Time Warner staff: “Bandwidth is basically free”

This is an excerpt that I found very interesting (from http://www.savetheinternet.com/blog/2009/04/15/free-press-questions-internet-limits/):

We looked at the TWC pricing schemes, and we noticed that the cost appears to bear no relationship to the price at all. According to Time Warner Cable’s Securities & Exchange Commission filings: “High-speed data costs decreased for the three and nine months ended September 30, 2008 primarily due to a decrease in per-subscriber connectivity costs.” In Rochester, N.Y., Time Warner Cable currently charges consumers $44.90 for unlimited access to the Internet. But under the new pricing scheme, consumers would have to pay $150 — over $100 more — for the same access. If it is costing the company less to connect consumers, why are consumers being charged more to connect? There may be a good answer to this question — but so far even tenacious reporters haven’t gotten it from Time Warner Cable.

The rationale being used to justify this large increase – an impending “exaflood” or Internet brownout — is not supported by the data. In fact, the argument that bandwidth is somehow a scarce resource was refuted by Time Warner Cable’s own CTO Mike LaJoie, who quipped: “Cable is like the Federal Reserve of bandwidth. … we can practically print the stuff!” LaJolie also commented that supplying consumers with more bandwidth is “basically free.”

On the whole, what we see is a major cable operator rolling out a new pricing model that looks like it has the scale to become a permanent system — which is an appropriate moment to raise a red flag. We see a bandwidth cap that is very low compared to others industry players like Comcast — and given the current rise of online video services, it isn’t unreasonable to suggest why this is happening and that it might be a problem. And we see a price that bears no relationship to cost. These things raise questions. And, when called on these questions by the media, the justifications TWC gave were weak obfuscations that just made it seem all the worse.


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