Time Warner: Download Too Much and You Might Pay $30 a Movie
Let's say you buy a new Apple TV because you want to rent high-definition movies. And say you are about to move to Beaumont, Tex. If so, you might wind up paying Time Warner Cable as much as $30 when you download a movie using its high-speed Internet service.
Context & Ripple Effects
Time Warner Cable spent 2007 building out the video side of its business — including a plan announced in August to expand its ad-supported video-on-demand service — and this week it moves on the other side of the house: a confirmed usage-based billing trial on high-speed Internet in Beaumont, Texas, where an HD movie downloaded through Apple TV could cost a subscriber as much as $30.
The collision is deliberate-looking: the same company selling unlimited-feeling cable video is now metering the pipe that delivers rival services' video. A report that Time Warner Cable is weighing whether the trial determines national deployment remains unconfirmed, and the story's fast syndication — picked up the same day by GigaOM under a 'Video Killed the Broadband Buffet' framing — shows how closely the rest of the industry is reading it.
First-order effects
- Beaumont subscribers who buy devices like Apple TV for HD rentals face a new cost curve: each large download draws against a cap, turning a flat-rate habit into a per-movie expense of up to $30.
- Apple's rental economics in that market are repriced by someone else's bill — a customer comparing an iTunes HD rental plus overage fees against Time Warner's own on-demand catalog no longer sees a level playing field.
Second-order effects
- Rival cable operators get a live test of consumer tolerance for metered broadband without spending their own political capital first; if Beaumont churn stays quiet, copying the model gets easier, and if it doesn't, they keep flat pricing as a differentiator.
- Consumer-electronics and download-service partners have a reason to push back or subsidize — device makers whose products generate heavy traffic become the visible face of the overage charge.
Third-order effects
- If usage-based billing spreads beyond one Texas market, metering becomes a structural lever for cable operators to protect subscription-video revenue from internet-delivered competition — the pipe owner charging tolls on the road around its own bundle.
- The pattern points toward a regulatory and consumer-policy fight over whether caps reflect network costs or bundle defense, a debate that would shape how any over-the-top video service reaches homes.
The trend: Broadband is moving from flat-rate all-you-can-eat pricing toward metered models as cable operators confront video competition arriving over their own pipes.