Tuesday, April 14, 2009

Well Done, Congressman Massa -- But Avoid Unintended Consequences!

Congressman Massa is way out in front of his local congressional colleagues in introducing legislation to stop Time Warner from capping internet use.   Congressman Dan Maffei is on record supporting Massa's proposal.

The folks at Rochester Turning put the right question this morning, in asking,"Where do our other members of Congress stand?"   (We should all thank Rochester Turning for the job they've done in keeping abreast of this issue.   Thanks, folks!)

We hope the Massa proposal foresees and prevents one potential unintended consequence of his legislation to stop the cap.   An older friend put it like this, "Massa's right, but I hope he's not pushing a 'self-service gasoline' bill."

Our friend explained:   "Before you could pump your own gas, attendants at gas stations did it for you.   Then along came the idea of self-service.   Its big selling point was that if the law changed to let you pump it yourself, then self-service gas would be cheaper than gas pumped by an attendant."

"So they changed the law to allow self-service.   Immediately the gas companies hiked the price of full-service, with the new self-service priced where full service had been before the change.   Now you paid the same, but had to do the work yourself.   So the prediction came true:   self-service gas did cost less than full service."

We hope Messrs. Massa and Maffei are aware that it's going to be no victory if their legislation forbids a cap   --  but lets Time Warner hike up, for everyone, the price of the same service we're getting now.

1 comment:

Rottenchester said...

Overall, my guess is that Massa, Maffei and the rest (hopefully Chris Lee will get involved in some way, too) are mainly using their seats as bully pulpits, and they're hoping that TWC will back off before it comes down to legislation.

That said, there's a good way to address the important issue you raise. Providers can create pricing tiers based on the speed of the connection. Some Internet providers do it already, and they can continue to do so as much faster technology comes online. Time-Warner has yet to deploy the third generation of cable modems (DOCSIS-3), which can increase bandwidth to 50-100 MB (from the current 10 MB).

The problem for Time-Warner is that even their current offering bites into their cable business. YouTube works fine on even a 1 MB connection, you can download movies from iTunes or Amazon over that connection, and even Netflix streaming is passable. That's the real issue here, and there's no way for TWC to achieve their anti-competitive goal without draconian usage-based (not speed-based) pricing.