Faced with growing opposition, Time Warner Cable announced Thursday that it was delaying the rollout of trial plans that would charge customers according to levels of how much they downloaded.
In a statement, the company said it would "alter plans to test Consumption Based Billing, shelving the trials while the customer education process continues."
'Great Deal of Misunderstanding'
CEO Glenn Britt said that it was "clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing." He added that the company will not proceed with the trials until there has been "further consultation with our customers and other interested parties."
The company also said that it would make measurement tools available "as quickly as possible," so that customers could see how much bandwidth they actually use.
In the statement, Britt specifically mentioned that Time Warner looks forward "to continuing to work with Senator Schumer," among others. Charles Schumer (D-NY) had recently joined Rep. Eric Massa (D-NY), the largest newspaper in Rochester, N.Y., and various consumer groups in protesting the planned rollout of the metered plan in that area. Massa has said he is preparing legislation to counter the tiered approach, which he said hurts America's capability to compete globally by limiting access to broadband.
Additionally, Rochester-area competitor Frontier Communications announced this week that it was dropping its own plan for tiered DSL service -- and looking to accommodate any disgruntled Time Warner customers.
Time Warner's metered plan began last year in Beaumont, Texas, where a company spokesperson said that only about 14 percent of customers used enough bandwidth to hit the caps. The other trials, besides Rochester, are planned for Greensboro, North Carolina, and San Antonio and Austin in Texas.
In the most recently released version of the plan, the tiers begin at 1GB per month at 768KB/128KB for $15, with an overage charge of $2 per GB. Time Warner said that about a third of its customers use less than 1 GB. Other packages are available at 10, 20, 40, and 60 GB, with overages at $1 per GB.
There is also a top tier of 100 GB for $75/month, with $1/GB over that. But the overages are capped at an additional $75, so a user could pay $150 and get what the company described as "virtually unlimited" bandwidth.
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 the most. The company has said that some projections indicate the Internet's infrastructure may not be able to handle this explosion by 2012.
Time Warner Cable has denied reports that it wants to discourage Net use of high-bandwidth video because it competes with its cable TV services. Some observers have suggested that the metered plan is an attempt to head off the disaster of unlimited use of video through broadband Internet on TV sets, which would in effect replace cable channels but at a much lower fixed price.
Having It 'Both Ways'
Yoav Schreiber, an analyst with industry research firm Current Analysis, said that, while a subgroup of heavy Net users could degrade bandwidth performance for others, cable companies like Time Warner were trying to "have it both ways."
"They say they're building to surpass fiber," he said, "and then they want to put caps on bandwidth." But he pointed out that the growth of bandwidth-heavy, online video has just begun, and companies are getting prepared for a massive shift in viewer habits by testing out metered plans. The challenge for Time Warner and others, he said, is to come up with a "clearer way" of explaining what is essentially a consumer-level service level agreement.
Larry Hettick, also with Current Analysis, noted that a colleague of his only watches TV on Hulu.com, not on over-the-air or cable-based TV. "He is the cable companies' worst nightmare," not because Time Warner wants to stunt the growth of online video, but because the licensing of TV shows to the Net has not yet fully matured into a standard business model.
Right now, he said, Hulu.com is being seen as an ancillary outlet for the shows, not a primary one, and Time Warner's plan is "not trying to prevent people from watching Net video but trying to put it on a level footing."
"Time Warner is smart in recognizing that there are different categories of users," he added, but he agreed with Schreiber on the need to find a clearer way to explain it. One approach, he said, might be simply to have one rate for Net that doesn't include heavy video watching, and another that does. Hettick also noted that the bandwidth-monitoring tools could help consumers feel more in control.