Policy + charging

Congressman Mad About TWC's Internet Meter

Congressman Eric Massa (D-NY) is formally opposing Time Warner Cable Inc. (NYSE: TWC)'s Internet pricing plan that charges customers more if their bandwidth consumption exceeds defined thresholds.

In a statement issued yesterday, Massa labeled the MSO's plan as "ill-conceived" and "monopolistic."

"The problem is that by [installing a metered billing plan], broadband Internet users' usage will obviously take a steep decline or else middle income families will see outrageous Internet bills," Massa argued. "Internet access is as essential to our economy as water is to our survival. I firmly oppose capping Internet usage and I will be taking a leadership role in stopping this outrageous, job killing initiative."

Time Warner Cable first tested the metered Internet concept in Beaumont, Texas, charging new customers $1 for every gigabyte consumed beyond a given limit -- 5 GB for the operator's "Lite" 768 Kbit/s; 10 GB for the 3 Mbit/s "Basic" offering; 20 GB for its 7 Mbit/s "Standard" tier; and 40 GB for "Turbo," which offers speeds up to 10 Mbit/s. (See Metered Usage Test Rolls On and TWC Tees Up Metered Internet Trial .)

The company told Business Week that about 14 percent of the 10,000 customers subject to the test in Beaumont exceeded the cap, with overage fees averaging about $19 per month.

As indicated by the MSO in February, Time Warner Cable is preparing to launch similar trials in several additional markets, including systems serving Austin and San Antonio, Texas; Rochester, N.Y.; and Greensboro, N.C. (See TWC Tees Up More Meters .)

In addition to the usage-based tiers already offered in Beaumont, trials in these additional markets will also introduce a new "super-tier" that sets a 100-gigabyte threshold. The MSO, which also plans to provide customers with a "gas gauge" that monitors their bandwidth consumption, has yet to reveal pricing on the 100 GB tier.

TWC doesn't anticipate charging any applicable overage fees until after it completes a three-month evaluation that aims to help customers get a grip on their consumption levels and pick the tier that best suits their bandwidth usage. Timing will vary by system, but billing on the new set of trial markets likely won't start until September, a TWC spokesman says.

Although the MSO says it must migrate to a usage-based system, detractors believe the company is attempting to discourage customers from tapping "over-the-top" Internet video sources and to stifle the success of Web TV competitors. TWC and Comcast Corp. (Nasdaq: CMCSA, CMCSK) are developing Web TV models of their own that look to complement their traditional subscription-based video offerings and to prevent so-called "cord-cutting." (See Cable-Led Web TV Deals Still Forming and Cable Web TV: Results May Vary .)

Comcast has so far resisted a billing-based, metered Internet model, instead opting for a policy that keeps "excessive" users in check with a monthly 250-gigabyte consumption cap. Canada's Rogers Communications Inc. (NYSE: RG; Toronto: RCI), meanwhile, has launched a metered billing platform in all its markets. (See Rogers Takes Internet Meter to the Masses and Comcast Draws the Line at 250GB.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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