Time Warner Cable Expands Internet Usage Pricing

[Xanthe]

The newly spun-off cable company will impose premium rates on big users of broadband in Web markets in Texas, New York, and North Carolina

Web users, the meter is running. In a strategy that's likely to rankle consumers but be copied by competitors, Time Warner Cable (TWC) is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets.

In April, Time Warner Cable will begin collecting information on its customers' Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner (TWX) this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. "We need a viable model to be able to support the infrastructure of the broadband business," Time Warner Cable CEO Glenn Britt says in an interview. "We made a mistake early on by not defining our business based on the consumption dimension." Time Warner Cable has 8.4 million broadband customers.

FOUR PROPOSED BROADBAND TIERS
Consumer advocates and Web site owners say tiered Web-use pricing limits customer choice and could stifle innovation by crimping demand for high-bandwidth services such as online video and music. Cable and phone companies say they need flexibility in setting prices for use of large, expensive, heavily used broadband networks.

In the case of Time Warner Cable, customers will be charged from $29.95 to $54.90 a month, based on data consumption and desired connection speed. Customers will be charged $1 for each gigabyte (GB) over their plan's cap. Time Warner Cable offers four cap levels of 5, 10, 20, and 40 GB. A download of a high-definition movie typically eats up about 8 GB. A recent report from Sanford C. Bernstein suggests that a family on the 40 GB plan that streams 7.25 hours of online video a week (a fraction of the 60 hours Americans spend watching TV in a week) could end up spending $200 per month on broadband usage fees. And that's just for video viewing, before factoring in such Internet activities as music downloads and photo sharing. "To put it mildly," says Bernstein analyst Craig Moffett, "the decision to limit data consumption can be expected to have profound implications for [consumer] behavior."

But Time Warner says most people are not using that much data. The company's trial in Beaumont, Tex., lasted several months. Of the 10,000 broadband customers enrolled—about 25% of the company's total for Beaumont—about 14% exceeded their cap and had to pay additional fees that averaged about $19 a month. Time Warner Cable also discovered that the top 25% of users consumed 100 times more data than the bottom 25% of users, suggesting an enormous gap in usage patterns.

COMCAST: A WARNING, THEN NO SERVICE
As more and more people download TV shows and movies, particularly those in high-definition, broadband networks are facing enormous strain, providers say. Time Warner Cable has said its strategy is intended to alleviate some of that strain. But critics worry that the pricing will discourage broadband use and impede new online media businesses before they even have a chance to flourish.

AT&T (T) is currently conducting its own broadband pricing trial, also in Beaumont. Comcast (CMCSA), the nation's largest cable operator, has taken a different approach, capping residential bandwidth usage at 250 GB a month. Customers who exceed it get a warning phone call from Comcast. A further problem can get a subscription canceled.

For Time Warner Cable's Britt, instituting broadband pricing is a bold move just as he takes the helm of a newly independent company. Fully spun off from Time Warner, the cable company's shares started trading on Mar. 30. Britt's first big challenge may be to sell the upsides of aggressive broadband pricing to his investors. "It's an intriguing idea if you didn't have such a competitive landscape out there," says Rich Greenfield, an analyst at Pali Research. "There are so many other alternatives for consumers when it comes to broadband."

Time Warner Cable Expands Internet Usage Pricing - BusinessWeek

Well crap... A 40 GB cap for the top tier is ridiculous, and a 5 GB cap for what I'm paying right now? I'll have to agree with some of the comments on the article that this is a push by TWC to get people to use their On Demand service instead of downloading media from other providers. I wish I knew a better alternative.

[Izzy]

I saw this on SA yesterday and lol'd pretty hard. There's no way this business model would survive here unless every cable company went to it. TW's competition in Austin has already stated that their network has no bandwidth restraints because they use a fiber network and they will not be switching to consumption based billing.

[Seraph]

Fucking hate Time Warner. Greedy fucks.

[Xanthe]

Unfortunately the only broadband options here in Rochester are Time Warner Cable or Verizon DSL. Heck if I'm going to switch to DSL and pay for a phone line and get slower transfer speeds. Maybe I'll just have to torrent everything at work. Hurray for university connections!

[braaaanch]

Fucking hate Time Warner. Greedy fucks.

this.

no competition, shitty service, shitty support... as if they werent bad enough.

S I G H .

[Xanthe]

Well, to be fair service and support has been great in my area. I've yet to experience any downtime in almost 2 years on my own plan, and my hookups were quick and painless. About the only bad experience I've had is searching for information on their website. Now Comcast on the other hand...oh the stories I could tell.

[braaaanch]

Well, to be fair service and support has been great in my area. I've yet to experience any downtime in almost 2 years on my own plan, and my hookups were quick and painless. About the only bad experience I've had is searching for information on their website. Now Comcast on the other hand...oh the stories I could tell.

you've got to be kidding. my internet goes out atleast once a week. are you out in the boonies hoarding all the bandwidth for yourself, or do they just not give a shit about people below the mason dixon line?

[Seraph]

Well, to be fair service and support has been great in my area. I've yet to experience any downtime in almost 2 years on my own plan, and my hookups were quick and painless. About the only bad experience I've had is searching for information on their website. Now Comcast on the other hand...oh the stories I could tell.

It's just the little things with them. Their prices for regular customers is already quite high. I'm more pissed off about the low limits, as opposed to their 'new' pricing since it isn't much higher than what they charge now.

40GB a month? Seriously? I almost have a flash drive that large. I don't even DL or stream movies and this has me annoyed. This must be cables answer to text messaging charges.

[Xanthe]

you've got to be kidding. my internet goes out atleast once a week. are you out in the boonies hoarding all the bandwidth for yourself, or do they just not give a shit about people below the mason dixon line?

Nope, I'm in the suburbs of Rochester. They must not care about the confederation.

[Dimmauk]

you've got to be kidding. my internet goes out atleast once a week. are you out in the boonies hoarding all the bandwidth for yourself, or do they just not give a shit about people below the mason dixon line?

I get the same from my Time Warner internet, and the digital phone too both go down once a week.
I live in San Antonio, I rarely download anything, and mostly just play FFXI on my PC. So did my shit just get fucked?

[Zeb]

I wish providers would upgrade their networks/coverage and charge users accordingly instead of going with a business plan that's just going to delay their problems. Eventually they're going to get more non-power users and their network is still going to cap out. Better to plan ahead. I can see a top tier unlimited package going for $100+ a month. If DirecTV can charge $100+ a month for their premium packages, broadband companies shouldn't have a problem getting that much.

[BerenTebogo]

I moved from Boston (where I had comcast) to western MA near NY and was forced to choose between Verizon and TWC.

So yeah, my time with TWC has probably been the angriest I've ever been at the internet. TV service blows. The OnDemand is terrible. At least once a day I R0 and almost DC and now I can't do jack fucking shit on my PC if this expands to be nationwide?

Fuck you TWC, I'll take Verizon bullshit over this if the policy expands.

[Yuri-G]

Wow, fuck TWC. Same company that wouldn't come pick up my cable modem when I moved out of my last apartment and wanted me to drive down to their out-of-the-way office to drop it off or pay to keep it (I don't have a car). Why am I not surprised?

Oh well. Comcast is just as evil. I should just switch to the citywide wi-fi we have in Minneapolis.

[The Blackrose]

Jesus Christ, TWC is making me choose between them and the Death Star. If only Verizon pushed FiOS up this way.

And TWC sent me a letter/ad trying to tie me up for 2 years. Hah. Fuck that shit.

[Xanthe]

If only Verizon pushed FiOS up this way.

Seriously. I could go 80 miles West to Buffalo and get FiOS, but then I'd have to live in Buffalo... Not exactly my first choice in residential areas.

[Ikith]

I'm on comcast myself and have experienced outages lasting 5-10 minuets and when those outages come I call them and tell them about the problem and they give me a full days free service on my bill. Any problems with the actual hardware have been fixed same day. However I'm sure it helps that I have the higher up techs on my twitter (and twitter on my cell with unlimited data). Oh and the outages are around 2-4am in the morning.

[Izzy]

Seriously. I could go 80 miles West to Buffalo and get FiOS, but then I'd have to live in Buffalo... Not exactly my first choice in residential areas.

You could go east to NYC! I'm enjoying my 20/20 FiOS connection mmmmmmmmmmm!

[Correction]

Remember when more expensive internet meant you actually got a faster connection, and not simply paid more for it?

I miss those days.

[Xanthe]

You could go east to NYC! I'm enjoying my 20/20 FiOS connection mmmmmmmmmmm!

Ugh, I don't even want to think about the commute from NYC to Rochester for work. And like it was said in the other thread, I'm not gonna go give up my nice cushy job in this economy.

[Devek]

We get around that by letting people burst.

We run direct ethernet to the businesses and let them burst at 50mbits for 10 seconds at a time. Most of the people downtown are not downloading all day so for 99% of the time, they are on a 50mbit connection.

Some of our customers, like geologists, actually have to upload/download some big files for business and we have special agreements with them.