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Congressman Mad About TWC's Internet Meter

Jeff Baumgartner
4/8/2009

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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DCITDave
DCITDave
12/5/2012 | 4:07:29 PM
re: Congressman Mad About TWC's Internet Meter


I think water and broadband should come down the same pipe, on a single bill. That would make me happy (but might kill my router).


 


ph

pilchard
pilchard
12/5/2012 | 4:07:29 PM
re: Congressman Mad About TWC's Internet Meter
Congressman Massa would be well advised to take a look at his monthly water bill. The more water he uses, the more he pays. Why imposing such a model on Internet usage is considered such an outrage is beyond me...or, better yet, the arguments don't hold water!! ;)
paolo.franzoi
paolo.franzoi
12/5/2012 | 4:07:28 PM
re: Congressman Mad About TWC's Internet Meter


 


Instead of only raising prices for high users there should be a cooresponding lowering of prices for low users.  If you make the assertion that water is a pay as you go service, then I should have no charges if I use no bits per second.  Right?


I think lowering the base price to include very small usages and then having pricing as you go models make sense.   I am guessing nobody really wants to lower the pricing to the low usage customers.  Okay, I am not guessing.


seven


 

DCITDave
DCITDave
12/5/2012 | 4:07:28 PM
re: Congressman Mad About TWC's Internet Meter
Great point, though. There must be some base price for an information service, but it CAN be a lot lower than it is today.

Why wouldn't a carrier lower prices for lower usage customers?

ph
menexis
menexis
12/5/2012 | 4:07:27 PM
re: Congressman Mad About TWC's Internet Meter
I agree with Eric Massa that this will impact the middle class the most
OldPOTS
OldPOTS
12/5/2012 | 4:07:27 PM
re: Congressman Mad About TWC's Internet Meter


Agree Seven


RE:$1 for every Gigabyte consumed beyond a given limit -- 5 GB for the operator's low-end tier; 20 GB for its 7 Mbit/s offering; and 40 GB for the 15 Mbit/s tier.


It appears to me this thresholds for the 'cap' is awfull low, disallowing any sustantial video, likc LR's Wecasts. Only about one a month for low-end and little streaming news.


 


OP





paolo.franzoi
paolo.franzoi
12/5/2012 | 4:07:25 PM
re: Congressman Mad About TWC's Internet Meter


 


miar,


There are internet tiers (DSL primarily) of $12.95/month service.  Most cable operators work in the $35/month service with some higher tiers.


If I was told that I could get a baseline $12.95 or $9.95 per month service with a reasonable bw cap/overage charge that might make sense.  Then I could buy additional rate cap (like minutes on wireless).


If I use wireless as an example, there is an MVNO that sells prepaid connectivity for $7/month.  Calls are expensive ($.10/minute iirc), but for those folks that just use their cell for emergencies that might make sense.


Now, here is the problem - what we need to make this work for the consumer is competition.  The beauty is that if my cable vendor does this, then I am likely to shift back to DSL.  I feel no compulsion to live with a deal that makes no sense to me.


 


seven


 

miar70
miar70
12/5/2012 | 4:07:25 PM
re: Congressman Mad About TWC's Internet Meter


I agree that the internet is extremely valuable and essential to any country and economy to have a high quality network to facilitate business and learning for growth in the future. However while I would like the government to actually build out/subsidize a fast broadband network, should it really be doing so to facilitate my streaming of Hulu, Netflix etc (which is doing great damage to Blockbuster...) ?


So for business and learning, government money to subsidize and for entertainment probbaly not. Sounds like a 2 tier internet already...


So perhaps the Australians (and UK with OpenReach) have got it right, by separating transport from service. Government pays for the access networks and provides fast pipes everywhere. Then learning and business is done in a 'free' environment and service providers will need to pay carriage fees for transporting content etc into your home. That would at least put cable, satellite and internet streaming on an equal footing as well :)


If only it were that simple...

miar70
miar70
12/5/2012 | 4:07:25 PM
re: Congressman Mad About TWC's Internet Meter


Whilst everyone would like lower prices, the operator must balance whether or not they can really get the higher prices out of the higher bandwidth consumer. Right now it is an average across the board, chances are that higher consumers are likely to take steps to cut their bills if they went to a pay-what-you-use model.


One other thing, if you have service and you don't use it, you still need to cover the cost of providing the network for you not to use it, so there would be something like a small fixed cost (line rental sounds familiar ?).


I agree with the careful analogies, but let's reverse it. I think it is outrageous that gasoline is metered, after all this is clearly stifling the economy and doing great damage to large engined vehicle manufactures who are finding it much harder to compete, perhaps if we introduce an uncapped $300/month gas plan for all we could save the auto industry !! ;)

miar70
miar70
12/5/2012 | 4:07:24 PM
re: Congressman Mad About TWC's Internet Meter


Seven,


I agree that competition is critical in providing the motivation to offer good service and deals to consumers. Unfortunately there is not enough competition in a lot of areas and leads to little choice for consumers. It would be great if those options were available, similar as they are to pre-paid wireless users. My local MSO does offer a range of speeds and capacities (MSO remains unamed :) )

<table border="0" class="ici">
<tbody>
</tbody>
<thead>
<tr>
<th class="linedef" id="services"></th> <th id="downloadBits">Download speed</th> <th id="uploadBits">Upload speed</th> <th id="downloadMois">Monthly capacity
(Downloading)</th> <th class="lineend" id="uploadMois">Monthly capacity
(Uploading)</th>
</tr>
</thead>
<tbody>
<tr class="tgv30">
<td class="linedef">Ultimate Speed Internet 50</td>
<td>50 Mbps</td>
<td>1 Mbps</td>
<td align="center" colspan="2">100 GB&nbsp;&nbsp;&nbsp;
combined**</td>
</tr>
<tr class="tgv30">
<td class="linedef">Ultimate Speed Internet 30</td>
<td>30 Mbps</td>
<td>1 Mbps</td>
<td align="center" colspan="2">70 GB&nbsp;&nbsp;&nbsp;
combined**</td>
</tr>
<tr class="ixtmPlus">
<td class="linedef">Extreme High-Speed Internet Plus</td>
<td>20 Mbps</td>
<td>1 Mbps</td>
<td align="center" colspan="2">30 GB&nbsp;&nbsp;&nbsp;
combined*</td>
</tr>
<tr class="ixtm">
<td class="linedef">Extreme High-Speed Internet</td>
<td>10 Mbps</td>
<td>900 Kbps</td>
<td align="center" colspan="2">100 GB&nbsp;&nbsp;&nbsp;
combined**</td>
</tr>
<tr class="ihv">
<td class="linedef">High-Speed Internet</td>
<td>7.5 Mbps</td>
<td>820 Kbps</td>
<td align="center" colspan="2">30 GB&nbsp;&nbsp;&nbsp;
combined*</td>
</tr>
<tr class="ici">
<td class="linedef">Basic Internet</td>
<td>600 Kbps</td>
<td>128 Kbps</td>
<td align="center" colspan="2">2 GB
combined*</td>
</tr>
<tr class="itel">
<td class="linedef">Dial-up Internet</td>
<td>56 Kbps</td>
<td>28 Kbps</td>
<td>N/A</td>
<td class="lineend">N/A</td>
</tr>
<tr>
<td colspan="5" id="texte">* $7.95 per additionnal gigabyte
Basic Internet, up to a maximum of $50 per month,
High-Speed Internet, up to a maximum of $50 per month.
Extreme Plus High-Speed Internet, no fees limit.
** $1.50 per additionnal gigabyte. No fees limit.</td>
</tr>
</tbody>
</table>

Will we ever see a minutes/GBytes 'a la carte' menu and will we see more choice like this in other markets ?


P.S - Hope I don't break any rules by posting pricing info, but it is generally available on the internet.

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