Blog Post

Time Warner Starts Consumption Pricing Trial; Will Charge Overage Fees

You hear about overage fees being charged when wireless subscribers exceed the number of minutes allowed during any given month, but now there’s an equivalent for the internet. We reported in January that Time Warner (NYSE: TWX) Cable was considering a trial that would monitor how much content its users are uploading and downloading, and now that trial is going live on Thursday for new subscribers in Beaumont, Texas, AP reports. Time Warner said the trial is targeting the problem that just 5 percent of the company’s subscribers take up half of the cable company’s capacity. But the approach is definitely a throw-back to the early days when users paid for dial-up access by the minute. Time Warner appears to be the first major cable company to institute the policy, but if others jump on the bandwagon, it could put a damper on the adoption of such bandwidth-heavy services such as TV and movie downloads.

More details on Time Warner’s “metered billing”:

— Pricing plans: Time Warner’s tiers will range from $30 a month for 768 kilobits per second and a 5-gigabyte monthly cap to $55 a month for 15 megabits per second and a 40-gigabyte cap. Those prices cover the cable portion of subscription bundles that include video or phone services. Both downloads and uploads will count toward the monthly cap.

— Fees: Those who go over will be charged $1 per gigabyte.

— Content Hogs: Web surfing and email won’t get users into trouble, but movies and TV shows might….a gigabyte is equal to about 3,000 Web pages, or 15,000 e-mails without attachments. But a standard-definition movie can take up to 1.5 gigabytes, and a high-definition movie can be 6 to 8 gigabytes.

5 Responses to “Time Warner Starts Consumption Pricing Trial; Will Charge Overage Fees”

  1. Big companies just can't get enough. They nickel and dime us every which way. They might regret doing something like that. As soon as I get a bill with additional fees and I'll drop them as fast as I did the last few internet service providers. If all ISPs go to adopting that model, I think I can live without the internet. I'm assuming that I will not be the only one.

  2. As I wrote about on my blog, this is essentially an Internet tax. A TW subscriber would have to pay an extra $1.25 for an iTunes movie rental which is a 24% tax rate on the purchase of the movie. Hopefully other ISPs don't adopt the same model.

  3. Gordon

    Its all about the money. Ever since TW convinced Congress to deregulate the cable companies with the promise of lower prices, their prices have done nothing but go up, up, up, up. Let them expand their system. If they don't, Google is liable to come along and wipe them out. I for one wouldn't mind.