Blog Post

Tiered Broadband Trials Torment Beaumont

[qi:004] Poor Beaumont. The tiny Texas town gained fame in the technology world when Time Warner Cable said in January that it would use it as a testbed for its tiered broadband trial. Then Hurricane Ike hit in September. And right before Thanksgiving, AT&T told the local paper it would start trialing its own brand of tiered broadband service there. When I ask AT&T (s T) why it would pick on Beaumont, a spokesman told me via email that, “While we are aware of Time Warner’s (s TWC) local trial in Beaumont, our decision was based on Beaumont’s good representation of many of our other markets.”

Perhaps, but it’s also a classic example of why we need competition in the broadband arena. Beaumont is a small market and as such, doesn’t offer a lot of choice when it comes to broadband providers — making it easy for the dominant players to implement anti-consumer initiatives such as overage fees and tiered plans. AT&T will charge its Beaumont customers $1 for every gigabyte over 150 GB per month, while Time Warner Cable has a set of plans that allow users to download between 5 GB and 40 GB per month before facing overage charges. The FCC is attempting to bridge the broadband gap by encouraging new wireless technology, but I’m not sure those networks will be robust enough for the home, which will require fast speeds and the ability to stream video content. That means the digital divide will continue to exist even as companies and the government attempt to eliminate it.

10 Responses to “Tiered Broadband Trials Torment Beaumont”

  1. Jeff Simmermon

    Hi — I’m the digital communications director for Time Warner Cable.

    From our side, we’re trying to be as clear as we can about the tiered pricing trial. We’ve announced our intentions well ahead of time, and we’re giving our Beaumont users tools to track their consumption and see how the process works. Our customers in Beaumont have a 3-month grace period to get used to the tools, watch their consumption and make decisions about their service accordingly.

    We don’t want to surprise any of our customers with this, and we’re trying to make the transition as transparent as possible. If you have any further questions, you can e-mail me directly at [email protected].

  2. Nayak, tiered pricing is evil because it will be far too easy to confuse and thus dupe/defraud consumers. Read Ms. Higginbotham’s sentence:

    “AT&T will charge its Beaumont customers $1 for every gigabyte over 150 GB per month, while Time Warner Cable has a set of plans that allow users to download between 5 GB and 40 GB per month before facing overage charges.”

    Maybe you know what that means, but most consumers have no idea and any attempt to compare the offerings of multiple providers (assuming they live in an area with multiple providers) will cause confusion and uncertainty, and many consumers will wind up paying far more than they need. And don’t give the knee-jerk response that it is the consumer’s job to educate himself on these issues; consumers barely have time to read the headlines on CNN while caring for a family that’s scattered to the four winds most days. Have you ever tried comparing health insurance plans? Same thing.

    Then there are those consumers who do not live in an area with multiple providers, making the tiers even more insidious because those consumers have no option but to pay whatever price the sole provider cares to charge, no matter how unjustifiable.

  3. As a proponent of metered and tiered pricing, I have to disagree with the notion that tiered pricing is evil. It is equivalent to saying restaurants should only sell buffet meals – A La Carte is forbidden. Someone using the internet primarily for video content is different from someone using it for research and information. The value of the broadband access is intrinsically different for these users. The idea of paying for what you need is’nt very far fetched. Amazon has made “Pay as you use” their mantra for the elastic cloud offering, and users pay only for the hardware resources they consume.

  4. I live in a small town. The people I would like to see with tiered or free access to broadband here would not even understand what a gigabyte was, let alone why they were charged for overage. Heck, I don’t even understand the tech side of things, nor should I have to. I just know that my only “choice” was Comcast as Fios wasn’t even available here. I know that anyone who wants computer access takes a spot in line at the library for a few dozen computers. My new office will by default only be offering Comcast service. It will work for what I will need it to do, but choice or tiers isn’t even the conversation I’ll be having—it’s access in the first place.

  5. Stacey Higginbotham

    Wes, I think metered or tiered is more accurate as caps imply a set stopping point, and both of these plans allow you to go over a cap if one pays.

    Texan, my apologies. Calling Beaumont a tiny town is a bias from my growing up in Houston. It does indeed have 100,000 people so perhaps town would have sufficed.

  6. Stacey,

    Beaumont is an hour from Houston and has well over 100,000 people (2000 census numbers) and acts as the hub to a well populated region. How can you call this a tiny town? That is half the size of Richmond, VA (by the same measure)…would you call that a tiny town too? Having AT&T & Time Warner compete is at least the beginning of competition, isn’t it? Please check your facts next time.