Time Warner's Consumption Based Billing At A Glance

by: robert.harding

Fri Apr 10, 2009 at 20:40:34 PM EDT

What Time Warner Cable is proposing is a broadband cap. In Time Warner's terms, it is "consumption-based billing."

The plan is fairly simple. It includes the following:

- Light Internet users would pay $15 per month for 1 GB. According to Time Warner Cable, about 30 percent of their users use 1 GB or less every month. Overage charges for these users will be $2 per gigabyte every month.

- These current packages will have the following caps: Road Runner Lite - 10 GB; Basic - 20 GB; Standard - 40 GB; Turbo - 60 GB. The prices for these packages will remain the same, but overage charges will be in place. The overage charges for all these plans will be $1 per GB a month.

There will also be a 100 GB Turbo package that Time Warner Cable will offer for $75 per month.

- Overage charges will not exceed $75. According to Time Warner Cable, that means you could get "unlimited usage at Turbo speeds" for $150 a month. (Note: That is if you get the $75 a month package that will give 100 GB Turbo.)

- Time Warner Cable says that they will not charge for overages immediately. They will give customers three months, including a one month grace period, to get used to their usage and to adjust to the new plan.

The argument that Time Warner Cable uses for these usage fees is that those who use more should pay more. TWC cites industry experts who say that by 2012, the Internet infrastructure might not be in place for the supply to meet the demand. The rising costs of providing this service is one of the main reasons why consumption based billing is being attempted.

While Time Warner Cable says that this is not a rate increase, it is hard to argue that it isn't. This consumption based billing concept will have an impact on individuals and businesses alike. Right now, individuals and businesses pay a flat rate for Internet use. For individuals that use the Internet frequently, that cost is sure to rise under the new plan for those living in the Rochester area. And for businesses that also depend on the Internet and use the Internet, this will only add to the operating costs for the businesses and will hurt them in this tough economy.

It is time for true competition. For many of us in Western New York, the only company we can turn to for cable television and high-speed Internet is Time Warner Cable. The computer I am using right now is using Road Runner (through Time Warner) and the TV I am watching is the standard cable service provided by Time Warner Cable. The only other options are dial-up and satellite dishes. The latter isn't a bad option, but the former is a terrible option, especially for someone who uses the computer regularly.

Time Warner Cable doesn't have a monopoly everywhere, but they do enjoy monopoly status in plenty of areas throughout the United States. Western New York is one of those areas. It is time that TWC's monopoly in this region and others is addressed.

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.

Massa Takes On Time Warner's Broadband Usage Caps

by: phillip anderson

Tue Apr 07, 2009 at 13:24:59 PM EDT

Web users, the meter is running. In a strategy that's likely to rankle consumers but be copied by competitors, Time Warner Cable is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets.

In April, Time Warner Cable will begin collecting information on its customers' Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. "We need a viable model to be able to support the infrastructure of the broadband business," Time Warner Cable CEO Glenn Britt says in an interview. "We made a mistake early on by not defining our business based on the consumption dimension." Time Warner Cable has 8.4 million broadband customers.

Congressman Eric Massa is having none of this and makes an interesting and I think effective argument against the practice. From an emailed press release:

Today Congressman Eric Massa announced his opposition to Time Warner's monopolistic plan to charge customers for broadband internet based on the amount of information they download. Time Warner's decision to make this move is part of an ill-conceived test marketing plan which will charge customers for internet usage much like cell phones. The problem is that by doing so, broadband internet users' usage will obviously take a steep decline or else middle income families will see outrageous internet bills.

"Just at a time when access to information is driving our economic recovery, Time Warner is moving to stagnate the 21st Century technology needed to rebuild America," said Congressman Eric Massa.

Additionally, now that the internet has become an essential communications tool used by most Americans, there are broad and sweeping First Amendment issues at stake as well.

"Internet access is as essential to our economy as water is to our survival," said Congressman Eric Massa. "With limited choices in broadband providers, and virtual monopolies in many market areas, I view this as nothing more than a large corporation making a move to force customers into paying more money. I firmly oppose capping internet usage and I will be taking a leadership role in stopping this outrageous, job killing initiative."

Killing such a plan legislatively will be a real tough undertaking, but it's one worth pursuing. Massa is correct that this is a bad plan and one that is especially unhelpful in the middle of a recession that is further depressing the upstate economy.

I wish Massa luck with this. He's going to need it.