Top cable companies try reining in heavy web use
Jun 3, 2008
Top U.S. cable operators Comcast Corp and Time Warner Cable Inc will begin testing ways this week to limit individual subscribers who use the largest amount of Internet capacity in an effort to protect their high-speed networks.
The moves are a response to government inquiries as well as the heavy costs of upgrading existing broadband infrastructure due to the explosion of downloading and watching music and videos.
Such usage is "taxing the infrastructure," a Time Warner Cable spokesman said. "In order to make investments in the infrastructure, we have to find the revenue to pay for it."Some technology blogs have criticized the new pricing structure and usage limits, which they said would curtail interest in viewing videos online and enrage consumers who currently pay for unlimited service.
Time Warner Cable said it will launch a service on Thursday that charges new consumers of high-speed Internet service based on their usage. Broadband subscribers in Beaumont, Texas, will be charged $1 per gigabyte above monthly allowances, a company spokesman said.
Separately, Comcast said it has changed the way it will manage network traffic and begin a test to slow the transfer of files to individual subscribers who are its heaviest users during congested periods.
The tests will begin Thursday in the Chambersburg, Pennsylvania and Warrenton, Virginia areas.
Time Warner Cable's new policy is intended to address its top 5 percent of users, who have spent a "disproportionate" amount of time on the company's network, the spokesman said.
Consumers in Time Warner Cable's test region will be offered several levels of service. A $29.95 per month plan for slower speeds of 768 kilobits per second and a 5 gigabyte limit would let users send and receive nearly 350,000 e-mails, play 170 hours of online games, or download more than 1,380 digital songs per month.
At the high end, a $54.90 monthly fee for a 15-megabit-per-second service and a 40 gigabyte monthly limit would allow subscribers to watch 124 hours of standard-definition videos or download 11,070 songs.
COMCAST MULLS NEW BILLING
Comcast is currently looking at "consumption" billing plans. The top U.S. cable operator offers tiers of service differentiated by speed, but not by size limits.
A Comcast spokesman said it is also evaluating a monthly 250-gigabyte limit for customers to manage its heaviest users, but it has not made a decision.
"We want to deliver the best online experience for our customers," a Comcast spokesman said. "We can do it really quickly and without the need for government intervention."
In January, the U.S. Federal Communications Commission said it would investigate complaints by consumer groups over the blocking of file-sharing services such as BitTorrent on Comcast's service.
At the time, Comcast said it did not block such services, but used network management technology to slow delivery of files to heavy users of such services.
Comcast's new approach will stop distinguishing the type of activity or services that are considered bandwidth hogs, but will slow delivery of files it believes is taxing the network.
"Setting the caps is a very simple matter to change," the Time Warner Cable spokesman said. "If usage patterns are such that we need to change those, we certainly can."
Google and cable firms warn of risks from Web TV
Wed Feb 7, 2007
New Internet TV services such as Joost and YouTube may bring the global network to its knees, Internet companies said on Wednesday, adding they are already investing heavily just to keep data flowing.
Google, which acquired online video sharing site YouTube last year, said the Internet was not designed for TV.
It even issued a warning to companies that think they can start distributing mainstream TV shows and movies on a global scale at broadcast quality over the public Internet.
"The Web infrastructure, and even Google's (infrastructure) doesn't scale. It's not going to offer the quality of service that consumers expect," Vincent Dureau, Google's head of TV technology, said at the Cable Europe Congress.
Google instead offered to work together with cable operators to combine its technology for searching for video and TV footage and its tailored advertising with the cable networks' high-quality delivery of shows.
One cable chief executive, Duco Sickinghe from Belgian operator Telenet, said it was "the best news of the day" to hear that Google could not scale for video.
MIXED BLESSIN
Google was welcomed with a mix of fear and awe by the cable TV companies, which are concerned that Web companies will try to steal their lucrative TV business. The Internet on the whole is a mixed blessing, cable carriers said.
Broadband Internet delivery to homes and small businesses is one of the most lucrative segments for cable TV operators, but heavy investments in infrastructure are needed to meet the rapid rise of Internet file-swapping and video downloads.
The data involved in one hour of video can equal the total in one year's worth of emails.
"Most of the IP (Internet protocol or data) traffic is peer-to-peer (file swapping), and most of that is video. Every year we have to invest substantially just to maintain the user experience. In fact it has actually decreased," said Spanish cable operator ONO Chief Executive Richard Alden.
"People (Internet service providers) don't like to talk about (the fact) that just to stand still, they have to invest. But you cannot keep investing at the same clip," he added.
Research group Gartner estimates that 60 percent of the Internet traffic that is uploaded from computers is peer-to-peer traffic, mostly from consumers swapping films and TV shows through select user groups and BitTorrent.
Financial advisers praised the cable TV industry because, unlike the large telecoms operators, it has been expanding and has been more efficient with capital and more profitable.
Shares of cable operators trade at around nine times forecast 2007 earnings before interest, tax amortization and depreciation (EBITDA), while telecoms operators trade at around six times, said Charles Manby, Goldman Sachs' global co-head for the telecoms, media and technology industries.
Cable operators are set to return to capital investments of a modest 10 to 12 percent of revenues, but they can be forced to spend much more due to outside pressures from increased Internet consumption and from rival telecoms operators that upgrade their broadband Internet packages to fiber optic super speeds.
"Then, the world becomes cloudy," Manby said.
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