TWC Boosts Broadband Caps But Doesn’t Satisfy Critics
Time Warner Cable lifted broadband usage limits for tests to deal with increasing bandwidth use, after criticism from a freshman member of Congress whose district will soon see a trial (CD April 10 p6). The cable operator is boosting bandwidth tier sizes, limiting what it will charge subscribers for going over the caps and giving them a grace period before charging them more for heavy use. “We realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused,” Chief Operating Officer Landel Hobbs wrote late Thursday. “We've heard the passionate feedback and we've taken action to address our customers’ concerns.”
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Many concerns remain, we found Friday. The changes didn’t satisfy Democrat Rep. Eric Massa, whose upstate New York district will see a trial starting in August, as will Greensboro, N.C. Public interest groups that have said they prefer metered pricing to the blocking of content (CD Jan 18/08 p7), as the FCC found Comcast did, also criticized TWC’s approach. But the co-founder of Insight Communications said he supports how the larger cable operator is dealing with increased broadband usage.
Customers won’t pay more than $150 monthly no matter how much they exceed limits, including the regular service charge, TWC’s Hobbs said. For the approximately 30 percent of the company’s broadband subscribers who don’t use more than 1 GB of data a month, TWC will sell for $15 monthly a service with upload and download speeds below 1 Mbps. For higher-speed packages, TWC is boosting limits to between 10 GB and 60 GB. Customers will get two months of usage data and a one-month “grace period” after the trial starts when they won’t be charged for overages, Hobbs said. Tests in San Antonio and Austin, Texas, set for October will “guarantee at least the same level of usage capacity,” he added. The company began in June a test in Beaumont, Texas.
“If they want to charge less, we're in favor of that,” but caps still don’t fly with Rep. Massa, said Jared Smith, his communications director. “Internet usage increases by about 50 percent every year and setting a precedent of putting caps on is not acceptable to middle-class families.” At a Thursday meeting with constituents in Pittsford, N.Y., Massa heard complaints from doctors concerned they won’t be able to get medical images sent to them online because of the metering, Smith said. “This is a situation where people are depending on the Internet for their health and for their lives and we don’t believe that it’s fair to set up roadblocks.”
Free Press and Public Knowledge officials said TWC was right to quickly react to criticism of the trials but the changes aren’t enough. “It’s really obvious that what is motivating this for them is they are trying to kill the Internet video market,” since such applications use more bandwidth, said Derek Turner, Free Press research director. The new price plans try “to get users to avoid the willingness which they've always had to try new and exciting things online,” added Turner. TWC “openness” in “communicating with the public now is largely just them testing their marketing message” because consumers “don’t like metered billing.”
Absent price tiers, TWC might have to raise prices for all customers, Hobbs said. “If we don’t act, consumers’ Internet experience will suffer. Sitting still is not an option.” Hobbs said consumption is rising 40 percent annually among TWC customers, and all broadband providers are grappling with how to deal with increased bandwidth use. (See separate report in this issue.) He noted AT&T has begun two consumption-based billing tests and cable operators including Charter, Comcast and Cox “are using varying methods of monitoring and managing bandwidth consumption.”
Comcast’s monthly limit of 250 GB is much better than what TWC is testing, said Art Brodsky, Public Knowledge communications director. Caps are “better than filtering, but our caveat, as always, is it depends how you implement them” and 250 GB “gives consumers a lot more flexibility” than TWC’s approach, Brodsky said. “I'll believe Time Warner really has a problem when they institute caps in a competitive market” that has video products from telcos, he added.
With bandwidth usage “growing at exponential rates” cable operators’ pricing structure set up 10 years ago may need adjusting, said Insight CEO Michael Willner. Insight is a cable company with about 700,000 customers in the Midwest. “No one anticipated [then] the types of usage that people are finding available on the Internet today,” Willner said. “The logical conclusion is that instead of spreading that cost across everybody, let’s spread it fairly,” added Willner. “I'm very supportive of what Time Warner is suggesting is the right answer. It also resolves a lot of network management issues that some people think border on net neutrality issues.”