Time Warner Cable is experimenting with capping consumer data traffic, a test that could have dire consequences for the Internet economy and innovation
Way back in the mists of Internet time, 2000 to be exact, a new Web site called eMusic opened its doors. eMusic was amazing. It offered DRM-free music from a huge number of independent labels and even included lots of old recordings, for example, pretty much everything Bill Evans, the legendary jazz pianist, ever recorded.
The other great thing about eMusic was it was cheap — $9.99 per month for unlimited downloads! This was heaven for music fans.
I signed up as soon as I heard of the service and I must have downloaded thousands of hours of music. It was fantastic. But this amazing situation couldn’t last.
Nope, the first blow came when eMusic cancelled a number of subscribers, claiming that they had violated section 5.3 of the user agreement: “Because the Service is designed for personal sampling and use, you are not allowed to use any automated system for the selection or downloading of files. EMusic reserves the right to immediately and permanently terminate your access to the Service if EMusic believes that you are violating such limitation.”
Most of these subscribers claimed that, while they had been downloading as much as they could, they had not violated section 5.3. EMusic pretty much ignored the minor furor that followed and never responded to any questions about how it could offer “unlimited downloads” yet cancel accounts for too much downloading.
Then in October 2003 eMusic went a step further and cancelled unlimited downloads. Existing subscribers were capped at 40 tracks per month for $9.99 while new subscribers got only 30 tracks for the same price. I wasn’t pleased, but then again, at under 33 cents per track (25 cents for me), and given the size and scope of the catalog, it was and still is a good deal.
But the questions remain: What is acceptable use of an unlimited service? And when you stop providing an unlimited service, what is the consequence? In eMusic’s case the former question was ignored until it went away, while for the latter question, even though many people cancelled their subscriptions, the service survived because of its value proposition.
Why do I bring the saga of eMusic up? Because I was reminded of it when I saw the news that Time Warner Cable is planning to roll out a new Internet cable service this quarter to some unfortunate towns in Texas. This service will have a traffic cap for so many gigabytes of data per month and carry an overage charge for traffic above the cap.
According to a leaked Time Warner memo that was published on Broadband Reports, “Following the trial, a determination will be made as to whether or not existing subscribers should be charged. Only residential subscribers will be impacted.”
I am as close to speechless as I ever get! The implications of this could be enormous. Some ISPs have implemented similar plans — for example, Rogers Communications in Canada — but if Time Warner decides to roll this out more broadly then other US ISPs will surely follow, and the impact will be huge.
Innovation in Internet communications and applications will slow. Consumer interest in e-commerce will flag. Web traffic will drop sharply. Google‘s earnings will slip (there goes the economy!). Amazon and eBay will stagger. Consumer VoIP will falter. And a sullen silence will fall over the online world broken only by the cackling of ISPs counting their filthy lucre.
Worse still, if capping is implemented then the next step — to whit, ISPs implementing traffic shaping and giving preferential prioritization to sites and services that are commercially advantageous — is right around the corner.
And to think I was upset by the changes in eMusic.
