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Time Warner To Test Metered Pricing For Broadband

Leaked memo reveals testing of new price scheme in Texas town

By Martin H. Bosworth
ConsumerAffairs.com

Jan. 17, 2008 

But heavy downloaders and bandwith hogs may soon be paying more for the privilege, if one cable company has its way.

Broadband Reports obtained a memo from Time Warner Cable detailing its plans to test out a metered pricing plan for broadband service in Beaumont, Texas.

According to the report, new customers will be offered one of several "tiers" of broadband service, and the ability to track how much bandwith they consume on the plan via a special Web site. If users consume too much bandwith, they can be upgraded to a higher, more expensive, tier.

"Following the trial, a determination will be made as to whether or not existing subscribers should be charged...We will use the results of the trial to evaluate results for possible future nationwide rollouts," the memo said.

Time Warner initially did not verify the memo's veracity, but later confirmed the test plan to Reuters.

"Largely, people won't notice the difference," said a Time Warner Cable spokesman. "We don't want customers to feel they're getting less for more."

Although other countries' Internet service providers regularly offer tiered pricing structures, the United States' largest telecom and cable companies heavily advertise "unlimited" broadband access for one fee. Companies shy away from listing hard limits on the amount of bandwith a customer can use for fear of losing them to competitors.

Instead, customers who use large amounts of bandwith suddenly find their connections crippled or terminated without explanation, as was the case with several Comcast subscribers. Comcast denied that it had any "bandwith caps," even as customers complained that any caps or limits on their service should be disclosed in contracts and advertising.

ConsumerAffairs.com found out in 2006 that Verizon Wireless would cancel its EV-DO wireless broadband service for even slightly exceeding the company's extremely low caps on usage.

Verizon was later forced to remove claims that it offered "unlimited" broadband service in order to settle a deceptive-marketing lawsuit brought against it in New York.

Unintended consequences

Although tiered pricing is often touted as a means to resolve fears of a "bandwith crunch" on the Internet, the model may also serve to constrain one of the Internet's biggest sources of innovation -- user-created content, particularly home videos and movies uploaded on sites such as YouTube and Joost.

Bandwith-heavy services such as video hosting and sharing may never have gotten off the ground if users were concerned about exceeding caps on their bandwith, and if tiered services are adopted by cable and telecom providers on a nationwide basis, it may lead to slower usage of file-sharing services and video-sharing sites.

While that might mean fewer videos of pets performing silly tricks, it could also severely restrict the many ways Internet users communicate and share information via the Web.

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