& cplSiteName &

TWC Subs Say No to Data Caps

Mari Silbey
3/12/2014
50%
50%

In a sign that money is still not everything, a $5 monthly discount is not enticing most Time Warner Cable customers to choose a data-limited broadband plan over an unlimited package.

Speaking at the Deutsche Bank Media, Internet and Telecom Conference in Palm Beach, Fla., Wednesday morning, Time Warner Cable Inc. (NYSE: TWC) Chairman and CEO Rob Marcus said very few broadband subscribers have opted for its Internet plan that caps data use at 30 gigabytes per month. In fact, the number of subscribers taking the use-based service tier is running only "in the thousands" -- a very tiny slice of the MSO's roughly 11 million US broadband customers.

Despite the roughly $5 monthly discount for the use-based plan, the vast majority of customers prefer to avoid broadband caps, even when they are unlikely to go over the data threshold. Marcus said TWC customers' median broadband use hovers in the "high twenties" every month, indicating that the bulk of customers would save money by choosing a data-capped service.

Time Warner Cable has a rocky history with use-based billing. When the company introduced bandwidth caps in 2009, there was a huge public outcry. The No. 2 US MSO backed down temporarily in the face of customer opposition, but it came back with a five-gigabyte plan two years ago. It then introduced the optional 30-gigabyte service tier six months ago, providing a financial incentive for users to accept a monthly data cap.

Despite the extremely low uptake rate, Marcus said he thinks there's an important principle for the company to establish: The more data customers use, the more money they should pay.

In the Q&A session with financial analysts Wednesday, he spent much of his time talking about Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed purchase of TWC. But he was careful to highlight the operational steps his company is taking to improve business even without Comcast's muscle.

On the residential services front, TWC continued to make strides in the early part of 2014. It just enjoyed its best January and its best February in five years from a subscriber standpoint. Marcus credited the gains primarily to reduced customer churn -- a trend that he thinks will continue throughout the year.

As in previous years, Marcus said TWC is planning rate increases for 2014. But rather than rolling out the increases separately across individual voice, video, and data services, the company will simplify things by imposing a single increase on each customer. The rate hike will depend on the customer's particular cable packages.

He also outlined some of the service improvements that TWC has started carrying out for residential customers. The TWC Maxx initiative is increasing download speeds for the standard broadband tier in New York and Los Angeles from 15 Mbit/s to 50 Mbit/s. The MSO is also making a big all-digital push for video, which it plans to implement primarily with the help of digital transport adapters. (See TWC: Charter's Got Nothing on Us, TW Cable Hemorrhages Subs, and What's Next for TWC.)

In an update on the rollout of its new cloud-based program guide, Marcus said the new interface has landed on more than 4 million set-tops so far, versus 3 million at the end of last year. He expects that the rest of the 6 million set-tops capable of supporting the new guide will receive the upgrade relatively early this year.

TWC executives are also considering licensing the X1 and X2 IP video platforms developed by Comcast. The company has been interested in the idea for a while, but Marcus said the pending merger could make the concept even more attractive.

As for Marcus himself, he said he's trying to stay focused "as if we hadn't announced the deal." That's a noble goal, but it's likely to be increasingly difficult to achieve as the market digs further into the implications of the pending acquisition by Comcast over the rest of the year.

— Mari Silbey, special to Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
3/13/2014 | 4:45:59 PM
TWC Subs Say No to Data Caps
@KBode, good points.  There isn't enough value to the customer to accept these restrictions.  I think it proves that people do not want limits unless there is a significant cost value in savings, etc.

I agree with your assessment that they are not likely to move into more creative pricing for customers with the Comcast deal.  I think whoever can come up with a more appealing service/pricing structure could gain customers.

 
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
3/13/2014 | 3:05:27 PM
Re: Caps
Agreed, though I'm not a customer, nor do I think I'm near that data level, the last thing I or customers would want ot do is to take the discount, then a month later find the data consumption had changed drastically so that the caps become an issue. 

I pay my provider a little extra each month for "free" simple maintenance because I find it cheaper than paying for a service call each time. 

I think once you hit a cap, you'd never want to do so again, so it's not surprising that few want it. The only way it makes sense is if someone is far below the caps.
jayja
50%
50%
jayja,
User Rank: Light Sabre
3/13/2014 | 2:45:02 PM
Yay, can't wait!
"As in previous years, Marcus said TWC is planning rate increases for 2014."
KBode
50%
50%
KBode,
User Rank: Light Sabre
3/13/2014 | 8:24:03 AM
Caps
A measly $5-$8 discount off of your bill if you agree to go from an unlimited connection to a 5 GB cap (with $1 per GB overages if I recall) is kind of an insult. And the 30 GB offer is only recent, for a long time it was a $5 discount just for a 5 GB cap.

The thing that gets me is we're told time and time again that all ISPs are interested in when it comes to these capped plans is the freedom to experiment with creative pricing. Yet each and every time I see an actual pricing plan unveiled creativity is nowhere to be found. Neither is value, frankly. I think it took Time Warner Cable two years to bump the savings on  the 5 GB cap offer a measly $3 bucks (at the same time jacking up various fees including the Broadcast TV fee and modem rental fee).

I don't think a Comcast acquisition will change this push much. Comcast followed Time Warner Cable's lead and is tinkering with very similar pricing in trial areas.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/12/2014 | 11:19:02 PM
Re: Not a big enough incentive
What reassurance do customers have that they won't go over and get charged without their knowing it?
PaulS681
50%
50%
PaulS681,
User Rank: Light Beer
3/12/2014 | 7:08:09 PM
Re: Not a big enough incentive
I agree Carol... $5 doesnt seem to be enough to move people away from unlimited. $20?  Now maybe we are talking.
albreznick
50%
50%
albreznick,
User Rank: Blogger
3/12/2014 | 6:47:25 PM
Re: Not a big enough incentive
Could be, Carol. Matbe TWC needs to up the ante a bit. What do you think would be enough of a discount? $10 a month? $15 or $20?   
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
3/12/2014 | 5:11:07 PM
Not a big enough incentive
I don't think it's true that customers don't care about money, I suspect $5 isn't a big enough incentive for them to have to worry about how much data they are using. 
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
UPCOMING COURSE SCHEDULE
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
Wednesday, August 17, 1:00PM EDT
Using Open Source for Data Centers and Cloud Services
Roz Roseboro, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (0) comments


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Light Reading Beyond
Steve Saunders, CEO and founder, Light Reading, 7/28/2016
Yahoo Signing Off in $4.83B Sale to Verizon
Mari Silbey, Senior Editor, Cable/Video, 7/25/2016
Are IP/Optical Integration Initiatives Moving to Silos?
Faisal Khan, Network Operator Technology Planning Dept., 7/28/2016
Ericsson Board Has Been Asleep at the Wheel – Consultant
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.