Time Warner Cable and HBO: Same Company, Conflicting Biz Models

Written By Sepideh Saremi | January 22, 2008 | No Comments

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As the lines between TV and online video continue to blur, today HBO will make its 600 shows and movies available online for free download to its TV subscribers, via a new site called HBO Broadband. There are some catches: Initially the service is only available to Windows-using HBO subscribers in Wisconsin that are also signed up for Time Warner Road Runner high speed Internet. Gizmodo also reports there are DRM restrictions – no burning or transferring content to your iPod, and your downloads are yours for no longer than three months.

Still, the NY Times praises its “innovative features,” like separate profiles for each member of a household, parental controls, and the live TV version of the channel, so there’s no need to wait for the episode to go online after it’s aired on the tube first, a common network-TV practice. And DSLreports.com shows this is a big step for previously broadband-resistant HBO.

But The Hollywood Reporter notes that because HBO is actually owned by Time Warner – the broadband provider that wants to switch its model from a monthly flat fee to one that chargers people for how much bandwidth they use – this sets up an interesting conundrum in which free HBO content could get quite expensive, discouraging users from using a service like HBO Broadband. From The Hollywood Reporter:

Last week, Time Warner Cable disclosed its intent to experiment with a billing plan for high-speed data that charges customers based on how much bandwidth they consume. If such a model catches on in the U.S., it could have big implications for content companies trying to find traction online — like HBO.

There is no conflict in the short term; only HBO subscribers in Green Bay and Milwaukee, Wis., will be able to access HBO on Broadband when it is deployed there Tuesday on TWC systems. Meanwhile, the cable operator has selected Beaumont, Texas, as the test market for metered billing.

But in success, the dueling Internet initiatives could conceivably cross paths — and purposes — in other markets. Time Warner would find its cable-operator arm discouraging the very behavior HBO is allowing.

An easy solution for Time Warner would be not charging users for overages due to downloading Time Warner content. But Techdirt notes that this strategy will get the company in trouble with net neutrality advocates:

The Hollywood Reporter story mentions the possibility that Time Warner would create a special “exception” to the bandwidth rule if that bandwidth was for watching Time Warner-only videos. That, of course, is exactly the sort of thing that will be sure to get network neutrality advocates up in arms, though it’s a subtle shift from traditional network neutrality claims. This time it won’t be about “better quality,” but about which content counts towards a bandwidth cap.

Of course, the answer that makes the most sense is the one Time Warner doesn’t want to acknowledge: a metered pricing model for Internet access should not exist. The caps are just too low, they will stifle innovation, and because of a lack of competition in the broadband market, the whole thing reeks of price-gouging.

(via DVD Dossier Blog, from Techmeme)

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