market research and consulting firm. “Internet usage is skyrocketing, and consumers have grown accustomed to an all-you-can-eat broadband subscription, so the cable companies are looking for a way to put this genie back in the bottle.”
You can argue all day but the simple fact is telecom services whether voice, data or anything else mysteriously have similar pricing and it is all too much. The single largest problem causing that is the reluctance of consumers to object to excessive pricing. In this latest story on the topic the public has not been impressed. That is largely an exception to typical consumer behavior which acquiesces to vendor pricing.
What adds to this insanity is government spending to increase broadband access to rural and other underserved areas. To subsidize areas of lower population density and in this case lower broadband profit potential with public funding for private enterprise costs is another boon for special interest….top ISPs and telecom companies.
In the past cable companies were reluctant to serve sparsely populated areas for lack of potential subscribers per mile of cable installed. Voice telecom is moving away from physical plant being wire and pole bound to wireless and cell towers. The service has become less satisfactory and more expensive. The same is on the horizon for other telecom services.
Rather than let the buyer beware or let competition set the price the sheep will be led to slaughter (figuratively speaking) as they have lost their way and no not how to influence the market or specially connected interests who control the outcome.
Time Warner’s claim that a few users consume more than their fair share of bandwidth as the excuse for tiered pricing is lame. If it were true the excessive price charged to the remainder of subscribers would cover costs associated with the few they describe. And cable operators’ form of internet access is markedly different from non-cable ISPs. Like other items described in the reference above maybe that is Time Warners real problem.
While conservative principles and a free market philosophy are noble ideas even Sean Hannity said on his radio program this week that not all business operators are honest but most are. No argument here but it does fit well in the ending note of this post.
This is one case where there are bandits in the marketplace. Without adequate public complaints all it takes is one vendor to introduce a bad deal and that becomes the standard almost overnight. Then the option to take your business elsewhere becomes moot. All the prices are then essentially the same and there is no competition.
Stanford Matthews
MoreWhat.com
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April 18th, 2009 at 8:06 pm
Who are the minority that subscribe to the all-you-can-eat service? Where would bloggers fall into the tiered pricing?
April 18th, 2009 at 8:10 pm
Okay, I followed the links and I understand now:-)
April 18th, 2009 at 10:43 pm
If it isn’t malicious hackers or other ripoff artists scheming on the internet it is control freaks from business or government. Spotted a post on your blog that I have to get back to read. The one on Rockefeller, Snowe and cyber security legislation.