Part 3: Killing Your Financial Performance… and your company’s performance.

Time Warner can bring out the argument that, under data-capped plans you only pay “extra” for data “over the cap.” The problem is that every single one of Time Warner's plans require you to “buy” that cap of data with your monthly fee.

Since every single monthly fee that Time Warner has come out with (so far) costs around the same $1 per gigabyte for under-the-cap gigs. For some plans, (such as the $30 ten-gig plan, or $15 one-gig plan) it’s much more. For the “60 gigs for $55” plan, it’s slightly less. But for every gig you download, you pay, whether you go over the cap or you don't. How much will that cost?

Well, to simplify things, let’s take a look at the overage rate of $1/GB – only the top tier, at $0.91/gig , is cheaper, and even then, you’re saving maybe 5 dollars for the month over a flat $1/GB rate.

• Idling for One Month: $2.04
  
  Yep, I actually checked, when I had the computer running there, with nothing else going on, no AIM, no Skype, nothing coming in or out of my LAN other than the statistics my router was sending me, I was still using up 485kB over 10 minutes. Extrapolating this out, I get 2.04 GB. I can assume that I'm being bombarded by all sorts of neat little packets containing all sorts of things I don't want. All of which, I'd have to pay for under Time Warner's plan.
  Keep in mind, Time Warner's lowest plan is 1GB, with a $2/GB overage rate. I’m not even sure I can avoid this “usage” by turning off the cable modem when I wasn't using it, because Time Warner measures the traffic at their end.
  
  
• Downloading “Twilight” (HD) from the AppleTV store: $3.80
  
  (I thought that it was pretty appropriate to use a vampire movie to illustrate my point about Time Warner's new pricing plan.)
  
  It should be noted that renting HD version of the movie itself only costs $4.99. At a total cost of $8.79, you might spend $2 on gas getting to Blockbuster and still come out ahead.
  
  Which brings me to an interesting point – Apple’s major overhead cost for the iTunes store is bandwidth. I can't imagine that Apple is paying anywhere near $3.80 in data transfer fees, as that would leave them with only $1.19 in profit before splitting it with the content distributors.
  
  
• Downloading Season 1 of Friday Night Lights (A source of Austin Pride): $30.86
  
  It should be noted that Friday Night Lights is a source of much of Austin's creative community's income and future career positioning – Austin Mayoral Candidata Brewster McCracken specifically mentioned Friday Night Lights in his statement on the data caps. The HD season costs $65.78 – this would add $30.86 to that bill.
  
  
• Watching “Young Frankenstein” on Netflix Instant: $1.26
  
  This would absolutely be one of the competitive, promising services killed off, as the cost of mailing the DVD out is certainly less than the cost of downloading it would be. Netflix Instant is free to Netflix subscribers.
  
  
• Watching an episode of “The Daily Show” from ComedyCentral.com: $0.20
  
  
• Watching an episode of “Survivor” on CBS.com: $0.49
  
  This includes the cost of the commercials that they were running, which included, ironically enough, commercials about watching March Madness Online at the Office.
  
  
• Watching a March Madness Game: $0.28
  
  Yep, it's online now. Oddly enough, the video quality for March Madness was lower than that of Survivor... but as I don't watch sports anyway, who cares.
  
  
• Downloading “Where the Wild Things Are” Trailer: $0.15
  
  Not much, but who goes to Apple's trailer site to watch ONE trailer? And if it's something cool, like “Star Trek” (2009) aren’t you going to see it more than once?
  
  
• YouTube High Definition Video (7m11s): $0.11
  
  Again, YouTube is providing a great way for people to become active creators instead of passive consumers. When a third party charges for something the first party created and the second party wants, it limits the audience and stifles growth.
  
  
• Downloading the back catalogue of a video podcast (Comedy Central's Stand Up Podcast): $1.13
  
  These video podcasts are free to download, though they serve a purpose – the idea is that you watch the podcast, want more, and tune in to Comedy Central’s programming.  Under a data cap, it severely alters the new media marketing plan of just about every company.
  
  If everyone had to pay a surcharge for the data as well as bandwidth, there wouldn’t be any demand for “new media communications specialists” because we’ll all be forced back into using the old media – the old media that we “loved” so much that we abandoned it en masse the instant a better alternative became available.  


• Watching Live Breaking News (Obama's DNC Speech used as example): $1.11
  
  
• Downloading Service Pack 1 for Vista: $0.45
  
  Hobson's choice: Skip an update and risk infection, or leave Windows updates on, and pay more for it? Oh, and if you think you’re immune to infection because you run Linux…
  
  
• BitTorrenting Ubuntu: $0.65 + ($.065 x your share ratio)
  
  A 1:1 share ratio would cost $1.30 – still cheaper than Windows, but not “free.”
  
  
• Gaming:
  
  
  
  • Downloading the latest nVidia graphics card drivers: $0.07 
  • Downloading Half Life 2 from Steam: $0.94
    
  • Patching Battlefield 2: $0.55 
  • One Hour of Team Fortress 2 gaming online w/Voice: $0.09
    
  
  
• Sending an 8GB SD card worth of digital photos to Grandma: $8.00
  
  “Yes, Mom, I'd love to send you photos of your grandson... but... it's so expensive...”
  
  
• Getting Rickrolled: $0.01…
  
  …per rickroll.
  
  Rick Astley only clocks in at 10MB... but Rick's been out there over 19 million times. It adds up. 
  
  
• Video calling my sister via Skype: $0.88
  
  I had a great 2 hour conversation with my sister on Saturday when I was sick. She showed me her fan-translations of Japanese comics and we talked about what she's going to do when she gets her certificate, her plans for her future, it was a great time. She also made fun of me gargling Chloraseptic when I had forgot to mute my headphones, and made fun of me gargling Chloraseptic when I did mute my headphones but still had the webcam on. Ah, great times.

You know, I think it's absolutely ironic that Time Warner didn't learn any lessons from the fact that they were able to storm into the telephone business because they eliminated the exorbitant fees for long distance telephone calling with “cable phone service.” Of course, that may be the idea – there's nothing technologically separating Time Warner's cable telephone service from a service like Vonage, except that you would have to pay for every gigabyte on that Vonage phone – while Time Warner's phone wouldn't have any charges associated with it.

All of a sudden, this thorny “pricing” issue becomes a thorny “Net Neutrality” issue...

Maybe some of these sub-dollar prices look reasonable to you… except that you previously got them for free.  And when people have to pay for what they previously got for free, they’ll find a way around that.

So instead of waiting until they get home to watch that March Madness game, or that YouTube clip, or that Daily Show episode, they’ll do it at work, instead.  And unlike on a Time Warner connection, there really is congestion difficulty on corporate networks. 

You think recreational traffic is bad now…

But ultimately, I think this is a case where Time Warner simply has not learned from history.  We already looked at how the last major service to charge based on usage is a shadow of its former self and eventually abandoned that business model, and how an “@aol.com” e-mail address on a business card went, in the early 90s, from being seen as a go-getting trendsetter to being a laughingstock.  And we saw how Time Warner and other cable companies were able to battle entrenched phone service monopolies by eliminating rated service for long-distance calling for a flat rate. 

But there’s more to it.  When you put a third party price on it, a “Time Warner Tax,” if you will, the thought of doing some of these things – things that have been changing our lives, our economy, and our culture, from one of passive consumers to creators and producers, well... it reminds me of a specific point in history. 

That is, there was once a time in America where every official communication, every official piece of business, every record – required that an onerous surcharge be applied, a tax levied by a distant, monolithic monopoly with no concern for those affected. It negatively affected merchants, manufacturers, printers, lawyers and anyone who needed to work with legal documents. The justifications were also similar to the arguments by Time Warner today – that is, that the tax was “the most easy and least objectionable” way of raising the money, and that alternatives were considered but rejected.

This was the “Stamp Act of 1765.” Opposition to it was so widespread and heartfelt that, well, one thing lead to another, and eventually we waved bye-bye to King George III.

And that's what it comes down to. The move by Time Warner to attempt to use this pricing scheme flies in the face of history. Anybody who legitimately needs broadband service and has the ability to switch to a different provider will do so when they get that first bill.  In short, Time Warner is getting out of the broadband business. 

They’re just doing it in the most money-draining way possible.