Pity Time Warner Cable.
One of the largest telecommunications companies in the U.S. just took careful aim — and shot itself in the foot.
As fast as you can say “DOA,” Time Warner Cable postponed plans to test a usage billing model for Internet service after howls of protest from politicians, Internet sites and customers.
The service was to be offered in tiers, depending on usage levels. Heavy users who download lots of movies or other large media files would pay for the more expensive plan. Critics predicted price increases and penalties for users who go over monthly limits.
The cable giant has gone and stumbled where careful steps were required. First, it failed to widely announce a comprehensive plan. The company argues that a small group of customers is using a majority of bandwidth. But bloggers and Web sites like Stopthecap.com took the story away from the MSO just when it needed to control the message the most. The rallying cry from politicians was predictable.
Perhaps its biggest mistake was the failure to inform customers in a smart way about the changes. Internet users at home have no idea how much broadband they use, so announcing such a detailed plan was meaningless, confusing and put customers on the defensive. Now, the company is offering a free “meter,” so subscribers can see how much they actually use.
The plan was also needlessly complex. Four differently priced tiers would force users into puzzling packages where none existed before. And it wasn't entirely clear that the lowest-priced offering would be enough for most consumers, who might then be forced to buy the higher tier or pay fees for going over. That's where many consumers feel like they were being pushed.
Now, politicians are threatening to make any caps or restrictions illegal, which would be a bad idea. I believe the Internet should be affordable to anyone who wants it, but I also don't want government-controlled pricing in which I subsidize the price for data hogs on the system.
Already Internet providers around the world impose metered price plans with caps, while most services in the United States have been unlimited. Here's a simple idea: Charge for excessive usage, but allow the majority of subs to receive a reasonable amount of bandwidth at the same price. It's already been done: Comcast recently imposed a cap of 250 Gigabytes, much higher than the Time Warner Cable levels.
Bandwidth is finite on a shared system. And it will never be easy to transition from an unlimited, all-you-can-eat platform to a metered service to satisfy most customers, who are seeking reasonable amounts of bandwidth. The real question to be answered in coming months is: “What's reasonable?”