TWC Dons Larger Consumption Caps

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.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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