Big Cable’s Internet Rip-Off

Megan Tady

You’ll have to excuse me – I’m a little tired, having stayed up all night watching episodes of Lost online. I’ve never really cared what’s in that hatch, but thought I should stream the videos before they cost me the equivalent of two weeks worth of groceries. 

Used to their strangleholds on the American consumer, cable giants don't want their market challenged by online video.

The good news is, that kind of online price-gouging has been delayed – for now, anyway. Thanks to a firestorm of public pressure and congressional opposition, last week Time Warner Cable shelved its pay-per-byte plan, which would link price to the volume of content consumers want.

The media giant’s proposed pricing plan would force customers to purchase different tiers of Internet access. Customers who exceeded their bandwidth limit – say, by viewing online videos – would face steep penalties on top of their subscription rate. Think of it like a cell-phone plan that routinely gouges customers for using more than a monthly allotment of minutes. 

It’s a huge rip-off: In Rochester, N.Y., the company currently charges consumers $44.90 per month for unlimited access to the Internet. But under their new plan, consumers would have to pay $150 per month – over $100 more – for the same access. And this outlandish increase comes after the company has said it now costs less to connect consumers to the Internet. Time Warner had planned to test their pricing scheme in four markets; it has already imposed overage” fines in Beaumont, Texas.

But the company hasn’t abandoned its plan: It’s only backing away until the fire dies down. In the meantime, other Internet service providers are waiting in the wings, watching the company’s every move as they consider launching similar schemes. AT&T already has.

Stifling online innovation

There’s a host of reasons why we should be worried about Internet service providers’ march toward penalizing the use of the Internet. Exhibit A is last week’s mainstream news cycle: tea bag protests, and the UK’s sudden singing sensation, Susan Boyle. If you want substance in your news, you’ll have to look elsewhere – beyond corporate media’s steady stream of sensationalism, celebrity gossip, product placements and CSI-Everywhere. 

These days, elsewhere” often means the Internet, where innovative journalism outfits are bringing investigative news, hard-hitting reporting and minority voices to audiences via online video. The Internet allows anyone with a creative idea, camera and computer to upload their content to the world, effectively bypassing media executives by allowing the public to choose what gets aired, and when.

Already, a digital divide prohibits millions of people from getting alternative news and videos online, let alone a missed episode of The Office.” (Nearly 40 percent of the country does not have high-speed Internet, according to the U.S. Census Bureau, and high-speed Internet access here is already far more costly than in many other countries.) Yet cable companies’ pricing plans would put the unfettered Internet further out of reach for tens of millions of Americans. 

And fewer people connecting means fewer people creating, thereby stifling online innovation. 

Anti-competitive behavior

Time Warner and other Internet providers say they need to penalize users to slow down an impending Internet brownout” – a day when we run out of bandwidth. That bandwidth doomsday, however, isn’t even close.

Even one of Time Warner Cable’s own executives offers evidence that bandwidth scarcity is a ruse: Cable is like the Federal Reserve of bandwidth…we can practically print the stuff!” said Mike LaJoie, the company’s chief technology officer. LaJoie has also said that supplying consumers with more bandwidth is basically free.”

Not only does Time Warner’s pricing increase bear no relationship to the cost of connecting consumers, its bandwidth scarcity argument falls flat. So what’s really behind the company’s ploy?

Cable companies aren’t happy the public is increasingly putting down remotes and turning on computers to watch online video. Used to their strangleholds on the American consumer, cable giants don’t want their market challenged. What better way to crush online video viewing than by making it too expensive to watch? 

Free Press is calling on Congress to investigate all cable companies threatening to introduce Internet usage caps. Already, activists have signed 16,000 letters urging Congress to look into Time Warner’s plans to impose penalties against Internet users. (Congress is already getting the message that something’s gone awry: Rep. Eric Massa and Sen. Charles Schumer (), both from New York, now oppose the Time Warner plan, and Massa has promised legislation to curb the price-gouging.)

The fight continues

Time Warner Cable has halted the billing plan as it continues its customer education process” but probably only long enough to come up with better talking points to convince Americans that blocking Internet usage is in their best interest.

Or as Phillip Dampier, who runs the website Stopthe​Cap​.com, put it: “[The cable companies] still think they’re right: the problem isn’t draconian usage caps, it is that people weren’t properly conditioned to accept them first…the OPEC of the Internet will be back by the fall, probably with almost the identical plan they shelved’ yesterday.”

We can and should celebrate last week’s victory: public pressure dampened Time Warner’s spirits. But cable companies will soon be back to challenge the current system. We must be ready to stop them from swindling us by curtailing access to the Internet.

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Megan Tady is a blogger and video producer for Free Press, the national nonprofit media reform organization. She writes a monthly InThe​se​Times​.com column on media issues. Follow her on Twitter: @MegTady.
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