Bowing to pressure brought on by consumers and politicos, Time Warner Cable Inc. (NYSE: TWC) is beefing up its current and upcoming metered, usage-based Internet trials, and, as expected, will debut a new "super tier" that caps consumption at 100 Gigabytes per month before overage charges apply. (See Congressman Mad About TWC's Internet Meter .)
Among the new tiers, outlined in a statement issued by Time Warner Cable COO Landel Hobbs early Thursday evening, the MSO intends to try out a 100 GByte Road Runner "Turbo" package that sells for $75 per month and offers speeds of 10 Mbit/s downstream and 1 Mbit/s upstream. If those customers exceed the cap, the MSO will then charge $1 for every GB thereafter.
To "accommodate lighter Internet users," the MSO is placing a relatively microscopic 1 GB cap on a new tier that costs $15 per month, and offers speeds of 768 kbit/s down by 128 kbit/s upstream. Customers who take that tier will be hit with a charge of $2 per GB if they exceed that cap. TWC said its usage data shows that about 30 percent of its cable modem subs use less than 1 GB per month.
The operator is also increasing the caps on its existing consumption-based trial packages. The chart below details all of the MSO's new tiers and the changes being made to its existing ones.
Table 1: Tiers for Fears
Road Runner tier
Speed (downstream)
Previous monthly consumption cap
New monthly consumption cap
Overage charge
"Lower priced option" Lite tier*
768 kbit/s
N/A
1 GB
$2 per GB
Lite
768 kbit/s
5 GB
10 GB
$1 per GB
Basic
3 Mbit/s
10 GB
20 GB
$1 per GB
Standard
7 Mbit/s
20 GB
40 GB
$1 per GB
Turbo
10 Mbit/s
40 GB
60 GB
$1 per GB
"Super-sized" Turbo*
10 Mbit/s
N/A
100 GB
$1 per GB
*New consumption-based tier
Source: Time Warner Cable
In another change that's similar to a policy in use by Canada's Rogers Communications Inc. (NYSE: RG; Toronto: RCI), Time Warner Cable will cap overage charges at $75 per month. With that in place, customers can subscribe to the Turbo tier and get "virtually unlimited" usage for $150 per month, the MSO said. (See Rogers Takes Internet Meter to the Masses.)
Following the trial already underway in Beaumont, Texas, TWC expects to launch metering trials using the new policies this August in Rochester, N.Y.; and Greensboro, N.C. The MSO will then introduce similar tests in its San Antonio and Austin markets.
As was the case in Beaumont, TWC won't immediately start to charge for overages. Billing on overages won't go live until after TWC provides customers with two months of usage data, and an additional one-month "grace period."
In its defense, TWC said the new consumption-based Internet billing policies are necessary as Internet usage and the variable costs to keep the broadband network maintained and upgraded to accommodate that growth both continue to rise.
"Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more," Hobbs wrote.
Meanwhile, critics of the tests maintain that metered broadband policies aim to discourage customers from using Web-fed, "over-the-top" video services while concurrently maintaining lucrative margins on high-speed Internet services.
Docsis 3.0 hint
In the statement, Hobbs also leaked out some news about Time Warner Cable's planned Docsis 3.0 trials, noting that the MSO plans to start off with a wideband service that offers speeds of 50 Mbit/s downstream and 5 Mbit/s upstream for $99 per month.
He didn't identify which markets will get wideband first, but the MSO has previously hinted that its New York City system, where it competes with Verizon Communications Inc. (NYSE: VZ), will be among those to get Docsis 3.0 in the early going. (See Britt: Docsis 3.0 Coming to NYC.)
The best comment thet confirms many of my posts on network costs; they are discovering that the cheap network ain't so cheap when those shared customer really use the network they sold them for those new applications.
Their education requires changing expectations for what they sold.
I would suspect that duopolies will not be greatly cap friendly as well either, however that will depend on how competition evolves. For example, I note that AT&T is starting their cap (trial - exploration - pick a word) in a city where the cable provider is putting in a cap.
Let me make sure no one is misunderstanding me, I am not advocating no caps. I agree 100G is plenty of bandwidth for most people (although I am not sure I want to pay $75 for it). I am merely pointing out that there is a LOT of buzz on tech sites. Pretty much anyone who reads this site makes a living off of bandwidth in one way or another - including me.
As far as the price goes anyone can charge what they want, it is a free market. In my neighborhood if TWC charged $75 for 100 Gb I would walk over to VZ. And my next door neighbor, who just checks email, may stay with TWC since it is only $15 a month for that first Gb. That is the way it should work, let the market decide what is a fair price.
I think a lot of this is people feel like they have gone from unlimited phone calling to metered use; like going from all-you-can-eat to ala cart - because they have/will. The question they have is "is it fair?". I think most of us know equipment isn't free and neither are inter-connection fees. But I think we ought to not stick our heads in the sand about the ire this has created.
When I said there is a lot of buzz I meant a LOT of buzz (on tech sites). Just check out slashdot.org and you will see what I mean. There are multiple articles there including one from this morning about "New York Representative Eric Massa, who now says he will draft legislation to curb tiers, particularly in areas where a broadband provider owns a monopoly on service."
P.S. Not all the comments on the tech sites are anti-teir pricing. Many make the same point on those sites being bandwidth costs money.
If capping's the new DRM, then getting a water bill is the new being locked in a desert prison, or something silly like that. I mean, gimme a break. DRM is a real issue, violatiang privacy. Limiting profligate consumption is totally unrelated.
Tran Nguyen in Tom's whines that if he uses the Internet to download all of his TV and movie watching for the month, it can exceed the cap, and waaaaahhh! Well, then, DON'T DO THAT. The Internet is NOT free to provide, no matter what these guys think.
Their earlier tiers were way too low -- 40 GB/mo for the top tier was very restrictive. At 100 GB, it's tolerable. Residential service is cheap *because* it's heavily oversuscribed. Price out a commercial LAN-oriented T1 or higher to see the difference.
Yep, pretty much, which is why I said "Whether you agree or not". I thik the point is that an all-you-can-eat plan means you could pull *at least* 400G. How many people would? I don't know. Interesting though that Comcast has a 250G cap which works out to .17 per G.
As an aside another new article popped up today on Tom's Hardware which says capping is a form of DRM:
So they pulled this "400 GB" number out of thin air to use as the baseline for comparison?
Here it seems AT&T is looking at ranges of 50-150 GB for its trial.
http://www.lightreading.com/document.asp?doc_id=175121&site=cdn&
Interesting, as an article that ran yesterday in Ars Technica looked at provider pricing. They compared ATT and VZ at $0.09 and $0.11 per Gb respectively and TWC at $6 per Gb. So now it is only $2.00 per Gb if you don't count the $15 for the first Gb? I guess that's not bad if you just check you email once or twice week. Whether you agree or not the article is worth a read:
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