TWC Consumption Rates

[lawtai]

Hadn't seen this posted here...

TWC New Consumption Rates

Web users, the meter is running. In a strategy that's likely to rankle consumers but be copied by competitors, Time Warner Cable (TWC) is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets.

In April, Time Warner Cable will begin collecting information on its customers' Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner (TWX) this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. "We need a viable model to be able to support the infrastructure of the broadband business," Time Warner Cable CEO Glenn Britt says in an interview. "We made a mistake early on by not defining our business based on the consumption dimension." Time Warner Cable has 8.4 million broadband customers.

Four Proposed Broadband Tiers

Consumer advocates and Web site owners say tiered Web-use pricing limits customer choice and could stifle innovation by crimping demand for high-bandwidth services such as online video and music. Cable and phone companies say they need flexibility in setting prices for use of large, expensive, heavily used broadband networks.

In the case of Time Warner Cable, customers will be charged from $29.95 to $54.90 a month, based on data consumption and desired connection speed. Customers will be charged $1 for each gigabyte (GB) over their plan's cap. Time Warner Cable offers four cap levels of 5, 10, 20, and 40 GB. A download of a high-definition movie typically eats up about 8 GB. A recent report from Sanford C. Bernstein suggests that a family on the 40 GB plan that streams 7.25 hours of online video a week (a fraction of the 60 hours Americans spend watching TV in a week) could end up spending $200 per month on broadband usage fees. And that's just for video viewing, before factoring in such Internet activities as music downloads and photo sharing. "To put it mildly," says Bernstein analyst Craig Moffett, "the decision to limit data consumption can be expected to have profound implications for [consumer] behavior."

But Time Warner says most people are not using that much data. The company's trial in Beaumont, Tex., lasted several months. Of the 10,000 broadband customers enrolled?about 25% of the company's total for Beaumont?about 14% exceeded their cap and had to pay additional fees that averaged about $19 a month. Time Warner Cable also discovered that the top 25% of users consumed 100 times more data than the bottom 25% of users, suggesting an enormous gap in usage patterns.

Comcast: A Warning, Then No Service

As more and more people download TV shows and movies, particularly those in high-definition, broadband networks are facing enormous strain, providers say. Time Warner Cable has said its strategy is intended to alleviate some of that strain. But critics worry that the pricing will discourage broadband use and impede new online media businesses before they even have a chance to flourish.

AT&T (T) is currently conducting its own broadband pricing trial, also in Beaumont. Comcast (CMCSA), the nation's largest cable operator, has taken a different approach, capping residential bandwidth usage at 250 GB a month. Customers who exceed it get a warning phone call from Comcast. A further problem can get a subscription canceled.

For Time Warner Cable's Britt, instituting broadband pricing is a bold move just as he takes the helm of a newly independent company. Fully spun off from Time Warner, the cable company's shares started trading on Mar. 30. Britt's first big challenge may be to sell the upsides of aggressive broadband pricing to his investors. "It's an intriguing idea if you didn't have such a competitive landscape out there," says Rich Greenfield, an analyst at Pali Research. "There are so many other alternatives for consumers when it comes to broadband."

Edited April 1, 2009 by lawtai

[Veedems Veteran]

This really could wind up crippling internet usage across the board if it catches on, especially in a time where people are fighting to save every penny possible. I don't like this.

[lawtai]

I could understand the tiers, but the limits they have of 5, 10, 20, 40GB a month are ridiculous. All they're doing there is trying to price gouge everyone.

[Des]

This is not good for me as I am stuck with TWC pretty much. I guess I could switch over to AT&T UVerse if anything or hope Verizon brings broadband.

I really hope nothing like this ever goes through. It's ridiculous.

[(Spork)]

40gig hell i download triple that in a month easy some times more

[Spartan Erik]

I'm presently a college student at the University of Texas (Austin), and I'm quite the downloader. Definitely going to switch from TWC as my ISP this summer!

[toadeater]

TWC really needs to be sued to hell and back--twice. They are one of those most corrupt and inept corporations in America. TWC is a government-protected monopoly in areas they control, there is no other choice of cable provider in those areas! The city gives TWC its license for exclusive coverage and restricts any competition in those areas for cable service, the government should control TWC's prices so that they are competitive, or step in and end this practice of exclusive licensing deals.

[ziper]

Shouldn't they just be grateful that the bottom 25% uses so little of their capacity?

[(Spork)]

sadly twcrap is the only cable isp around me and Uverse wont be around for a long time ..... dsl in my zone is like 4 megs down not good

[lawtai]

yea, unfortunately for me, time warner is the only cable isp too. DSL is even worse since I believe it's essentially capped at 5GB a month here

[I am Reid]

not going to last

[Macalicious]

I could understand the tiers, but the limits they have of 5, 10, 20, 40GB a month are ridiculous. All they're doing there is trying to price gouge everyone.

What are you complaining about - in most countries the tiered pricing structure is the accepted norm - NZ did dabble in the 'flat rate' but found that it ended up clogging up the system; why should millions of dollars be spend on capital to upgrade networks because of a small number who go over board - thus force the everyone else to subsidise them?

I have a 10GB allowance with TelstraClear for NZ$55 - and I'm quite happy with it. Instead of downloading crap - ask yourself, "do I really need it?".

[I am Reid]

What are you complaining about - in most countries the tiered pricing structure is the accepted norm - NZ did dabble in the 'flat rate' but found that it ended up clogging up the system; why should millions of dollars be spend on capital to upgrade networks because of a small number who go over board - thus force the everyone else to subsidise them?

I have a 10GB allowance with TelstraClear for NZ$55 - and I'm quite happy with it. Instead of downloading crap - ask yourself, "do I really need it?".

LOL, just because other places have caps mean we should to? Dont blame anyone else for the fact that you allowed these companies to **** on you.

[InPCHell]

I'm with TW and 40GB is nothing. They aren't getting any money from newer video services like XBL Marketplace or Netflix Instant Watch, so they're going to price gouge the areas that don't have competition. Why don't they try this in NYC, LA or Chicago? Are they going to drop prices for the unused GB? My guess is hell no. They figure that since cell phone companies can charge .25 per text, that they can do the same and get away with it.

[Macalicious]

LOL, just because other places have caps mean we should to? Dont blame anyone else for the fact that you allowed these companies to **** on you.

If you failed to realise, these are businesses not charities - or do you want obama to nationalise all the ISP's and offer free internet access as a 'fundamental human right' or something?

[I am Reid]

If you failed to realise, these are businesses not charities - or do you want obama to nationalise all the ISP's and offer free internet access as a 'fundamental human right' or something?

The power of a dollar is pretty strong. If you dont like what they are doing take your dollar elsewhere, they will get the point pretty quick.

[Joe User 99]

What are you complaining about - in most countries the tiered pricing structure is the accepted norm - NZ did dabble in the 'flat rate' but found that it ended up clogging up the system; why should millions of dollars be spend on capital to upgrade networks because of a small number who go over board - thus force the everyone else to subsidise them?

I have a 10GB allowance with TelstraClear for NZ$55 - and I'm quite happy with it. Instead of downloading crap - ask yourself, "do I really need it?".

Yeah, the difference is I currently pay US$65 a month (BEFORE taxes and fees), which according to http://www.xe.com/ucc/ is somewhere around double what you are paying. So, now, on top of paying double what you are paying, I'm gonna have to tack on extra for usage?

And what do you think this is going to do for companies providing purchases like Steam? Or other online purchase downloads. Games nowadays run in the 5-10 gig range.

What happens when I get something 90% downloaded and the connection drops? You can bet they are still gonna charge me for that incomplete download, after all, it's a business, not a charity!

And believe it or not, they SHOULD have to spend millions of dollars to upgrade their networks, it's call PROGRESS. The technology changes, and with it the demands on bandwidth change. But let me let you in on a little secret. You know where they get the millions of dollars to upgrade their networks? That's right, from customers paying their bill! So you bet I expect them to invest in upgrading their networks. If these companies were hurting so bad for money, they wouldn't be so large.

They aren't doing this to reduce congestion, they are doing it to try to find a way to maintain their profit levels in a difficult economic time.

And as far as wanting Obama to nationalize ISPs, do you realize that 7.2 BILLION of the US Stimulus package is going towards expanding broadband availability? That's right, the government is paying for these very network upgrades, not the corporations.

[Macalicious]

Yeah, the difference is I currently pay US$65 a month (BEFORE taxes and fees), which according to http://www.xe.com/ucc/ is somewhere around double what you are paying. So, now, on top of paying double what you are paying, I'm gonna have to tack on extra for usage?

And what do you think this is going to do for companies providing purchases like Steam? Or other online purchase downloads. Games nowadays run in the 5-10 gig range.

What happens when I get something 90% downloaded and the connection drops? You can bet they are still gonna charge me for that incomplete download, after all, it's a business, not a charity!

And believe it or not, they SHOULD have to spend millions of dollars to upgrade their networks, it's call PROGRESS. The technology changes, and with it the demands on bandwidth change. But let me let you in on a little secret. You know where they get the millions of dollars to upgrade their networks? That's right, from customers paying their bill! So you bet I expect them to invest in upgrading their networks. If these companies were hurting so bad for money, they wouldn't be so large.

They aren't doing this to reduce congestion, they are doing it to try to find a way to maintain their profit levels in a difficult economic time.

And as far as wanting Obama to nationalize ISPs, do you realize that 7.2 BILLION of the US Stimulus package is going towards expanding broadband availability? That's right, the government is paying for these very network upgrades, not the corporations.

Then maybe they should have rolled out a completely publicly owned fibre to home network and the lease out access to ISP's instead of doing what they're doing - handing over US$7.2billion that'll provide nothing in the way of improved network capacity and service.

[I am Reid]

Then maybe they should have rolled out a completely publicly owned fibre to home network and the lease out access to ISP's instead of doing what they're doing - handing over US$7.2billion that'll provide nothing in the way of improved network capacity and service.

the goverment already gave these companies money to update their networks with fibre, long before the stimulus.

[Macalicious]

the goverment already gave these companies money to update their networks with fibre, long before the stimulus.

Isn't that telling you there is a massive lack in oversight if you're going to throw money at large corporations?

[ambushed]

<<<<<<<The kid that is currently having to live off of wireless 3g broadband and 5GB of data a month. You kinda learn to prioritize your net usage. Things like buying games off steam are bye bye. I'll let you know some time next millennium when I feel sorry for anyone's internet predicament.