Time Warner Cable Backs Off Pay-Per-Byte Broadband Billing

Published on April 16, 2009
by Peter Kafka

That was quick. Time Warner Cable (TWC) is shelving plans to charge its Internet customers based on usage. For now, that is.

The cable giant had planned on charging customers in four locations on a “consumption” plan in which they’d pay between $15 to $150 a month based on the amount of data they hoovered via the Web. But noisy opposition to the plan surfaced immediately and has been getting louder over the past few weeks.

Instead, the company says, it will spend time on “customer education” to clear up “misunderstandings” about the plan, which it still believes “may be the best pricing plan for consumers,” etc. Translation: We need more time to figure out how to do this without getting our heads ripped off. Or handing over customers to the competition.

That’s what was already happening in Rochester, where Time Warner’s plans were supposedly driving customers to Frontier Communications Co., which offered a (presumably slower) DSL service. From the Associated Press:

“‘We have gotten hundreds of calls from Time Warner customers into our call centers,’ said Ann Burr, the head of Frontier’s Rochester unit, in an interview with The Associated Press. ‘I guess it’s been a public relations crisis for Time Warner.'”

This doesn’t affect other pipe guys’ plans to institute similar caps or consumption-based pricing plans: Comcast (CMCSA), for instance, has a monthly cap on its broadband plans, and threatens to cut off customers who exceed it (thanks to Business Insider’s Dan Frommer for the fact-check).

And as of yesterday, at least, the cable guys’ trade group was pooh-poohing people who complained about the idea. Here’s Kyle McSlarrow, CEO of the National Cable & Telecommunications Association, on his group’s blog:

“Hundreds of billions of dollars have been and continue to be invested by our industry in the deployment of broadband and now the deployment of next generation broadband; speeds have doubled or tripled in just the last few years; new and spectacular applications keep getting launched; no anti-competitive conduct has remotely occurred; and, in fact, compared to many other industries, the Internet ecosystem seems to be one of the few really healthy, growing, and creative parts of our economy with continued investment and innovation taking place every day. At a time of economic and financial challenges for our country, I for one would rather Congress spend its time on real problems, not fictional ones.”

[UPDATE: McSlarrow just put out a new post discussing Time Warner’s move.]

By the way: McSlarrow, Time Warner Cable, Comcast other pipe guys with similar plans, like AT&T (T), may not have a terrible idea. But they’re going to undergo a lot of public whippings before they get this one through.

NEW YORK–Time Warner Cable today announced it would alter plans to test Consumption Based Billing, shelving the trials while the customer education process continues.

Time Warner Cable Chief Executive Officer Glenn Britt said, “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. 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. 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 also announced that it is working to make measurement tools available as quickly as possible. These tools will help customers understand how much bandwidth they consume and aid in the dialog going forward.

Britt added, “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.”

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