In the first experiment of its kind among U.S. cable operators, Time Warner Cable is testing a new high-speed Internet tier aimed at making bandwidth hogs pay to get more bytes from the broadband trough.
The MSO started testing a new version of its in-house Road Runner cable-modem service last month in three markets: Lincoln, Neb.; western Ohio, including Dayton; and Greensboro N.C.
Dubbed Road Runner Xtreme, the tier targets customers who routinely use well beyond the standard service's 15 Gigabyte-per-month threshhold for data download.
Road Runner Xtreme bumps the throughput speed to a maximum 3 Megabits per second downstream and 512 Kilobits per second upstream, compared with up to 2 Mbps downstream, 384 kbps upstream for the standard Road Runner package.
But it is the monthly data download limit that changes the most, raised from 15 Gigabytes to 40 Gigabytes.
Time Warner is testing the price point for the service, offering it for $79.95 in Lincoln, $89.95 in Ohio and $99.95 in Greensboro.
While customers are not prevented from downloading as many video and data files as they like, the idea is to make them pay for higher volume, according to Time Warner spokesman Mark Harrad. He noted that 12% of Road Runner users sop up 80% of available bandwidth.
"What we've done is added a new tier of service for that relatively small group — maybe about 5%, we're guessing — of our current customers who use a great deal of monthly consumption over the 15 Gigabytes, which is the Road Runner spec," he said.
Letters in mail
The average Road Runner customer doesn't come close to downloading 15 Gigabytes of data per month — a volume that equals 3,750 MP3 song downloads, 133 hours of Internet radio, 3 million e-mail messages or 85,000 shared photos, according to Harrad.
Road Runner is sending out letters to existing customers who routinely exceed 15 gigabytes monthly and it is making new customers aware of the higher-data tier.
If customer doesn't sign on, they will have to pay a surcharge for every 5 Gigabytes they use beyond the 15-Gigabyte threshold. Again, Time Warner is experimenting with the price for the surcharge, setting it at $10 in Lincoln, $12.50 in Ohio and $15 in Greensboro.
If the trial is successful, Time Warner will likely be extended to other markets, Harrad said.
He noted while the trial involves only Road Runner customers, if it becomes a nationwide rollout the other ISPs that offer service on Time Warner's cable data plant — including America Online and EarthLink Inc. — will likely have to pass through or absorb the excess download charges.
When contacted, an EarthLink spokesman said the ISP is interested in developing tailored services such as a high-bandwidth tier, and that it was watching the Time Warner trial carefully.
Cox just warns
"We're awaiting hearing about the current trials, and looking into how we might do this with our own customers," he said.
Cox Communications Inc. is taking a different tack. It has a download cap of 30 Gigabytes monthly in its acceptable usage policy, and only between 1% and 2% of customers routinely exceed that limit, according to Steve Gorman, executive director of Cox's high speed Internet service.
But Cox isn't charging these customers extra. Instead, it sends out a series of e-mails and letters informing customers of the dangers of file sharing and noting their high usage.
"Many of the users of peer-to-peer applications such as Kazaa and Morpheus do not understand that those types of software programs turn their computers into a file server, thus potentially exposing personal information to Internet users at large, plus it does provide another venue for malicious users to take advantage of broadband access," Gorman said.
Tier might emerge
To date, Cox has not suspended any persistent heavy data users, Gorman said. But the idea of creating a high data download tier is an option as the data service evolves.
"I think it is in the future for all operators, because it naturally segments the market into various types of Internet users — everyone from the light user to the very, very heavy Internet users. We believe those markets are indeed emerging."
Cablers in Canada and Australia have already started capping downloads, but this is the first experiment for a U.S. MSO, according to Joe Laszlo, a senior broadband analyst for Jupiter Research. While a high-data usage tier may make business sense, Time Warner needs to be careful how it fields the offer to existing customers.
"Consumers never react well when you offer them something, get them signed up and then change the terms midstream," he said. "It is almost certain to raise some degree of fuss from end users."