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Congressman Massa To Introduce Broadband Internet Fairness Act

by: robert.harding

Fri Apr 10, 2009 at 16:17:45 PM EDT

Congressman Massa has heard from his constituents who are outraged at this move by Time Warner. He has received letters and e-mails from people who are angry at this proposal. In response to the outpouring of correspondence he has received, Massa said today he will introduce legislation to address the broadband caps called the Broadband Internet Fairness Act.

(Note: The act isn't finished yet, but will be soon. As soon as the bill is finished, we will have access to it.)

Today Congressman Eric Massa (D-NY) announced officially that he is drafting legislation designed to prevent job killing broadband internet downloading caps. The Massa Broadband Internet Fairness Act would prohibit unfair tiered price structures from internet providers. The bill will also address the importance of helping broadband providers create jobs and increase their bandwidth while increasing competition in areas currently served by only one provider.

"I am taking a leadership position on this issue because of all the phone calls, emails and faxes I've received from my district and all over the country," said Congressman Eric Massa. "Time Warner has announced an ill-conceived plan to charge residential and business broadband fees based on the amount of data they download. They have yet to explain how increased internet usage increases their costs."

Massa also added this in response to Time Warner, who issued a statement regarding this proposal yesterday. I have included Time Warner's full proposal below the fold.

"Time Warner's decision has the potential to more than triple customers' current rates and I think most families will find this to be too taxing to afford. Time Warner believes they can do this in Rochester NY, Greensboro NC, Austin TX and San Antonio TX, and it's almost certainly just a matter of time before they attempt to overcharge all of their customers. And while I favor a business's right to maximize their profit potential, I believe safeguards must be put in place when a business has a monopoly on a specific region."

"At a time when millions of Americans have lost their jobs and businesses are struggling, I am compelled to fight against additional, unnecessary burdens placed on my constituents."

In the past week, there has been a significant uproar in the Rochester, NY area regarding Time Warner's announcement that they will "test market" a plan to charge customers based on how much they download. The initial proposal was to introduce a 5, 10, 20, or 40 gb/month downloading cap. If customers went over the cap, they would start mounting additional fees.

Then today Time Warner announced a new tiered plan similar to the previous one. However, for a consumer to receive the same unlimited internet that they currently do for around $40 per month, they would be billed $150 per month under the new plan.

In addition to this excessive and disproportionate charge, as internet usage increases by an average of 50% per year, companies setting caps sets a horrible, long-term, precedent. At a time when Americans need to utilize all available assets to improve the economy, limiting internet usage, which this plan would do, handicaps our ability to compete on the global stage. Furthermore, it will have significant stifling effects on start ups and small businesses.

This would also have significant impacts on the agricultural, medical, and educational communities. Farmers are increasingly dependent upon constant exchanges of GPS information to control all aspects of their operations. Medical professionals are increasing their data transfer rates, and patients rely on their ability to continue doing so unimpeded. Finally, educational institutions use more bandwidth every year. In Western New York, students at RIT's School for the Deaf, who use video transfer software to communicate, would be greatly disadvantaged by Time Warner's proposal.

It is also worth mentioning that Time Warner had four executives attend Congressman Massa's town hall meeting last night and engaged Congressman Massa on this issue. This reportedly led to an angry crowd and a tense debate about broadband caps. This isn't a popular decision Time Warner is making. That is very clear.

RE: Consumption based billing trials

4-9-09

Some recent press reports about our four consumption based billing trials planned for later this year were premature and did not tell the full story. With that said, we realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused. We've heard the passionate feedback and we've taken action to address our customers' concerns.

With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That's a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we've built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.

This is a common problem that all network providers are experiencing and must address. Several other providers have instituted consumption based billing, including all major network providers in Canada and others in the U.K., New Zealand and elsewhere. In the U.S., AT&T has begun two consumption based billing trials and other providers including Comcast, Charter and Cox are using varying methods of monitoring and managing bandwidth consumption.

For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the infrastructure may not be able to accommodate the explosion of online content by 2012. This could result in Internet brownouts. It will take a lot of money to fix the problem. 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.  

If we don't act, consumers' Internet experience will suffer. Sitting still is not an option. That's why we're beginning the consumption based billing trials. It's important to stress that they are trials. The feedback we've received from our customers has been very helpful. We've made changes to the terms in our current and upcoming trial markets as follows:

To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.

We are increasing the bandwidth tier sizes included in all existing packages in the trial markets to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively. Package prices will remain the same. Overage charges will be $1 per GB per month.

We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.

Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.

Once we implement this trial, we will not immediately start billing customers for overage. Rather, we will first provide two months of usage data. Then we will provide a one-month grace period in which overages will be noted on customers' bills, but they will not be charged. So, customers will have an opportunity to assess their usage and right-size their service packages before usage charges are applied.

Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August. We will apply what we learn from these two markets when we launch trials in San Antonio and Austin, Texas, in October, but we will guarantee at least the same level of usage capacity in these trials.

As we launch DOCSIS 3.0 in the trial markets, we plan to offer a 50/5 MB speed tier for $99 per month.

Again, the Internet is dynamic and continually evolves, so our plans will evolve as well and aren't set in stone. We appreciate the feedback we've received. We'll look forward to more dialogue as we progress in these trials. You can send us your comments at realideas@twcable.com.

Answers to Your Questions

Will my bill go up?

This is not a rate increase. Rather, it gives each level of Road Runner service a generous amount to use each month but, if of someone goes over the monthly usage allocation, they have to pay a slight fee. That's the only way your bill would change.

How will this impact my Price Lock Guarantee?
The plan will not impact your Price Lock Guarantee price, but it could mean a small incremental fee that will vary by month depending on how much you exceed the megabit usage that goes with your level of Road Runner service.

How can I know if the plan is fair?
Time Warner Cable simply wants to make sure only those who use large amounts of data either upgrade to a level better for them or pay for incremental amounts they choose to have each month. This ensures others don't have to pay for or subsidize those heavier users.

Why do I have to pay more for Road Runner?
You won't be paying more if you are like the average user. These new fees will only be charged to the small group of heavy users that the rest of RR customers are effectively subsidizing.