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The Twilight Problem: Why Metered Broadband Could Suck

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twilight-movie-poster-6When it comes metered broadband, most consumers don’t understand how its implementation could affect what it costs them to download content. So I decided to compare how much, depending on which of the nation’s top ISPs’ metered bandwidth plans you choose, it would cost to rent the teen vampire flick “Twilight.”

First I looked at how many gigabytes “Twilight” eats up. If I download an HD version of the movie from the iTunes store, all of the digital bits and bytes that make up the movie add up to 3.8 GB. Other HD movie downloads on iTunes are also in this range.

I then took the information on consumption-based broadband plans and divided the price a customer pays per month by the amount of data they can consume under the plan. This gets me the price per gigabyte. For example, under its cheapest trial tier, Time Warner Cable offers 1 GB for $15 a month, so the price per GB is $15 (each additional GB over the $15 a month plan costs $2). Finally, I multiplied Twilight’s 3.8 gigabytes by the price per GB under each plan.

And what did I find? That in almost all cases, the decision to download the movie will cost more than just the $3.99 rental fee — sometimes much more.

Time Warner Cable: Time Warner’s (S TWC) price per GB for its proposed tiers ranges from 75 cents to $15 (unless you max out the overage fees on the 100 GB per month tier and default into unlimited service for $150). This means the bandwidth for “Twilight” would cost between $2.85 and $20.60. After adding in the $3.99 rental fee, the evening at home costs between $6.84 and $24.59.

AT&T: In most markets, AT&T (S T) offers unlimited service, but for those in trial markets where AT&T meters its service we’ll use AT&T’s U-verse rate of $55 per month divided by the 150 GB cap it’s said it will implement. That nets out to AT&T charging 36 cents per GB, which means the bandwidth for “Twilight” will cost $1.37. Adding in that $3.99 rental fee means my vampire fixation will cost me $5.36 to watch without leaving my couch.

Comcast: Comcast (S SCMCSA) offers a variety of plans but only one cap, which is 250 GB. Price per GB ranges from 17 cents to 58 cents, which translates into bandwidth costs of 65 cents to $2.20 for “Twilight.” So at $3.99 to rent through iTunes, the total price to watch a vampire reluctantly seduce a mortal girl would range from $4.64 to $6.19.

Verizon (s vz): Since Verizon doesn’t meter or cap its service (or plan to), the cost to watch Twilight only reflects the $3.99 rental fee. A user still pays for broadband (as they do even without a metered plan), but without a limit on data downloads, its impossible to calculate a per-GB cost for downloading content.

45 Responses to “The Twilight Problem: Why Metered Broadband Could Suck”

  1. stefan lubinski

    Good responses. Although I did not see one that points out that the math is fundamentally wrong.

    The fact that Twilight is a 3.8GB file, does not mean that downloading that file takes 3.8GB of bandwidth.
    Obviously it depends on level of compression and your internet download speed, but the math in this post assumes a 1:1 relationship between file size and broadband usage.

    Nonetheless, the takeaway should be that metered bandwidth will affect the consumption of video online, and slow the cord-cutting from cable systems, if it proves almost as, or more expensive to enjoy mass video online as it does via cable subscription.

  2. Krishna Baidya

    personally i think idea of a capped bandwidth is totally rubbish and it will start posing barrier to web based services adoption (suddenly all those talk about HD video etc online wouldn’t make any sense) …..its just a ploy for carriers to force consumer pay more …. to me they are being really really “hypocrite”. this is only a step backwards.

  3. moxiemk1

    The problem is NOT with Metered broadband. Metered broadband will save us, because it actually forces net neutrality if implemented in any kind of sane way.

    The reason your analysis show’s it’s expensive is because these are (A) not real metered plans, and (B) not even close to _fair_ metered plans.

    When providers are forced to adopt a utility-like guaranteed profit level, with no preferential treatment of their own services, and no ability to charge higher than the legislated profit percentage, THEN you may make these measurements. Until then, you don’t have what we are asking for.

  4. This will be interesting. About 2 years ago their Marketing Director replied to a question with “Well we charge what the market will bear”. In Greensboro NC there is TWC or AT&T. The price for 7 meg is 49.95 with TWC. When you go into new subdivisions almost all of the houses go with the cable company. AT&T is not really in the game. I would pay more if I could get better speed but I will fight them on the metering.

    An issue I am curious about is the cookies and the constant transmission of small packets. Does that translate into a parasite cost?

    We are looking for the alternative in Greensboro. Right now it appears that Wimax may be a consideration

    In Greensboro

  5. Note that even “unlimited” broadband is actually limited as there are only about 2.5M seconds in a month and at 1.5 Mbps that’s an effective 486 GB monthly cap. True, it’s pretty high, but if you’re paying $150 for that “unlimited” plan that’s about 28 cents per GB. Unless my math is off by a few orders of magnitude somewhere. If it’s 3 Mbps or something decent obviously the price drops to half that. But there are no truly unlimited plans.

  6. You had me in the first sentence when you said, “…most consumer’s don’t understand…” especially when examining bandwidth caps. Most are clueless about — not bandwidth consumed right now or next week — but what happens as the growth of media center’s continues to accelerate, the demand for actual HD quality over the ‘net increases, and consumers begin to routinely exceed the caps?

    We have a site in Minnesota focused on innovation in internet and web technology. As you can imagine, our readership is *very* interested in the future of the ‘net and who controls what riding on the network. As such, I’ve gone out a bit on a limb and penned two articles since there is a MN Ultra High Speed Task Force in the process of recommending a course of action (this fall) to the MN State Legislature and the stakes are high:

    1) Internet Providers Want Control Over Your TV

    This came about after I’d installed a Mac mini media center and experienced, essentially, the world of internet video at-my-fingertips. Next thought was, “Oh sh*t…I’m going to hit that 250GB cap pretty quick” since I do a lot more on the ‘net than just watch video (as do my family members).

    2) Control Over Your TV: A Comcast Executive Conversation

    This post happened because Comcast is not terribly happy with me and my perspective.

    Keep up the great work on such a visible site!


  7. Scott Skibell

    Caps will stifle innovation just when America needs it most.

    It’s not just the renting of Twilight that will be impacted. It’s the download of educational videos from YouTube. It’s the automatic Microsoft software updates that consume bandwidth. It’s back-ups to Amazon S3. It’s VoIP services, collaboration services, and conferencing. It’s distance learning, tele-medicine, and entertainment industries. All of these new services will suffer when usage is metered and families have to choose which services to use for fear of going over their cap.

    This needs to stop and I thank GigaOM for being so outspoken about it.

  8. Adam Lindsay

    The answer is simple, don’t watch Twilight. It was an awful vampire movie. :)

    Joking aside, I live in Rochester, NY and will be greatly affected by bandwidth caps. The real cost to compare are the ones TWC is losing to customers not subscribing to Digital Cable and movie channels. Unsurprisingly it matches up quite well.

  9. This is a silly commentary that does nothing but detract from good debates about metered broadband.I I’m afraid this is what happens when technology meets policy. You get technology experts (the reason I read GigaOM) who are ignorant of economics and basic policy and there are policy experts ignorant in technology.

    • I disagree. Putting it into a different perspective may help those that don’t see the big issue with monthly transfer caps. So here, it shows that by increasing the cost of the individual rental from any other source, TWC has then made their own movie rental service the better option.

  10. Stacey – could suck? Yeah, I guess you could say that in the same way that getting cancer of the eyes could suck or being mauled by a pack of rabid wolverines could suck. Caps, limits, metering – all very bad and moving in the wrong direction. The path to technical greatness is not going to be paved with mizerly limits on web access. Bandwidth is the fundamental mojo, the fertilizer, the feedstock, the root of all goodness and caps, even caps which today look rather generous, will eventually be stifling limitations.

    “640 K ought to be enough for anybody.”
    — Bill Gates, 1981

  11. Steve Ducat

    I would like to see a few comments from your Australian readers as they have endured metered broadband for years.. Like everything in the free world.. soon enough those in charge will find ways to destroy anything good..

    Imagine the world today if we really lived in a free society..

  12. I can’t help but think, if carriers charge based on bits which they have no copyright over, wouldn’t they be committing piracy? I elaborate on this here

    Another thing that worries me, how would web services that have rich content, or service that depend on server communication like DRM, autoupdate be affects? Is the user liable for paying for services that auto communicate with server or updates? or should the service providers pick up the tab? I think metered broadband will be a mess, and carriers, blinded by greed, don’t have the foresight to see the implications of their moves. I think they will kill the internet as we know it if they agree to this move. They might make a quick profit, but the impact will be far reaching in the broader economy.

    • This whole thing is going to end up like electricity. Pretty soon we will all be hearing all about “bandwidth vampires” that use your connection when you don’t think it is and we’ll be told that we have to shut these things off and not use RSS feeds because it is contributing to global warming, etc. etc.

      • I dont think it can ever be like electricity due to the networked nature of the internet.
        The electric grid is interconnected and electric companies could buy capacity from one another, but it really doesnt matter where the electricity comes from because its all the same.
        Information bits on the other hand, although seem quite standardized in the eyes of the ISP, to the users, the content which it conveys is highly customized and specific.

        Say I retrieve content from a server in Australia, how would carriers who have the bits go through their networks be compensated? wouldn’t this needs to be resolved first? I think the closest a metered internet would resemble will be wireless networks, where international phone calls are expensive. I don’t expect the two to be exactly similar because of the nature of routing in the internet which is more unpredictable.

        I think carriers should charge based on Capacity and QoS rather than metering.

  13. In the case of bandwidth caps, a per-GB cost doesn’t make sense because you pay a flat monthly fee whether you run right up to your bandwidth cap or not. So you’re not paying any “extra” per-GB rate, and getting the movie isn’t costing you any “extra” either (unless you’re going over your cap and are getting penalized). The only cost is that you can download 3.8 less GB than you could otherwise (this still assumes you end up hitting your cap).

    Just pointing this out because you could use the same argument to say checking email is costing you $x per GB, or you could say the movie costs even more because of your electricity consumption, etc., and in the case of bandwidth caps you’re not actually paying any more.

    • Stacey Higginbotham

      Niraj, yes, we pay a flat fee for the gigabytes under a plan, but because they are now limited, we can calculate a value for each GB and thus a cost to the consumer for bandwidth. It’s no different than dividing out your cell phone plan price by the minutes in order to compare plans.

      • Sticking with the cell phone analogy, say you have a $40 plan for 500 minutes, and a $50 plan for 700 minutes. The first plan will be $0.08/min and the latter will be $0.07/min, but if you don’t use more than 500 minutes, it doesn’t make sense to get the second plan even if it’s cheaper per minute because you are paying a flat $50 versus a flat $40. The overall cap and the flat rate still matter (the same reason you’d tell someone you’re on a $40 plan or a 500-minute plan – I wouldn’t say I’m on a “8 cents a minute” plan). The actual cost per minute can’t be averaged because your actual usage will determine the cost, not the cap (again, unless you always hit your cap regardless of the plan). The cost per minute will be different for different people if they are not hitting the cap.

  14. This review is astoundingly dumb. Really. If the cost of the additional GB is $2, how can you consider the cost $15/GB based on the first GB? You need to look at the marginal cost of downloading the extra 3.8GB to watch the movie.