Friday, January 18, 2008

Time Warner Cable to test Usage Limits

A Light Reading article stated that Time Warner Cable will start a trial of differential broadband pricing that will charge higher fees to the 5 percent of its cable modem users that use 50 percent of its network bandwidth.

The trial apparently will put some new customers on a metered billing plan. It could become a national offering if successful. It appears that customers who are part of the trial will be able to track consumption using a web tool and, if needed, upgrade to a higher tier.

There have been comments by executives of other cable companies stating that the industry will move to usage based offerings in general. Rogers in Canada already has a cap of about 90 gigabytes on its 18 mbps tier.

I expect that telcos want to use similar usage based techniques on their broadband services as well. Both the telcos and the cable companies are facing significant network expansions to support the increasing demand for broadband Internet bandwidth.

These caps are one technique that both telcos and cable companies can use to limit the use of these broadband services to deliver video content, especially to systems like Apple TV that connect TVs to the Internet. Rogers 90 gigabyte limit amounts to only about one hour of HD viewing per day. Clearly, both the telcos and the cable companies want viewers to watch their TV offerings rather than over the top Internet offerings.

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