NEW YORK (Reuters) - Time Warner Cable Inc said on Wednesday it is planning a trial to bill high-speed Internet subscribers based on their amount of usage rather than a flat fee, the standard industry practice.
The second largest U.S. cable operator said it will test consumption-based billing with subscribers in Beaumont, Texas later this year as a part of a strategy to help reduce congestion of its network by a minority of consumers who pay the same monthly fee as light users.
The company believes the billing system will impact only heavy users, who account for around 5 percent of all customers but typically use more than half of the total network bandwidth, according to a company spokesman.
Slowing network congestion due to downloading of large media files such as video is a growing problem for Time Warner Cable. The company said the problem will worsen as video downloading becomes more popular.
But the move could prove controversial. Unlike with utility bills such as the phone or electricity, which have traditionally been based on usage, U.S. high-speed Internet subscribers have come to expect a fixed monthly charge. An Internet bill typically only varies based on the speed of the consumer's Internet access.
Time Warner Cable, which has 7.4 million residential Internet subscribers, is hoping the move will not confuse consumers if introduced nationwide and is planning a trial period.
"Largely, people won't notice the difference," said the Time Warner Cable spokesman. "We don't want customers to feel they're getting less for more." News of Time Warner Cable's plans was originally leaked on an online industry forum BroadbandReports.com.
Other cable operators may follow Time Warner Cable's lead and phone companies such as Verizon Communications Inc and AT&T Inc are likely to be watching the New York-based cable operator's plans.
As U.S. consumers have become more used to streaming and downloading digital media over the Web, their Internet service providers have started to come under pressure to be able to keep up with growing demand in a cost-effective manner.
Comcast Corp, the largest cable operator with around 13 million Internet subscribers, has been accused by consumer groups of blocking Web traffic moving across its networks, prompting a notice of inquiry by the Federal Communications Commission earlier this week.
Comcast denies it blocks any Internet traffic saying it uses bandwidth management technology to help improve the customer experience but which may slow down some file transfers.
Yeah, right. Only 5% of people use youtube."The company believes the billing system will impact only heavy users, who account for around 5 percent of all customers but typically use more than half of the total network bandwidth, according to a company spokesman."
Looks like some Time Warner Customers will soon be testing out other internet providers!
Just what I was thinking. SWB, oops, AT&T, here come some new clients. And if that's what happens, TWC will be happy because it will reduce a lot of their network congestion at a relatively low cost.
I have sbc/yahoo or whatever its called now wireless and I am happy with it, I hope they don't watch too closely at the end result of this. I doubt I use enough for this to be an issue but it would still be a ty thing to deal with. Particularly because I share a connection with my roommate -- if our bill went up, how would we know who is reponsible and should pay the overage? Talk about a headache.
Long live the flat monthly fee!
I just don't understand cable. DSL works so much better. And if that testing works well and they end up using it everywhere, I hope that everyone switches oever to dsl.
I haven't been with Time-Warner in awhile, but do they make you sign some kind of contract? It might be hard to test others if they are locked in for the duration of the 'test phase.'
This sorta reminds me of how Sprint got rid of their problem customers by saying they call customer service too much. Seems like a purging of sorts and both companies earn so much money they won't feel the pinch too badly.
Nope. No contracts with TWC.
Notice how they completely avoid going into cost. I'm not going to risk it with this company I'll switch, with kids and a big family our computer gets more use than the TV. I can only imagine what 7 hours a day of usage would equate to.....800 a month or worse.
True, but if I make the switch, I'm switching everything ... so they'd lose a cable & phone customer as well. I don't care how happy they are, I care what my bill is ... and how my service is, obviously.
*shrugs*
They do this in Canada and most services have a cap of 20 to 70 gig a month from what I read.
Methinks this won't work and would have only worked had they done this 6 or 7 years ago. Customers are just used to a flat fee.
Netflix and apple will have a heart attack if this messes with their new on demand service.
I have TW and the service is awesome, I had U-Verse and it was a complete disaster. I don't want to leave TW.
DSL has nowhere near the speed of cable unless you live close to the CO.
They should just go ahead and le this study 'how to lose your market share in 60 days' and be done with it.
With the proliferation of Youtube and iTunes, and now you have companies like Netflix and Apple now rolling out video on demand downloads, this might just be the dumbest decision TW could possibly make.
LOL... watching streaming video and downloading are the whole reason to pay for high-speed internet access. I'm guessing the people who only use the link for reading spurstalk aren't going to get a 75% discount or something.
At&t for life!
Exactly!
Yeah, that's what else I was thinking. They talk about charging people for using more, but will they also be charging less for those that don't really use that much? Doubt it.
We have AT&T U-verse now and I am most satisfied with it.
I don't miss Time Warner at all- and you think I might seeing as I got to know all the tech workers personally from calling them every other week to fix my internet connection.
I'd be dead. I am on my computer almost all day- much of it online. At night and weekends, there are two computers online for hours and hours.
I had U-Verse!
2 out of 3 boxes broke
2 remotes broke
when you drop them they send you pre-postage paid boxes to send the equipment back via UPS.
They sent me the wrong size box that was too small in October and they haven't been able to send me a new box because...(and I am quoting someone from corporate who called me and apologized for their service sucking so bad)
"so many people have dropped our service we are out of boxes and we have them on back order"
U-Verse is an awesome concept but it still needs a ton of work.
And I know that. But, I do. I'm like 2 feet away.
I don't need the power packed jetson style speed though either.
What a huge mistake, maybe a few years ago when most people that used a lot of bandwidth were downloading illegally, but nowadays even my grandma is downloading movies and music off iTunes, websites use a lot more bandwidth as well, people are watching YouTube, it's a totally different time, and with downloadable High Definition content most likely going to be the future, they should be focusing on making their network more capable of handling that, not this.
+1
I've been a Rogers/Paragon/TWC customer since 1984, but I'll be dropping them like a rock (all services from my triple account) if they try this . I'm paying good coin for HS internet. Don't penalize me because grandma only uses it to check email.
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