Video Killed the Broadband Buffet

Time Warner Cable this week said it will move away from the “buffet” model of broadband and start experimenting with a “metered” model. The cable operator is rolling out a trial program in Beaumont, Texas, in which customers will be charged based on the amount of bandwidth they use. Given the rise in bandwidth-sucking content, such as high-definition movies streamed over the Internet, the move is hardly a surprise. Of course before HD movies, the culprit was peer-to-peer file sharing and before that, gamers.

But HD streaming appeals to the masses, and that could be a problem for the cable industry, which is reluctant to spend when it comes to expanding network capacity. Comcast has already tried controversial methods to reduce bandwidth-sucking activity on their network; other providers have undisclosed bandwidth caps and disconnect those who exceed them. Time Warner (TWC) claims that 5 percent of its users occupy 50 percent of its network — and as more people start downloading video, those numbers will rise.

Time Warner can’t sustain a huge increase in power users on the current infrastructure; with a buffet model, such an increase would force it to either expand the network or force heavy users out of it altogether. Metered pricing, if it works, would allow them to do both. Depending on the pricing structure, some power users will have to reduce their usage, and in an ideal world money generated by the service would go toward network expansion.

Given that the U.S. is way behind other nations in terms of its broadband speeds (and users in many other countries pay less per megabit), I’m not a huge fan of metered pricing. But it’s really a symptom of the duopoly that exists in most communities when it comes to broadband access. And I’m not sure how to solve that problem, either.


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