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You are here: Home / Digital Life / Tiered Internet Plan Draws More Fire
Time Warner's Tiered Internet Plan Draws More Fire
Time Warner's Tiered Internet Plan Draws More Fire
By Barry Levine / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
APRIL
16
2009
Time Warner Cable's plan for tiered Internet service is running into more opposition and competition. In Rochester, N.Y., the site of one of the trials, competitor Frontier Communications has dropped its own plan for tiered DSL service -- and is looking to accommodate any disgruntled Time Warner customers.

Frontier spokesperson Ann Burr told news media that her company got "hundreds of calls from Time Warner customers into our call centers," adding that it appeared the trial in that area was a "public-relations crisis for Time Warner." However, Frontier says five gigabytes monthly is "a reasonable amount" for its service, in effect a soft cap.

Not a 'Guinea Pig'

Time Warner's metered plan began last year in Beaumont, Texas, where a company spokesperson said only about 14 percent of customers used enough bandwidth to hit the caps. The other trials, besides Rochester, are planned for Greensboro, N.C., and San Antonio and Austin in Texas.

Legislators are also getting into the act. Rep. Eric Mass (D-N.Y.) has said he will introduce legislation to counter the tiered approach in Rochester, which he said can hurt America's capability to compete globally by limiting bandwidth access. The largest newspaper in the Rochester area, the Rochester Democrat and Chronicle, is calling for more explanation from the company, and Sen. Chuck Schumer (D-N.Y.) has told local news media that he doesn't want Rochester used as a "guinea pig."

Time Warner's tiers in its trials now begin at 1GB per month at 768KB/128KB for $15, with an overage charge of $2 per gigabyte. Time Warner said about a third of its customers use less than 1GB. Other packages are available at 10GB, 20GB, 40GB, and 60GB, with overages at $1 per gigabyte.

There is also a top tier of 100GB for $75 a month, with $1 per gigabyte over that. But the overages are capped at $75, so a user could pay $150 and get what the company described as "virtually unlimited" bandwidth.

Comcast and AT&T also offer caps, but at higher levels than Time Warner's.

The company said that, rather than spread the cost of infrastructure and service to all users, it wanted to give lower rates to customers who use the Net least and higher rates to those who use most. The company has said some projections indicate that, by 2012, the Internet's infrastructure may not be able to handle the explosion in bandwidth needs.

'A Bridge to Sell Them'

Time Warner Cable has denied reports that it wants to discourage Net use of online video because of competition with its cable-TV service. Some observers have suggested that the plan is an attempt to head off the disaster of unlimited use of video through broadband Internet on TV sets, in effect replacing cable channels at a much lower fixed price.

The editor of DSL Prime, a newsletter for the broadband industry, isn't buying Time Warner's denial. "Anyone who thinks that's not an attempt to raise prices and keep competitive video off the network -- I have a bridge to sell them, and it goes to Brooklyn," he told the Associated Press.

Yoav Schreiber, an analyst with industry research firm Current Analysis, said that, in spite of the opposition and competition, "we're going to end up with metered bandwidth" of some sort because of the strain on the infrastructure from the exploding use of video and other high-bandwidth needs.

He added that "everything else in life is metered," and even "unlimited" plans for, say, phone service, are the top level of a tiered structure. The key question at this point, Schreiber said, is how well Time Warner Cable and other companies come up with metered plans that make sense to customers and how well they explain them.

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