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Internet plan called blow to entrepreneurs

Wednesday, April 15, 2009

(Updated 1:55 pm)

By Joe Killian
Staff Writer

GREENSBORO — When Eli Abrams graduated from Guilford College’s information technology program in 2003, he could have started a tech business anywhere from Atlanta to Austin. But he opened Utopia’s Edge Consulting in Greensboro — a place he saw as a vibrant, artistic and tech savvy community where he could afford to live and do business.

With Time Warner Cable’s recent announcement that it will begin measuring Triad customers’ Internet use and capping the amount of data they can send, Abrams said he worries future small business owners won’t make the same decision he did.

“It has an extreme potential to discourage business,” Abrams said. “Especially tech and Internet professionals who work from home. When you look at other cities where high-speed Internet costs are flat-rate and unlimited, why would you choose to come to a place where it’s this complicated?”

Earlier this month, Time Warner announced it would test metered usage plans in the Triad; Rochester, N.Y.; and the Texas cities of Austin and San Antonio.

Under the new system, customers would choose Internet usage plans that cap uploads and downloads at 10, 20, 40, and 60 gigabytes. Customers would pay $1 per GB in overage fees if they go over their caps. The pricing is similar to how consumers pay for cell phone service.

The announcement was met with outrage from customers and threats of legislation to block the change. In reaction, Time Warner postponed its tests in Austin and San Antonio, big areas for tech business.

For the Triad and Rochester, the company announced two additional tiers, including a “budget” tier allowing 1 GB of data use per month for just $15 and a “super-tier” allowing up to 100 GB of data use for $75. The company also said it would limit overage fees to no more than $75, essentially creating an “unlimited” plan for those willing to pay the fees.

Abrams and others said that’s not enough.

“One of the great things about Internet in Greensboro is that you didn’t have to upgrade to a business class service for Internet if you were a freelancer, someone who telecommutes or if you have your own business in your home,” Abrams said. “You could get unlimited Internet for smaller business needs with your residential service.

“With these caps, those kinds of professionals are going to find themselves paying twice or three times as much for the same speed and amount of data they’ve been using.”

Melissa Buscher, director of media relations for Time Warner Cable’s Carolinas region, said customers who are worried about their home business needs would get more out of being business class customers. The cost may be more, Buscher said, but the speed and service are worth the switch.

Abrams, who has filed a complaint against Time Warner with the Better Business Bureau and contacted the attorney general’s office, said the company’s plan is clear: make even low-level home business users pay twice as much for business class service.

Many Time Warner customers agreed, citing the company’s plan to continue offering its own digital phone service customers unlimited service at a flat rate but count any data used on competing digital phone services such as Vonage or Skype toward data caps, which could lead to overage fees.

“It’s the same amount of bandwidth if you use their service or someone else’s,” said Stephen Matlin, a self-employed Greensboro Web designer who uses Skype for phone calls through his Time Warner Cable Internet service. “Why would they charge only the people who choose not to pay for their digital phone service? It’s to discourage competition, to penalize you unless you subscribe with them.”

Last week, Greensboro Mayor Yvonne Johnson said she would look into bringing in competing Internet providers such as AT&T U-Verse and Verizon FiOS but no progress has yet been reported.

City leaders in High Point said they’re also concerned about how it will affect residents — especially business people.

“To single our area out at a time when we’re trying to attract new business, when everyone is trying to cut costs, is bad for the city,” High Point City Councilman Mike Pugh said. “We shouldn’t be at that disadvantage.”

Contact Joe Killian at 373-7023 or joe.killian@news-record.com

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LaborMan

April 15, 2009 - 6:17 am EDT

I came across this article from USA today and with local Time Warner increasing it’s rates for BROADBAND users I am curious to know if anyone else has saw the conflict it may be causing. The stimulus bill is clear as reported however Time Warner seems to be avoiding the issue getting stimulus funds plus making customers pay more for services. Could they be “Double-dipping”?

BROADBAND: Help for rural areas

Find this article at:
http://www.usatoday.com/money/economy/2009-02-12-stimulus-package-effect...

How will the $787 billion stimulus package affect you?
BROADBAND: Help for rural areas
The stimulus bill includes $7 billion for broadband deployment in rural markets across the USA.
That high-speed Internet access is counted as "infrastructure" is illuminating in itself, says Gene Kimmelman of Consumers Union.
Under the Bush administration, broadband service was treated as a luxury, he says. The Obama-backed stimulus package, in contrast, "treats Internet communications as an essential service, just like our highways," Kimmelman says.
With that baseline established, Kimmelman says, he expects major public policy shifts to follow, with the goal of making broadband available and affordable to all Americans. Though final language is still being worked out, the $7 billion plan offers "grants," or funding, to companies willing to deploy broadband — wireless or wired — in "underserved" or "unserved" markets.
But there are regulatory strings attached, notes Paul Glenchur of Stanford Group in Washington, D.C.
Companies must offer broadband services in a "non-discriminatory" fashion. That's code for "open access," a politically charged notion that says carriers must treat all Internet services the same.
Likewise, trying to define "underserved" or "unserved" markets could prove challenging, he says.
Why: Satellite-based Internet services already are available in most rural markets. Phone and cable TV companies have also spent billions deploying broadband in hundreds of markets, including rural areas.
The government's plan to essentially subsidize competition in these areas through a grant program "raises a basic question of fairness," Glenchur says.
Kimmelman disagrees. Satellite-based broadband costs around $90 a month, he says, putting it out of reach of many consumers.
By Leslie Cauley

ncnole

April 15, 2009 - 7:39 am EDT

I contact the NC Attorney General and asked them to looking TW's price gouging and the fact that it has a monopoly on broadband service in the area. This is the response that the NC Dept. of Justice forwarded me. Sounds like corporate doublespeak.

"I am writing in response to the inquiry by NC consumer, regarding billing for broadband services (Road Runner). The consumer’s question refers to the trial of a new packaging model called "consumption based billing."

With consumption based billing, bandwidth usage caps are established for each level of service. These usage caps will not become effective until TWC has concluded a lengthy customer education period during which consumers can track usage and "right size" the Road Runner package best suited to meet their individual broadband needs.

Following the extended educational period, customers will then be subject to additional fees for bandwidth consumption in excess of the caps outlined in their respective service packages. While all the product offerings have not been finalized, a wide range of usage caps will be available. Such a billing plan will impact only a few customers; the vast majority (estimated at 86% based on other trials) will see no change in monthly cost.

Consumption based billing is not currently in effect; we are just now in the planning stages for the trial and will be keeping customers informed on our progress. No changes will be made to the pricing of any customer's Road Runner service, under this plan, without advance notice. The new billing plan will not be officially introduced until the fall. Customers currently in a "Price Lock Guarantee" (PLG) won’t be impacted. Said another way, the PLG price will remain in effect until the end of the current PLG term.

With regard to consumption-based billing, as broadband usage and adoption rates grow, our experience tells us a natural divergence in consumption rates seem to occur among users. Current pricing plans require all users to pay the same amount, whether they check email once a month or download six movies per day. For that reason, when current user patterns are taken into account, the current pricing model is elementally unfair and is not the pricing model most preferred by consumers today.

All customers will have access to a website enabling them to track consumption against their individual plan. Once the website is available, customers will have three months to become comfortable with individual usage levels before the new billing plan is in place. Customers will always have the ability to change Road Runner service plans to fit their particular broadband and budget needs. TWC will proactively work with customers to help them identify the Road Runner plan which best meets their needs. Some customers may discover they consume far less bandwidth than before, therefore TWC customer service personnel will be happy to assist these customers in "right sizing" to a different plan.

In summary, the intended purpose of this plan is to create an equitable way to charge customers, one which will allow them to choose the speed and consumption package that makes sense for their household Internet usage. With a consumption based billing plan, all customers will have access to a "gas gauge" enabling them to track consumption against their individual plan.

Consumption based billing has been trialed successfully in other areas and we believe once our customers experience the advantage(s), they too will embrace it."

weatherwithyou33

April 15, 2009 - 9:13 am EDT

So the Attorney General forwarded you a letter from TWC explaining TWC's own policy? I guess that's one way out of the situation.

I would suggest everyone call or go online to AT&T or Verizon (I don't work for either) and demand they bring their fiber based options to our market. I would say AT&T is the way to go because the are dropping massive amounts of fiber in NC and they are supposedly close to bringing their fiber based Uverse system to NC but I don't want to push one or the other. We need to demand more choices and better competition.

MackBrown

April 15, 2009 - 10:16 am EDT

Have been following this story for some time. Ask yourselfs this: Why would the state, feds or local goverment help, this will only provide a new tax base. Just look at all the new student housing going up without the infastructure to support over 4000 toilets and showers. Can you imagine how many GB's each student will be using.

uncwgm

April 15, 2009 - 5:55 pm EDT

An especially anti-competitive reason why TWC wants data caps which would effectively make high speed internet video unaffordable:

From their recently filed 10-K report:

"Technological advancements, such as video on demand, new video formats and Internet streaming and downloading, have increased the number of media and entertainment choices available to consumers and intensified the challenges posed by audience fragmentation.

The increasing number of choices available to audiences could negatively impact not only consumer demand for the Company’s products and services, but also advertisers’ willingness to purchase advertising from the Company’s businesses.

If the Company does not respond appropriately to further increases in the leisure and entertainment choices available to consumers, the Company’s competitive position could deteriorate, and its financial results could suffer."

Full Document Here:

http://ir.timewarner.com/secfiling.cfm?filingID=950144-09-1481

poe_diddley

April 16, 2009 - 6:09 am EDT

I think our Mayor really needs to get on the ball with the competition if she was serious. Currently there are no real options in my area, which lies just outside of GSO. I would love to have the Verizon FIOS as an alternative, but without some help, it's not going to happen. Time Warner really does have a monopoly on this area, and regardless of whether this "test" fails or succeeds, it will be a financial strain on home based internet development firms, which are in their infancy in this area. Gigabytes get eaten up pretty quickly during construction and testing of a new site. And Time Warner's lame excuse of how we would get more out being business class customers is garbage. How would it be better if i'm paying more money for the exact same service? Business class is in reality no different other than the price. The speed is really no better than having RoadRunner Turbo, you just pay more. It seems like we will pay more regardless, only we won't see any improvements whatsoever.