Blog Post

Why Time Warner Cable’s broadband deal isn’t one

Time Warner Cable (s twc) is implementing a new pricing plan in certain areas of Texas that gives customers a break on their broadband bill if they agree to a limited plan. While in theory this is nice, because it lowers the cost of broadband for people who may not be able to pay $60 a month (that’s what TWC charges me), it’s also a pretty lousy deal.

Time Warner Cable will shave $5 off your broadband plan if you agree to keep your data use to 5GB per month. Overages are $1 per gigabyte, and a customer has a three-month grace period to track their usage and figure out if this is the right plan for them. It’s not a deal I would sign up for, knowing how much of my work, entertainment and even my climate control comes over the web, but for the dwindling bit of the population that can’t consume 5 GB a month, this is a way to cut costs. Just make sure when relatives or friends come over they know about your limited broadband — and don’t sign up for that Netflix (s nflx) or Hulu account.

I find the plan somewhat disturbing, given Time Warner Cable’s history attempting to implement tiered pricing back in 2009, but also because Time Warner is creating artificial constraints on people who may then be reluctant to pay more for Internet access. Plus, those giving up on unlimited access aren’t getting very much of a discount — I look at it as like selling your car in exchange for a discount on bus fare. I also think that as we’re encouraging ways to help poor people online via programs such as Comcast’s Internet Essentials program (even though the broadband these programs offer is not my definition of broadband), this helps set a precedent that unlimited or fast broadband is a luxury or an indulgence.

Meanwhile, in other parts of the world broadband access is being enshrined as a human right. Something else to think about is that when Time Warner first proposed tiers, it offered its 5GB-per-month plan at $29.95 a month. If I were to sign up for it today using Time Warner’s cheapest introductory plan at $34.95 per month for 12 months, I’d be paying the same rate as I would have under the proposed tiers.

So this entirely optional, and theoretically good, deal to help offset the cost of broadband leaves a bad taste in my mouth. It’s a lousy bargain and it makes fast, unlimited broadband look like something for rich people instead of like something for everyone. At least Time Warner Cable will let people opt out of the plan at their own discretion, if its FAQs are to be believed.

5 Responses to “Why Time Warner Cable’s broadband deal isn’t one”

  1. Patrick Knorr

    I managed a broadband operating, most customers do not use 5GB even with Netflix and the math on this offer would net a customer ahead if they used up to 9GB. 90% of customers would net ahead with only modest usage management.

  2. Phillip Dampier

    Just from an economic stance, this is a bad deal. A $5 break on a broadband bill for up to 5GB of usage isn’t much, and that $1/GB penalty rate can eat up the discount fast, and then subject you to up to $25 in overlimit fees. There go the savings.

    Think about how you can market this to a price sensitive customer who almost certainly has no idea what a GB is, or how many they use. And who wants to check a usage meter every day?

    We fought Time Warner off in 2009 when they tried something even worse in Rochester, NY, Greensboro, N.C. and three Texas cities. I had Rep. Eric Massa and Sen. Chuck Schumer involved, and stood next to the latter on Time Warner’s lawn when he announced Glenn Britt agreed to shelve the whole mess.

    I’ve already warned the company our group will picket yet again if this experiment stops being “optional.”

    I appreciate Jeff Simmermon’s new attitude about unlimited use plans, but I fear those views are not shared by CEO Britt or CFO Irene Esteves, who as late as December was telling investors usage billing was inevitable and a useful tool against cord cutting. That tool isn’t much help if it is “optional.”

    In short, we need more information and assurances before we’ll rest easy.

    My expanded thoughts are here:

    Phillip M. Dampier

  3. Brett, what in the hell are you talking about? Stacey is dead-on in this article. Time Warner is a joke of an ISP, and this “deal” is laughable. 5GB cap and they want as much as a wireless data plan? Top tier cable plans have been at ~25Mbps for something like 2 or 3 years now, which is unacceptable compared to the rest of the world. And no, wideband @ 50mbps for ONE HUNDRED DOLLARS A MONTH is not a good deal either. TWC has been F’ing us in Texas for over a decade and I’m sick of them. FIOS has been in Dallas for how many years now, and yet because of ridiculous legislation we can’t get FIOS in Austin.

    Thank GOD for Grande. If I was in a TWC- or AT&T-only zone I’d shoot myself.

    • I have long wondered why we don’t have FIOS in Austin when they do in the DFW area and San Antonio. what are the regulations that are keeping it out of Austin? It seems ironic that such a technology driven community has some of the worst broadband options in the state as far as big metro areas go.