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Time Warner Expands Metered Broadband Billing

"Pay-by-byte" plan hitting more markets

By Martin H. Bosworth
ConsumerAffairs.com

April 1, 2009

The tactic combines "caps" for broadband access usage with "overage" charges if the subscriber goes over the limit, and is widely unpopular with subscribers accustomed to a flat-rate, "all you can eat" plan.

The cable giant, which has been testing metered broadband subscriptions in Beaumont, Texas, said the tests would roll out to Austin and San Antonio, Texas, as well as Rochester, New York, and Greensboro, North Carolina, by late summer 2009.

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.

Time Warner's Melissa Sorola, regional communications director for Texas, said that "all customers will have access to a 'gas gauge' that will enable them to track their consumption against their current plan," and that "We don't want our customers to have any unpleasant surprises."

"Consumption based billing will enable customers to choose a tier that makes sense for them," Sorola said. "The vast majority of our customers will see no difference in their monthly bill. "

Jeff Simmermon, director of digital communications for Time Warner, said that the company would introduce a "super-tier" of service topping out at 100 GB. Simmermon told ConsumerAffairs.Com that details for pricing of the "super-tier" were still being worked out at the time of the expansion announcement.

Besides Time Warner, AT&T and Frontier Internet have all rolled out plans for metered broadband tests, usually in low-competition markets where they do not face challenges from Verizon's fiber-optic (FiOS) service.

Comcast, rather than setting up capped bandwith tiers, has put a cap on all service at 250 GB, with warnings given over the phone to users who go over the limit.

Opponents of metered broadband billing say that even something as simple as streaming online video can eat up a set broadband cap very quickly, leading users to shy away from downloading — or uploading — broadband-intensive media content.

Consumer advocates and telecommunications analysts say the real goal of metered broadband is not to prevent bandwith consumption, but to protect the profits from cable television, which faces challenges from the many services enabling video and TV watching over the Internet.

Early response to announcement of the plan was not kind. Said one commenter at BusinessWeek, "Well, they're cutting their own throats with their greed. The point is to monopolize the internet and stifle the growth of streaming content. I hope they go down in flames. I hope they lose so many customers they can't stay in business!"

Karl Bode, editor of Broadband Reports, criticized the company for not doing more to expand its infrastructure and improve its service.

"The pressure to shift to metered billing also comes from investors, who obviously love the idea of charging consumers more money for the same (or less) service in an age where the cost of bandwidth and network hardware continues to drop," he said.

"Keep in mind that Time Warner Cable has yet to officially announce DOCSIS 3.0 upgrades in a single market," he added.

ConsumerAffairs.Com asked Simmermon and Alex Dudley, Time Warner's vice-president for public relations, if customers will see any benefit from metered billing in the form of eventual infrastructure upgrades. "Yes," Simmermon said.

"Yes they will," added Dudley, "but perhaps more importantly, they will see a degradation of service over time if we don't invest to keep up."

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