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Time Warner Cable Now Charging for Web Data

Posted on April 2nd, 2009 in Internet Time Warner Cable CEO Glenn Britt, time warner charging for internet Web Data, why charge for web data

Ah, the Good Ol’ Days

Remember these times people, for one day we may actually look back on them as the good ol’ days. The good ol’ days for internet usage at least. It appears that Time Warner Cable is moving forward with its plan to charge users on how much web data they consume. I know for some folk this will just seem unimaginable while others are probably asking what took so long.

Testing for this, what some call, evil plan began in April of last year when Time Warner Cable began collecting information on the internet usage of its customers in the Texas cities of Austin and San Antonio as well as Rochester, New York. The consumption based billing will begin in these cities later in the summer. It looks like the lucky city to get first honors will be Greensboro, N.C. The plan was actually hatched by Time Warner Cable, recently divorced from Time Warner this month, when they began testing a plan to monitor and meter internet usage in Beaumont Texas sometime last year.

Poor Time Warner Cable realized their mistake of not starting the internet billing cycle on a usage based scale and are trying to charge users in much the same way cell phone providers collect fees from their customers who exceed their plan’s allotted minutes. Since the beginning of the internet business companies have charged users a flat fee for unlimited access to the web. The first hurdle Time Warner Cable will face will be defining a price structure that will be able to compete with every other company’s unlimited access policy. Time Warner Cable CEO Glenn Britt commented, “We made a mistake early on by not defining our business based on the consumption dimension”. The world could then be heard replying, “Well, duh!”

Aside from the off chance that America’s youth might actually experience a moment of physical activity in sunshine away from their computers there are all sorts of potential negative ramifications to tiered web-use pricing. One such potential hit is the possible stifling of innovation by tightening the belt for high-bandwidth needs like online music and video services. But it is exactly these high-bandwidth types of services that companies like Time Warner Cable claim they need the flexibility of pricing that a tiered web-use pricing system will provide.

For Time Warner Cable, the breakdown of the tiered charges works like this: customers will be charged $29.95 to $54.90 a month based upon presumed data consumption and connection speed. Their customers will then be charged $1 for each gigabyte (GB) that they go over their plan’s cap. Time Warner Cable has devised four cap levels of 5, 10, 20 and 40 GB. They have noticed a huge gap in data consumption. In the trial, only about 14% of those enrolled in the program exceeded their cap at an average of about $19 a month. But the real staggering number was that Time Warner Cable noticed that the top 25% of their users consumed more than 100 times the data of the bottom 25% of users.

But this is only the beginning. Time Warner Cable will first have to sell the idea to its investors. Other companies will be waiting in the wings to monitor the results and word is already out that both AT & T and Comcast are starting testing of their own.