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Time Warner Cable Hints at Higher Modem Fees, Usage Charges
Glenn Britt Simply Can't Give Up His Dream of Price Gouging
by Karl Bode 05:09PM Thursday Jun 06 2013
Time Warner Cable CEO Glenn Britt simply can't give up his dream of socking his broadband users with usage charges and even-higher fees, despite the immense and unprecedented public backlash to the idea just a few years back. Speaking at the Bank of America/Merrill Lynch Global Telecom and Media Conference in London, Britt stated that he sees some room to raise the company's recently imposed $4 modem rental fee.

He also stated that while the company now believes they should always offer unlimited broadband (after getting humiliated in the press for their ham-fisted effort to eliminate such plans), users should have to pay more for that privilege:
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For the first time, Britt admitted customers seeking unlimited service should be ready to pay a higher cost for that option, telling the audience Time Warner would set a premium price on the unlimited tier and offer discounts to customers seeking downgrades to comparatively cheaper, usage-based pricing plans. The company hopes this new approach will limit political opposition and customer push-back.
The problem is, Time Warner Cable's attempt to offer less expensive usage-based plans has been rather pathetic. Last year they introduced Internet Essentials, which provides users with a $5 monthly discount if they agree to caps as low as 5 GB -- "savings" that immediately disintegrate if you actually use your connection. That's of course because the goal isn't "creative pricing," or "value," it's to generate more cash from all users -- heavy and light.

From there, Britt whines a little bit about how people using the company's network actually requires that they keep said network upgraded (the horror):
Britt complained that increasing usage and demand for broadband speed was requiring the company to invest more in its broadband service, something not clear on the company’s quarterly balance sheets. Real investment, except for expansion by the business/commercial services division, has been largely flat or in decline for several years. Time Warner Cable’s broadband prices have increased over the same period.
As I note every single time this comes up, Time Warner Cable's flat-rate pricing is perfectly profitable for the company, and the cost of providing fixed-line bandwidth continues to plummet. The flat-rate pricing model simply isn't profitable enough, because no pricing model really ever is if you're an executive or investor whose entire life focuses on jacking up quarter over quarter results by any means necessary (see: customer support and service). The pretense that changing an entire pricing structure because some users use a lot of data (instead of nudging that sub 1% to business tiers) is a red herring designed to prevent you from calling fixed-line metered billing what it is: a rip off.

One major problem is that guys like Britt have been taking for granted just how good they really have it. Time Warner Cable operates in markets with little to no competition, where their biggest competitive threats tend to be aging, under-funded phone companies that only offer over-priced, under-powered DSL. As we've seen in places like North Carolina, Time Warner Cable also enjoys so much regulatory capture they actually get to write telecom law allowing them to keep competitors blockaded out of the market and prices sky high. Nice work if you can find it.

Britt still clearly dreams of metering all users in order to jack up data prices and protect TV revenues from Internet video, but his ham-fisted attempts to convince users this is a good idea have been more comical than anything. Previously, Time Warner Cable claimed they couldn't financially survive and that the Internet would suffer "brown outs" if they weren't allowed to overcharge you for data. As such, I very much look forward to their next series of misleading arguments to justify what is, despite protestations of those with a vested interest in it, obnoxious and predatory price gouging.

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