Time Warner has been testing out a “consumption based billing” structure for its broadband internet service in Beaumont, Texas and plans to expand the trials to San Antonio and Austin; Rochester, New York; and Greensboro, North Carolina sometime this summer.
Up to this point, bandwidth has been capped at 5-, 10-, 20-, and 40-gigabyte levels ranging from $30 to $55 per month plus $1 per gigabyte over, but a recent post from Time Warner Chief Operating Officer, Landel Hobbs, responds to some criticism and outlines plans for two additional pricing tiers.
Hobbs first defends Time Warner’s consumption-based billing model by saying that bandwidth usage has been increasing by about 40% per year on the company’s network and that ISPs in Canada, the UK, and New Zealand bill based on consumption, while Comcast, Charter, and Cox here in the US “are using varying methods of monitoring and managing bandwidth consumption.” He also points out that AT&T is testing out consumption based billing as well.
As for new pricing structures, here’s what’s coming to Time Warner’s trial areas:
• To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.
• We are increasing the bandwidth tier sizes included in all existing packages in the trial markets to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively. Package prices will remain the same. Overage charges will be $1 per GB per month.
• We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.
• Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.
• Once we implement this trial, we will not immediately start billing customers for overage. Rather, we will first provide two months of usage data. Then we will provide a one-month grace period in which overages will be noted on customers’ bills, but they will not be charged. So, customers will have an opportunity to assess their usage and right-size their service packages before usage charges are applied.
• Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August. We will apply what we learn from these two markets when we launch trials in San Antonio and Austin, Texas, in October, but we will guarantee at least the same level of usage capacity in these trials.
• As we launch DOCSIS 3.0 in the trial markets, we plan to offer a 50/5 MB speed tier for $99 per month.
It should be noted that in these trial areas, Time Warner has little or no competition. If these trials are eventually meant to extend to Time Warner’s entire network, the company can probably expect to lose bandwidth-hungry customers in just about any market where it faces competition, but may be able to pick up some light-usage households with the slimmed-down 1GB plans at $15 per month. At $150 per month for high-usage households, though, $50 to $60 per month on competing networks looks like a downright steal.
[via eWeek]
Wow,
and I thought ISP policies were bad in europe!
This sounds like a major kickback for heavy users who are currently enjoying their flat free lines.
I like how TW points to Canada, the UK and Europe as examples to follow and completely disregards markes such as South Korea where broadband penetration is much higher and much more affordable.
As a resident in the Greensboro market, some gaming buddies of mine and I have already begun to leave TWC due to these shenanigans. Think about this: Time Warner Cable supplies TV content, digital phone and cable ISP services. Hulu + similar: can help replace some cable TV needs. Vonage, Skype, or your lowly mobile [in my case] can replace the digital phone need, and then we’re left with the ISP. So as not to cannibalize their other services, as you consume bandwidth for Netflix, Hulu, Vonage, etc, they charge you more for services they don’t control. Seems kinda anti-competitive to me. So, guess what. I left. I encourage others to do the same. Vote against caps with your wallet. I’m now an Earthlink customer, which uses the same pipes that TWC wants to cap. Take that.
I think I’ll cancel my TV/Phone/Internet package if TW rolls this out in my area. Seriously, this is a sad attempt to rake in the $$$. A 50 Mbps downstream with a 5GB cap is an insult. “We’ll give you more speed so you can fill up your cap faster.”
There is MAJOR backlash in the Rochester market, including planned protests.
Be sure to share this link with everybody:
http://stopthecap.com/2009/04/10/why-is-time-warner-saying-costs-increasing-to-consumers-but-decreasing-to-stockholders/
“In 2007, TW made $3,730 Million, on high speed data alone, and then had to turn around and spend $164 Million to support the cost of the network. 2007 total profit on high speed data: $3.566 Billion”
“In 2008, TW made $4,159 Million, on high speed data alone, and then had to turn around and spend $146 Million to support the cost of the network. 2008 total profit on high speed data: $4.013 Billion”
“It cost TW 11% less money in 2008, to keep their network running, than in 2007.”
DISGUSTING!!
Oh, and in the comments for that article, reader “Jake” shared this nugget:
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The same SEC filing repeatedly identifies threats to their revenue from free online video content, which threatens their video business —
All taken from: http://ir.timewarnercable.com/sechome.cfm – 2008 Annual Report on Form 10-K
Page 33:
“In addition, TWC faces competition from a range of other competitors, including, increasingly, companies that
deliver content to consumers over the Internet, often without charging a fee for access to the content. This trend
could negatively impact customer demand for TWC’s video services, especially premium and On-Demand services”
Page 34:
“Increasingly, content owners are
delivering their content directly to consumers over the Internet, often without charging any fee for access to the
content. Furthermore, due to consumer electronics innovations, consumers are more readily able to watch such
Internet-delivered content on television sets. The increasing number of choices available to audiences could
negatively impact not only consumer demand for TWC’s products and services, but also advertisers’ willingness to
purchase advertising from TWC. If TWC does not respond appropriately to further increases in the leisure and
entertainment choices available to consumers, TWC’s competitive position could deteriorate, and TWC’s financial
results could suffer.”
Seems pretty clear that they’d love to find a way to stop people from using streaming video, if only there were a way to do so without running into possible net neutrality issues….
—————————-
This is BS.
Yeah – this blows. What burns me is finally, legit business models for paying for and delivering video via the Internet are getting going (iTunes, Netflix, Hulu) and the cable companies response to this is to stick to anyone who doesn’t watch video how they want to or to where they get their cut.
Horrible!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! They are gonna come out as the biggest loser.
Bold Broadband Policy: Yes We Can, America
http://snipurl.com/yes-we-can-america
I’d rather go back to dialup than pay these thieves. I hate twc. They can shove the cap so deep in their asses. I hope the competitors eat u alive. Ya bums.