Last week it was discussed at length how the investment community would like the public to believe that the shift to low cap and high overage broadband pricing is “inevitable.” We also discussed how cable industry lobbyists would like the public to believe that such a shift isn’t about making more money, it’s about helping the poor. Not only is the metered billing push absolutely about making money, it’s about artificially constricting the pipe to protect uncompetitive carriers and TV revenues from Internet video. But instead, there’s a very concerted effort afoot to portray this shift as necessary, inevitable, and even altruistic.

Most consumers prefer the simplicity of flat rate pricing, and understand that ISPs are perfectly profitable under the flat-rate pricing model. They also understand that this is a pipe dream forged by never-satisfied investors, and once implemented ends with ever soaring per gig fees and ever shrinking usage caps.

The PR campaign continues this week, with Hewlett-Packard’s Joe Weinman claiming at GigaOM that not only is such a pricing shift “inevitable,” but that it’s a shift that actually originates with consumers, not investors or ISP executives. Weinman starts out on the wrong foot immediately, by confusing “pay per use” with low cap and high overage pricing models:

For the record, I like unlimited Internet access just as much as anyone else. However, such plans appear to be on their way out, and here s why. As explored in “The Market for Melons”, pay-per-use is not an evil plot by greedy robber barons, but a natural outcome of independent, rational consumer choice. Consider a town with an all-you-can-eat (flat rate) buffet and an a la carte (pay-per-use) restaurant. Smart shoppers on diets will save money by patronizing the a la carte restaurant, whereas heavy eaters will save money by visiting the buffet…. Bottom line: it is not the proprietors driving this dynamic, but the customers themselves acting out of pure, rational self-interest

Except for the thousandth time, ISP’s are not interested in real pay per use plans because the majority of their users (who simply check e-mail a few times a day) would downgrade to $5 tiers and cost carriers billions. What ISPs are proposing is flat-rate pricing with costly per gigabyte overages (completely detached from any real-world costs, which for ISPs are fixed or dropping) layered on top. Meanwhile, the suggestion this is a consumer driven push is absurd. This is an investor driven push for obvious reasons, and you have to wonder if Weinman saw the consumer reaction when Time Warner Cable proposed charging consumers up to $5 per gigabyte then insisted such pricing was for their own good.

Weinmen offers up a second post in which he hallucinates a laundry list of supposed benefits that will occur from this change in pricing paradigm. Most of them revolve around technology platforms designed to aid this monitoring and metering of usage and billing, which we’ll go out on a crazy limb and guess is precisely what Weinman is selling at HP. Unfortunately, Weinman begins his sales pitch just like the cable industry traditionally has by pretending this is an inevitability consumers want, and that such a pricing shift is financially necessary. Neither are true.

Link to the original article…

Time Warner Cable announced that the cable provider is now the nation’s third-largest broadband ISP, having just passed the 9 million broadband subscriber mark. They seem to be working from trend projections: Time Warner Cable actually ended 2009 as the country’s fourth biggest ISP, their earnings showing 8.9 million broadband subscribers to Verizon’s reported 9.2 million customers. Both of course trail AT&T and Comcast, AT&T’s earnings indicating that AT&T now serves 15.7 million customers, while Comcast’s latest report shows Comcast with 15.9 million broadband users.

“This is a great milestone for Time Warner Cable, and it further proves that our customers enjoy the speed and content our HSD products deliver, as well as the value seen when bundling this service with our video and phone offerings,” said Landel Hobbs, COO of Time Warner Cable.

Time Warner Cable and Mr. Hobbs were greatly helped by the fact that Verizon’s all but giving up on rural DSL service, either selling or simply ignoring many of these Time Warner Cable markets. Instead, Verizon has made it clear they want to focus on wireless (especially LTE) service and more profitable FiOS markets.

Last we checked Verizon FiOS was available in less than 10% of Time Warner Cable’s overall markets, and Time Warner Cable doesn’t have to try very hard to lure subscribers that have grown tired of 7 Mbps (or often 3 Mbps or slower) DSL service.

Penetration of AT&T U-Verse is actually higher in Time Warner Cable markets – approaching 20%. But AT&T’s top broadband speeds max out around 24 Mbps at shorter loop lengths, and AT&T’s been struggling to get line-bonded VDSL service working.

Once you realize that less than a third of Time Warner Cable’s markets see any kind of real next-gen broadband competition (with Verizon’s FiOS deployment outside of major cities essentially done for now and AT&T line bonding a perpetual no show), you start to understand why the company’s been slower to upgrade to faster DOCSIS 3.0 technology. The faster speeds are only available in portions of New York City, with only 2,000 of Time Warner Cable’s 9 million customers signed up for 50 Mbps service.

“High Speed Data continues to be a growing part of our business and we look to keep adding new features and further enhance speeds as we move through 2010,” says Hobbs. Though Time Warner Cable has been slow on upgrades we expect several new market launches over the next month or two; one insider tells us faster “Wideband” service should soft launch in upstate New York in a matter of weeks, with a hard launch a month later. Localized upstate New York promotions would seem to confirm this.

Link to the original article…

Time Warner Cable was successfully spun off from Time Warner early in 2008 in order to give both companies “greater operational, financial and strategic flexibility,” according to Time Warner CEO Jeff Bewkes. Now an insider tells Dow Jones the company has launched “Project Mercury” – an effort to rename itself sometime during 2010.

Given the spinoff the rebranding is an obvious move, though it may also help distance the company from last year’s public relations implosion when the company attempted to impose low usage caps and unreasonably high overage fees on their customers.

Good luck with that, Time Warner Cable.

Link to the original article…

The article makes no mention of publicly available financial reports from broadband providers like Time Warner Cable that prove that at the same time their profits on broadband service are increasing, the company s costs to provide the service continue to decline, along with the dollar amounts they spend to maintain and expand that network to meet demand.

Dampier also notes how the Journal misidentifies Rep. Eric Massa (who is pushing for laws protecting consumers from over-charging) and omits the potential conflict of interest in ISPs pushing for high overages while at the same time crafting massive new Internet video empires. While the Journal does note that the average user consumes just 15 GB a month (that number is even less, according to a recent Cisco study) it omits just how low many of these proposed caps have been (Frontier thinks 5 GB a month is reasonable for an entire household).

The Journal also also helps the industry make caps sound more reasonable by measuring them in e-mails sent, an annoying and silly metric used by ISP marketing departments. Most importantly though, the Journal helps sell the idea that a shift from flat-rate pricing to the industry’s version of metered billing (not to be confused with pure per byte billing) is both necessary and inevitable. In reality, it’s neither, and the metered billing models we’ve seen proposed by carriers so far are little more than price hikes disguised as altruism and fairness.

It doesn’t inspire fresh confidence in the American press when a consumer covers the full scope of the metered billing discussion far better than the nation’s supposed top business paper and its corral of staff writers.

Link to the original article…