Tuesday, June 17, 2008

Gaming and Tiered Internet Pricing

Back at the begining of the year I had read about Time Warner experimenting with different pricing structures for their internet access. At the time I thought little about it since it was just a test program and I didn't think it had a chance in hell of becoming accepted. Most people are smart enough to want to avoid overly complex billing systems. One only has to look at cellphones and credit card contracts to find out that the consumer loses when excessive legalse is added to a service.

However, other cable companies have recently started complaining about heavy users who they say are responsible for consuming more then 46% of their bandwidth. This wouldn't really be that much of a problem except that existing cable lines can't support the growing demand for internet bandwidth. New internet applications and an increasing amount of online games seem to be behind this trend and actually detract from the demand for traditional television. Some conspiracy theories say cable companies would really like to use tiered pricing to stop the increasing amount of television content going online.

In an effort to raise money for laying new cable line the cable companies say they need a more competitive pricing structure. Thus Time Warner and others are trying to pitch to their customers that most of them are only light internet users and they would pay less under a new pricing plan. This would be correct in the short term but eventually with the increasing popularity of the Internet everyone will become a heavy user. However, most cable companies would love to lay the groundwork for internet overage fees before this becomes the case and more people would protest the change.

One only has to look at the tier pricing Time Warner is using in the test area where a 5 GB a month plan would cost 30$ and a 40 GB a month plan would cost 55$. Most gamers seeing the options would obviously opt to have the 40 GB plan and think they were safe. But the problem is that if your techno savy enough to play online games then you also probably downloading music, movies, and other forms of media. What about streaming sites like Hulu and Youtube? The truth is that within five years almost no one is going to be able to survive on 5 GB a month.

I'll say again its obvious that the real goal here is to allow internet service providers to collect overage fees in much the same manner as cell phone providers. In the initial test program Time Warner only charges 1$ per 1 GB over your limit. But once overage fees are established you know they would quickly get out of control. Anyone who has ever had a huge overdraft fee on a bank account for a small overage amount knows what I'm talking about. Plus once fees enter into the picture most companies have no ethical problem manipulating circumstances to produce the highest potential overage fees.

P.S. Anyone want to guess the amount of bandwidth Age of Conan patches will take up this month alone? So far I'm guess 7 GB at least.


Viet said...

Stop scaring me. I'll go fios or DSL instead of Cable if this ever occurs.

Heartless_ said...

Heh, it won't work out. If you notice, cell phone companies have been moving towards unlimited plans for a couple years now because that is what the customers demand. A lot of people foolishly believed low end cell plans would work. 500 minutes? Hell yeah, thats more than enough a month. WRONG!

Same thing will happen with this. A lot of casual net users will think the $5 plan is awesome. It will work for a month or so and then they will ignorantly download some massive Windows update or sign up for NetFlix instant play and suddenly be gang banged by a $500 Internet bill.

Selera said...

Let me get my foil hat. That way the can't steal mah brains!!

Seriously though they will get this to work by tricking those who only check their email to sign onto this. Although I wouldn't count out the gamer and heavy PC user demographic. We have a tendency to very bitchy and vocal when anyone messes with our interwebs.


Relmstein said...

Unfortunately, if you follow some of the links for the story it looks like ATT is going forward with a similar test program for their DSL packages.

It does seem obvious though that a majority of internet users would revolt if cable companies tried to push this.

bliSSter138 said...

I suppose it remains to be seen how well-informed broadband users are as a whole. :P

Broadband usage was originally an option picked up by the more affluent and now it's practically the norm. We still have the last mile to tread and that's a LOT of ground, but by and large, broadband availability is ubiquitous. I'd really like to see a usage report on my household before anything like this is attempted in our area. I know that both my wife and I play online games, watch streaming video via Netflix or any other of a variety of HD video services. I download games via Steam and we have a pretty hefty iTMS bill every month, not counting daily pod/videocasts to our ipods.

I really want to see what the media companies are going to say when their entire business model of online advertising is threatened while still in its infancy. They may turn out to be bigger consumer advocates than we could be.

Also some interesting commentary over at Dana Blankenhorn's blog on this subject, thought you all might find it interesting. http://www.danablankenhorn.com/competitive_broadband_fiber/index.html

Cheers! ;)

Pleochism said...

The truth is that within five years almost no one is going to be able to survive on 5 GB a month.

I had to laugh at this :) In SA, we've had 3GB monthly caps ever since we've had ADSL. Seeing people throwing a fit over "only" 50GB/month is amusing.

Relmstein said...

Pleochism :
There are a lot of new applications out on the internet that can use 3GB of bandwidth in a few hours let alone a month. Just watch a few HD streaming television shows online. I'm actually curious to how you can play MMOs on a 3GB a month cap since patching has to eat a decent amount of that up.

Pleochism said...

We generally coordinate amongst the community and get people to download the patches for us, and then publish them on local mirrors. The AoC patching is wreaking havoc with that system, has quite a few people miffed. It's just too much data.
My point is simply that, when your options are limited, you'd be surprised what you can get by on.

Relmstein said...

Pleochism :
I'll have to agree with you on that. American is been very pro free market on a lot of things but for some reason most areas in the states only have one cable and phone company. I know if Time Warner, Comcast, and ATT all rolled out tiered pricing plans at the same time most people would have no choice.