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Time Warner Doubles Down on Metered Broadband Plans

Company faces heavy criticism but insists plan is necessary

By Martin H. Bosworth
ConsumerAffairs.com

April 7, 2009

Landel Hobbs, chief operating officer for Time Warner Cable, said that "Our current pricing plans require all users to pay the same amount, whether they check email once a month or download six movies a day," and that the flat-fee, "all you can eat" pricing structure was becoming increasingly unfair to users who did not use as much bandwith as others.

"When you go to lunch with a friend, do you split the bill in half if he gets the steak and you have a salad?" Hobbs asked.

Hobbs added that any changes in billing that would result from adopting metered broadband plans would be used to pay for improvements in cable service, including higher speeds for existing customers and a rollout of advanced infrastructure.

According to Time Warner Cable, customers will be charged from $29.95 to $54.90 a month, depending on how fast their connection is and how much bandwith they use. Subscribers who go over their cap would be charged $1 per gigabyte (GB) used. Time Warner Cable will offer cap packages of 5, 10, 20, and 40 GB for users in the test markets.

Many customers are unimpressed, and have been heavily criticizing the move. Rochester, New York-based blog "Stop The Cap," which has been chronicling efforts by Internet service providers in the area to establish bandwith caps, compared the plan to a television network interrupting a favorite show to demand payment before it would continue.

"For most people the above example would be absurd to the point of idiocy. Any provider trying to enforce such a policy would be laughed out of town and their competitors would be literally falling over themselves to sell you 'unlimited TV viewing' at a similar price point," the author said. "Now, change your television usage in the above example to your Internet bandwidth usage and you have what is beginning to take shape in today’s broadband Internet market."

The cable giant has been testing metered broadband plans in markets where it faces little or no competition. In Beaumont, Texas, site of the first trial, Time Warner Cable's only real competition is from AT&T — which is testing its own bandwith usage caps in the same area.

But when Time Warner Cable announced last week that it would expand the tests to larger areas, including Rochester and Austin, Texas, the fierce criticism led legislators at the state and federal level to get involved, largely opposing the move as unfair to their constituents.

Congressman Eric Massa (D-NY) lambasted the move "as nothing more than a large corporation making a move to force customers into paying more money." ""Just at a time when access to information is driving our economic recovery, Time Warner is moving to stagnate the 21st Century technology needed to rebuild America," he said.

Austin mayoral candidate Lee Leffingwell said that he was "deeply concerned about the impact of the plan on business owners, especially those working in high-tech and creative industries that require regular access to broadband Internet service. Introducing an economic disincentive for Austin businesses to use the Internet to communicate, collaborate, innovate, and deliver services is very worrisome at best, and catastrophic at worst."

Internet service providers testing metered broadband plans say they are necessary to prevent network congestion and ensure that heavy bandwith users do not prevent lower-level users from enjoying the same level of Internet access. Critics claim that metered billing will stifle users' ability to download or upload bandwith-heavy Internet content, such as videos, or watch television shows over the network — a move, they say, designed to protect cable and telecom companies' investment in television service.

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