Data Throttling
Posted on June 2, 2008
This week, new Time-Warner cable Internet customers in Beaumont, Texas will not be given unmetered Internet bandwidth - they will instead become the first to be billed under TW’s new choke-’em down plan that will provide users between 5 and 40 gigabytes in total monthly data usage (that is total, uploads and downloads combined). Data usage over that amount will be billed at $1 per gigabyte. Comcast is also considering putting the meter on bandwidth.The goal is to limit average data usage. Why? Well, if you save the bandwidth, obviously you have room for more customers. Get the picture? If it is difficult to raise rates without losing customers, then cut back on their access capability allowing you to add more customers accomplishing the same desired result, more money in the coffers.
The entire model lies in stark contrast to the competitive markets set up in many countries, and it’s going to hurt innovation in the U.S. Many new startups, particularly those focused on video and online gaming, depend on their customers having access to high bandwidth, with no limits on their connections.
Cable companies have regional monopolies and are able to extract excess profits from these monopolies. Innovation and the health of the infrastructure is dependent on a competitive marketplace. If one part of the market falls behind (and we’re already behind in broadband penetration and average data speeds), it becomes very difficult to remain competitive.
I’m almost never in favor of government intervention, but monopolies are an exception. We need to encourage data usage by users, not the opposite. Here’s yet another problem to go along with the lack of broadband availability in many areas that needs to be solved…and not ten years from now.
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