News

TWC Puts Cap Plans on Ice

4/18/2009 2:00 AM Eastern

Time Warner Cable, after blistering attacks from politicians and consumers about its plans to widen usage-based Internet-billing market tests, is shelving those plans “while the customer-education process continues.”

The closely watched plans have implications for how all U.S. cable operators approach the issue of managing explosive growth in Internet use. Usage-based pricing schemes are already widely used in other countries, including Canada, the United Kingdom and New Zealand, and in this country AT&T is testing the concept as well.

Time Warner Cable had defended the idea as fairer than raising prices on all customers or simply limiting usage. But the company was seemingly caught off-guard by a ferocious backlash from consumers and national politicians who characterized the plan as a price-gouging “monopolistic” move, leading to the pullback last Thursday.

The company acknowledged it needed to do a better job of communicating the concept and letting consumers know how much bandwidth they use now.

“It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing,” TWC CEO Glenn Britt said in a statement.

“As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met,” Britt continued.

“While we continue to believe that consumption-based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process.”

Time Warner Cable had planned to initiate usage-based billing trials in Rochester, N.Y., and Greensboro, N.C., in August, followed by San Antonio and Austin, Texas, in October. It tested the concept in Beaumont, Texas, last summer.

Under the different plans TWC was considering, monthly Internet usage would be limited to a certain number of Gigabytes used in downloads and uploads, and customers would be billed $1 or $2 per GB used beyond the cap.

TWC also said it's working to make measurement tools available as quickly as possible to help customers track their bandwidth consumption.

U.S. Sen. Charles Schumer (D-N.Y.), also last Thursday, said he spoke with Britt to discuss the “overwhelming opposition” to the usage-billing plans. Schumer said he will work with company officials to make sure any future changes in Internet pricing are “in line” with consumer expectations.

“By responding to public outrage and opposition from community and elected officials, Time Warner Cable made the right decision today,” Schumer said in a statement. “I will make sure that any changes going forward are in line with what Rochester's families and small businesses need.”

Britt said, “We look forward to continuing to work with Senator Schumer, our customers and all of the other interested parties as the process moves forward, to ensure that informed decisions are made about the best way to continue to provide our customers with the level of service that they expect and deserve from Time Warner Cable.”

Even as TWC retreated on the bandwidth-billing plans — for now — a New York congressman vowed to continue the fight against any usage capping, with plans to introduce a bill prohibiting Internet service providers from charging subscribers based on the amount of data they download

Rep. Eric Massa (D-N.Y.) said he would proceed with his proposed Broadband Internet Fairness Act, to “eliminate broadband Internet caps, increase competition and provide incentives for businesses while protecting the consumer.”

“We're delighted that common sense prevailed,” he said about Time Warner Cable suspending the Internet-billing trials. “This is a true grassroots victory, but we will move forward with our legislation to ensure that any future plans to charge customers based on how much they download do not spring up anywhere else.”

Massa claimed that Time Warner Cable has “yet to explain how increased Internet usage increases their costs,” adding “while I favor a business's right to maximize their profit potential, I believe safeguards must be put in place when a business has a monopoly on a specific region.”

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