E-Commerce

Time Warner Cable to experiment with Net pricing

Time Warner Cable has announced that it will begin an experiment with a new pricing structure in a limited market. It is considering charging customers based on how much data they download.

Time Warner Cable has announced that it will begin an experiment with a new pricing structure in a limited market. It is considering charging customers based on how much data they download.

From the Los Angeles Times:

The nation's second-largest cable provider will start a trial in Beaumont, Texas, in which it will sell new Internet customers tiered levels of service based on how much data they download per month, rather than the usual fixed-price packages with unlimited downloads.

Company spokesman Alex Dudley said the trial was aimed at improving the network's performance by making it more costly for heavy users of large downloads. He said a small group of super-heavy users of downloads, about 5% of the customer base, could account for as much as 50% of network capacity.

It is rumored that Comcast has also considered this kind of pricing structure, but it has never moved forward. Overall, there is a fear of customer backlash over such a move.

Some people even think that this is a blatant effort to stop companies like Netflix and more recently iTunes from successfully providing movie rentals from the consumer’s computer.

What are your thoughts? When you signed up for service, did you sign up for unlimited service? Do you think that this decision by Time Warner represents a significant change to the contract you agreed to?

Additional information:

Time Warner Cable Eyeing Overage Charges? (Broadband Reports.com)

Time Warner Cable Experimenting With Overage Charges for Top Users (Techdirt)

Leaked Memo: Time Warner Cable to trial hard bandwidth caps (Ars Technica)

41 comments
Absolutely
Absolutely

"These are darn comfy! Where did you get them?" Where I've worked, I have a set of duties and I am retained/promoted or discharged according to whether I can, or cannot perform them adequately, to [more or less well-] defined standards of quality and timeliness, and I am paid a pre-determined amount for such time as I continue to perform those tasks to those standards. Time Warner is deciding that they no longer like being treated as a salaried employee, the payment structure they originally offered. Now, they want to add "overtime pay" to their compensation package. The basic reason that I cannot do the equivalent [when employed] is that there are other people, willing and able to do the work I do. Not owning any Senators, Congresscritters or bureaucrats, I only get pay raises after earning them.

CharlieSpencer
CharlieSpencer

For all any of us know, the terms and conditions in the contract allow TW to change the pricing structure at their discretion. They certainly don't have any legal problems changing my cable TV rates on an annual basis. I can drop them at my discretion without penalty with less than 30 days notice, so I assume they can do the same.

Tig2
Tig2

I know that they have announced the tiers but I am looking for the affected market. They HAVE said that they will only impact new customers and only in one town in Texas. I think that they want to see how well this will go over before they do any wide-spread implementation. I expect to do a follow up this week.

NickNielsen
NickNielsen

[i]** Dial-up comparisons are based on average maximum download speeds of 28K and 56K modems. Actual speeds may vary. Home networking is an optional service at an additional cost. [b]Terms and conditions of this offer are subject to change at the discretion of Road Runner and/or Computer Associates at any time.[/b] [/i](my emphasis)[i] EZ Armor Security Suite software must be downloaded on Road Runner and registration is required. Software not available for Macintosh computers. TM & ? Warner Bros. Entertainment Inc. (s07)[/i] I find it ironic that the page heading states "Member Benefits." http://www.timewarnercable.com/SouthCarolina/products/internet/memberbenefits.html Edit: formatting

vtassone
vtassone

This opens new job opportunities. Like the electric and gas meter readers. I'm going to apply for a gb meter reader job ;-)

CharlieSpencer
CharlieSpencer

I worked for the phone company, checking the coin return on pay phones. I worked on commission and was allowed to keep 25% of everything I found. After I'd been with them six months I got a raise and was allowed to keep 50%! Kids, ask your grandparents what a "pay phone" is.

bennetts77833
bennetts77833

ATT allegedly bills on speed of connection, (related to how much you can download per day) which affects your streaming experience. We live in rural TX where ATT can't deliver their highest service speed; But they were still billing the ~$49 rate and discounting it to 27. When I complained about lousy speed and asked for the $14.XX as advertised on TV, best speed for the price, price. I was told I would not be happy with that speed how about $23 per month? I said no let me try the best speed for the price rate. (Advertised as not an introductory rate). Well the rate works but is billed as $29.99 with a monthly credit of $15. Current speed test is 616 kbps download; 172 kbps upload. Download is sometimes half that.

Locrian_Lyric
Locrian_Lyric

otherwise, they're setting themselves up for a class action suit. If anyone has already signed up for unlimited use, and they try to bill for use, TWC will be in for a nasty suprise when a few lawyers catch wind of it.

brian.mills
brian.mills

the customers were made aware of the terms when signing up. Whether these customers paid attention to the terms is another issue, but if it's a test market scenario and not a stealth move (like Comcast's traffic shaping) they most likely made known what was going on. It just may have been buried in the agreement where most people just skip over when reading.

Jaqui
Jaqui

This is very similar to the very beginning of the internet era. back when it was 5 cents an email and dial up was the only connection type at all other than a T1. It does make sense, and cents. if you pay for what you use, then light data transfer usage is a low cost. gamers, file sharers and malware infested people with wind up paying through the nose. bring back the 5 cent cost per email even. that will kill spam faster than anything.

norb_houston
norb_houston

I agree theres probably a fair number of people downloading more music and video than ever before. But I dont think its fair to charge someone who is legally getting movies via netflix or iTunes. Im sure they can track who is getting their media from where. But then this is why ComCast is doing their Internet Shaping scheme. To stop or hinder people from using Torrents to get mass video and a fast rate. I also dont agree with Internet Shaping schemes either because this is hindering internet technology advances. Sure people are probably using it for the wrong reasons but theres still a majority of people who use it for its intended legal purposes. Open up the internet and let people use it.

Shellbot
Shellbot

The point is not that they are downloading movies from wherever..its that they are downloading massive amounts of data. So lets say you and i each have an internet account that we pay 20 a month for: -you only check email and order from amazon a bit.. 2gigs a month -I play World of Warcraft online, check email, send photos, download music, video and movies..25 gigs a month Would you not agree that a system of "paying for what you use" is more fair? Are you happy that your 20 a month is in fact paying for my extra 23 gigs a month?? I'd be thrilled to let you subsidise my internet usage!! I think the idea is that they don't want "stop or hinder people from using Torrents to get mass video and a fast rate"...they want them to pay thier fair share for using all the bandwidth!! Happy Weekend :)

Absolutely
Absolutely

If you agree to buy "A" for monthly fee "$", then after some number of months you're asked for "$$" instead, or else settle for "A-" or less for the price which used to get you "A," that is a reduction in service, and might not be legal.

Tig2
Tig2

I have been writing a Mac blog since the end of last year and writing News for two weeks. I'm having a great time! The real challenge is picking out the stuff you all want to read. That can be a real challenge sometimes. But I love seeing a discussion take off!

Absolutely
Absolutely

I'm going to go post to the original article now. I wish I'd seen it sooner. Since when are you on the Writing Staff? Congrats!

Tig2
Tig2

And they are pretty bad. I'm trying to get confirmation now and will follow this up. I don't know yet how they are going to implement with existing customers. It is all still very much up in the air. Hopefully, new information soon.

norb_houston
norb_houston

I think regardless of how anyone uses the internet if I or you pay however much a month we should be able to do whatever we want with what we pay for. If all Im doing with my 20 dollars a month is checking emails and buying online then so be it. I am regularly using my internet at its max just to make sure I get my moneys worth. Where I live there is already a limit per month on what I download. I believe its 10-15 gigs a month and any more than that there is steep charges. I dont agree with this in the slightest because I think everyone should be able to use the internet as much as they want or need to without being restricted. It doesnt bother me in the slightest that someone could be paying 20 dollars a month for "unlimited" usage and downloading 50+gigs of data. Theyre paying for the internet let them use it. With technology advancing as fast as it is I dont see how this is such an ongoing issue. Soon enough HD Video will be broadcasted more regularly and then where are we? Someone wants to watch a movie over the net and they've then gone over their limit because they watched one movie? That is not fair.

Shellbot
Shellbot

I see where yer going.. but if they put structured usage in place, maybe we'd get a better service? (ya i know..probably not but in theory it sounds good) I'd gladly pay a higher premium for reliable fast broadband with low contention rates. Now if only i could find that somewhere...

norb_houston
norb_houston

Im not disagreeing. They need some sort of structure in place to make it fair for everyone. The way Im looking at is that I feel Im paying an over amount of money for a service and I would like to feel that Im getting the most out of it. As long as I feel that Im satisfied with the service for the price Im paying then fine. What I disagree with is someone complaining because theyre paying the same price for the same service and not feeling justified. My original statement was that with technology going the way it is we will soon see TV and movies all incorporated via internet whether people like it or not. So coming up with a fee based on per usage doesnt seem viable if everyone in 5 years will be using the same service for the same uses.

cmiller5400
cmiller5400

You use more, you pay more. You use less, you pay less. I think it is Sprint that has a cellular plan that automatically adjusts your plan based on your usage; that would be the way to go with internet charges because it would change the plan monthly depending on how much you downloaded. And if you want a monthly bill that stays the same, then opt for an "unlimited" account. Edit: for clarity.

norb_houston
norb_houston

No we dont all live in america. I live in a remote part of canada where all the internet and telephone communications are via satellite. So I know all about cost. Even when I was living in a city there was nothing cheap about my 49.99 cable bill that creeped up to 59.99 because of modem rental. So if Im paying that much for internet I should be allowed to do whatever I want with it.I also lived in Houston Tx for 2 years and the internet wasnt cheap there either. Id love to see highspeed for 20 bucks a month or 30 for that matter. There will never be a cheap method of internet and as long as we let the beaurocrats tell us how its going to be we will be stuck with "internet shaping" and billed for things we "think" we are paying for someone else to use. I pay the same bills as everyone else, the fact that I use it a different way shouldnt matter. Because I choose to watch a few videos online and play mmorpg's and use more bandwidth than "granny" I should have to pay a higher premium is bs. If all she wants to do is check her email and internet shop then go to dial up. Highspeed is overkill to check your email and buy a book on Amazon.

Shellbot
Shellbot

Ya..thats it..you tell em how it is! I smell a WATB... :) :)

Shellbot
Shellbot

well your a heavy user..so of course you don't give a rats.. contrary to popular belief..the internet is not free..ISP have to pay for equipment and bandwidth ..which it then sells to the consumer.. yes your entitled to use as much as you want, and i agree with others..Unlimited SHOULD be unlimited..so when I pay for unlimited use thats what i expect..(as others..i know i'll get booted when i max out at 30 or so).My ISP is crap, they block the ports for common download sites..so i can't even download movies if i wanted to.. why do i use them? because they are the ONLY ISP in my area that is reliable that does not require a land line..(and i live in a major city...so please do tell me about advancing technology, i'm dying to hear all about it.. we don't all live in America with great broadband :) ) It puzzles me why you seem to be against the idea of maybe you paying 30 for 50 gigs..and yer granny paying 10 for 2 gigs..? Give the little guys a break man..

CharlieSpencer
CharlieSpencer

"I dont agree with this in the slightest because I think everyone should be able to use the internet as much as they want..." That's the point. I don't want to MMORPG, download music or movies, stream television, etc. But to only get e-mail and check NASCAR web pages, I have to pay as if I was doing those other things. Not only do I subsidize your use, I have to compete with you for infrastructure bandwidth. THAT'S what's not fair.

TonytheTiger
TonytheTiger

[i]I think regardless of how anyone uses the internet if I or you pay however much a month we should be able to do whatever we want with what we pay for. If all Im doing with my 20 dollars a month is checking emails and buying online then so be it.[/i] The more appliances and lights you run, the higher your bill is. The great thing about it is that you control it.

cmiller5400
cmiller5400

It is about usage. I would love to see a tiered structure; say an option for an unlimited, 1GB, 2GB, and 5GB data plans.

i<3php
i<3php

1, 2, 5, & unlimited GB? You call that tiered? I could use a gig just by gaming for three hours. TIERED would be more like 5gb, 10gb, 20gb etc. Its only the 19th and I've already used 15 gigs with comcast. They'll probably shut me off when I hit 30gb cuz you know, 30gb = unlimited....right?>

cmiller5400
cmiller5400

I was just throwing some numbers out there. Some of us do not use all the bandwidth YOU may. My numbers were TIERED, just not to your liking.

CharlieSpencer
CharlieSpencer

I wish they do that with their TV cable service. I'd love to pay for just the channels I watch. The way people use the web has changed since the "traditional" service contract was developed. A decade ago home users didn't download much. Then came pictures (of increasing resolution and size), then music, and now movies. I think it's fair to pay for bandwidth based on your traffic. With a flat fee, those who use the web only for surfing and e-mail are both subsidizing and competing with those who download Ken Burns' "Civil War" or the LOTR trilogy. I'm glad we don't use that model for other utilities like electricity or water. Edited for clarity adn spelin.

brian.mills
brian.mills

I'm not sure about everywhere else, but where I'm at, after a year with service from my gas (and I think electric) companies, customers have the option of paying a flat rate based on the average monthly usage of the previous year. This is evaluated annually and prices adjusted accordingly. But it does save from high gas bills during the winter and high electric bills during the summer. I think a similar model would work great for ISPs. One month I may download a lot more than the next, which under a "pay for use" plan would make my bill go up or down accordingly. But taking a monthly average for a year and paying a flat rate would keep the bill fairly stable while at the same time allowing light users to pay less than heavy users. And I love the idea of a-la carte cable TV. I only watch about 10 of the who knows how many channels I have, and I'd rather just pay for them than for everything.

NickNielsen
NickNielsen

I first ran into this method of billing for utilities when I was in the military stationed in Europe. One thing to watch out for was that your first year's billing would be based on the previous occupants' use, possibly resulting in a large surprise at the end of the year. I like the idea of a-la-carte cable as well. I truly watch more than an hour each week of only 4 or 5 channels and some days I don't watch at all. In total, the entire household probably only watches more than an hour a week of 10-12 of the over 70 channels available here on the "non-digital" cable tier. Would I object to paying a quarter of what I'm paying now? H3ll no!

NickNielsen
NickNielsen

They adjusted it at the end of each calendar year. If the previous occupant was a big user and you weren't, you got a nice surprise in January: a check for the difference and a reduction in payments. It was usually the other way around for Americans: a hundred (or more) Dmark increase in the monthly payment and a massive bill to make up the difference.

brian.mills
brian.mills

That could get very interesting paying based on what the previous occupant used. Especially if the previous occupant was a big user of whatever utility it is. I believe in the area I'm in you have to have service for a year before you're eligible for the level pay option, that way the monthly average is based on your usage, not someone else's. Cable companies like to run special deals for the first few months, usually 3, 6, or 12, so they could use those special deal months to establish an average and then price based on that afterwards.

Tig2
Tig2

When you signed up for service, did you sign up for unlimited service? Do you feel that this decision by Time Warner represents a significant change to the contract you agreed to?

NaughtyMonkey
NaughtyMonkey

to the network. I pay $2.00 a month as a fee for maintenance costs of the providers network. I have no problem with paying this small amount a month so they have the funds to invest in new, better technology to allow for the ever-increasing bandwidth usage of todays media enhanced internet. Do other providers use this approach? It seems to make sense to me, but then again, I am a little off. ;) edit to add: I have been paying my maintenance fees for 10 years to the same provider as well as many others. If they were to say that now they are going to throttle my bandwidth or tier the cost due to their network not being to handle the load, I would want to know where the money went that 20,000 customers have been giving them to upgrade their network. That is $4,800,000 they have not used as they outlined they would.

apotheon
apotheon

I'm not a customer of this particular corporate daylight robbery outfit, but I would certainly consider switching providers if this happened to me -- depending on whether my costs would go up under the new pricing plan. A bit of irony: I suspect that most of the people aghast at this idea are also people who strongly support "Net Neutrality" legislation. Of course, that NN legislation would almost certainly effectively outlaw all QoS management of bandwidth for home Internet connections, which means that egregious bandwidth consumers could not have their bandwidth gluttony moderated effectively. As a result, ISPs would be left with four options: 1. Just cut off all users who exceed certain bandwidth usage levels -- and those limits will have to get increasingly restrictive as more and more people get online and discover the joys of YouTube. This tactic would probably start riots. 2. Charge customers based on bandwidth. Eventually, that bandwidth based fee schedule would have to become an open-ended per-unit cost, which would overall be very inconvenient for most customers of ISPs and be very expensive for a great many of them as well. 3. Charge [b]everyone[/b] a whole lot more to defray the costs of constantly upgrading the network to provide more bandwidth. 4. Let people enjoy bandwidth brown-outs and black-outs on a regular basis thanks to the unreasonable demands imposed on the system by egregious bandwidth consumers. When you refuse to let someone manage a resource directly, you either force that person to manage it indirectly or you run out of that resource in a hurry. Now people are complaining about indirect management. It's as though they think bandwidth is unlimited and free for ISPs. edit: It was four options -- not three.

EPIKService
EPIKService

Given how they implemented the AOL acquisition, 95% percent of the users will see no change in their billing. The 5% heavy users will have a choice to take it or leave it.

CharlieSpencer
CharlieSpencer

but I recall AOL acquired TW, not the other way around.

apotheon
apotheon

It ended up being a somewhat mutual merger situation.

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