Cable Operators

Time Warner Cable Revives Usage-Based Internet Plan, But Now It's Optional

2/27/2012 4:29 PM Eastern

Three years after Time Warner Cable tried to test usage-based broadband billing -- and backed off after a furious outcry from customers and elected officials -- the MSO is launching an optional plan in southern Texas capped at 5 Gigabytes per month.

The operator is pitching the "Essentials Broadband" plan as a way to save money: Customers with Standard, Basic and Lite broadband packages will receive $5 off per month if they stay under the 5 GB ceiling. However, they could pay up to an additional $25 per month if they exceed the usage limit.

TWC is offering Essentials Broadband in San Antonio, Laredo, Corpus Christi, the Rio Grande Valley and Texas's Border Corridor. 

"Although our Internet service is terrific, it's a competitive world out there, so we're trying some new stuff to not only retain the customers we have today, but get new customers tomorrow," TWC director of digital communications Jeff Simmermon wrote in a blog post announcing the program. "By offering broadband pricing based on usage, we're hoping to enhance the value of the subscription to the lighter users that represent a large number of our customers. And we're hoping that attracts more customers from our competition -- people that are drawn by the flexibility, choice and opportunity to save."

TWC_bandwidth_meterTWC is positioning the metered-usage plan as the broadband equivalent of TV Essentials, the $39.99 per month stripped-down cable TV service.

In the spring of 2009, TWC tried to launch consumption-based billing in four markets. But the effort rapidly became a public-relations nightmare, with Sen. Chuck Schumer (D-N.Y.) and others intervening to express their opposition. Time Warner Cable chairman and CEO Glenn Britt later characterized the episode as "a bit of a debacle."

Simmermon acknowledged that "we know that when we attempted a usage-based billing plan before, it didn't go well."

The Essentials plan is opt-in, he emphasized, and offers customers the opportunity to save a few dollars each month. "It's not going to be for everybody, and that's fine -- all Time Warner Cable customers will still have the option of selection an unlimited broadband plan," Simmermon wrote.

Time Warner Cable customers can switch back and forth between metered and unlimited plans as often as they like. Essentials Broadband users will have access to an online meter that displays usage on a monthly, weekly, daily or hourly basis. Usage above the 5 GB limit is billed at $1 per Gigabyte, up to $25 per month.

In addition, the MSO will have a 60-day (two billing-cycle) grace period to allow customers to adjust usage patterns, during which the cable company will notify customers of overages but won't charge for them.

Among other Internet service providers, AT&T and Suddenlink Communications have instituted monthly usage limits with overage fees. Meanwhile, those that have caps but don't charge overage fees include Comcast, which limits all users to 250 GB of monthly usage, as well as Cox Communications and Charter Communications.

Time Warner Cable customers with higher-speed Turbo, Extreme and Wideband service will continue to have access to unlimited-usage broadband, and no optional tiered plan or discounts.

"We profit from unlimited consumption, and a free, open Internet is the sort of Internet that has gotten us this far," Simmermon said. "But now, if our customers in southern Texas choose a tiered plan, then they've got a chance to knock a few dollars off their monthly bill."

September