Time Warner Cable shook up the Internet world earlier this year when it started testing a "consumption-based" broadband service in Beaumont, TX. Although final results of that experiment have been postponed by Hurricane Ike, which hit Beaumont hard, TWC CEO Glenn Britt thinks that ultimately all broadband service will be metered or consumption-based.
Speaking at Goldman Sachs' Communacopia Conference today (webcast here), Britt said that he believes consumption-based broadband is "where we will ultimately go." Comparing broadband service to an electric utility, Britt said "with electricity we buy something called kilowatt hours and it’s a measure of both voltage and throughput and the amount you’re consuming. I think broadband is going to develop into something like that."
Cable holds the competitive upper-hand when it comes to high-speed Internet access because cable modem service is simply faster and better, Britt said. "We just have a better product as consumers do more video and use more bandwidth they notice it’s a better product."
When it comes to overall service, the cable industry is rapidly moving away from its monopoly mindset as it faces competition from both satellite and telcos. "We’re still evolving from where we used to be. We’re getting more sophisticated at marketing."
But the media tends to overhype the competitive video threat that phone companies pose to Time Warner. The company faces competition from AT&T's U-Verse service in only 8% of its footprint, while Verizon's FiOS service is available to only 4% of TWC's homes passed.
Even the threat that Verizon poses in Time Warner's most important and lucrative market, New York City, is overblown, according to Britt. Verizon is building out its New York City network to offer FiOS TV service following receipt of franchise approvals earlier this year, but it's going to take years for the telco to be fully up-and-running. "So it's not going to happen all at once," he said.
Cynthia Brumfield at 3:24 PM|Comments(2)
The difference between bandwidth and electricity is the amount of electricity going to the grid cannot be augmented without adding more sources of power. Bandwidth can be augmented through technological advances (better routers, switches and data managment) spurred by necessity and want of the consumer. If bandwidth is sold by how much is used then competition will be stifled and there'll be no need for corporations to build more effecient networks.
Posted by: Josh at September 19, 2008 6:54 PM
In other words, because we don't have to worry about competition we'll limit our broadband to consumers instead of building out capacity. I've got no problems with Time Warner controlling how they sell their internet, but when they are granted local monopoly access rights they shouldn't be allowed degrade their product just because they're not willing to upgrade their system. If they want to meter their broadband, they should have to release the local governments from the contracts they signed so that other people can come in and offer a product that will benefit the consumer.
Posted by: Davis Freeberg at September 18, 2008 4:27 PM
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