Time Warner Cable Returns to (Optional, For Now) Metered Billing
Save $5 on Slower Tiers if You Agree to 5 GB Cap
Time Warner Cable suffered a PR disaster back in 2009
when they tried to impose incredibly low caps and high overages on their customers, arguing at the time that flat rate pricing simply wasn't economically viable -- and that they simply had
to starting metering usage or the Internet would see brown outs. Several years later and the Internet has survived just fine -- as have Time Warner Cable earnings, which have consistently
shown flat rate broadband to be increasingly profitable. In more blunt terms, Time Warner Cable was completely and utterly full of crap.
As I noted at the time
, it seemed likely the effort would return eventually with a new coat of PR paint, given the lust investors have for the idea of imposing overages on usage in the age of Internet video. On cue, Time Warner Cable has announced over at their blog
that they're giving metered billing another shot -- albeit this time on a voluntary basis to begin with.
According to Time Warner Cable's Jeff Simmermon, the company is introducing a new optional usage-based pricing plan called "Internet Essentials
" in several markets in Southern Texas, including San Antonio, Laredo, Corpus Christi, the Rio Grande Valley and the Border Corridor. In his post, Simmermon acknowledges Time Warner Cable's first attempt on this front didn't go so well, and promises that users will always have the option of an unlimited tier:
Yes, we did try this before, a few years ago. And yes, pretty much everyone agrees that it didn’t go so well. So we listened to customer complaints. A lot. Consequently, Time Warner Cable customers will always have access to unlimited broadband at a flat monthly rate. Usage-based consumption is optional, and it’s designed to save light users money. Customers can switch back and forth as often as they like, but if they choose not to switch, nobody’s switching anything for them.
Time Warner Cable customers will always have access to unlimited broadband at a flat monthly rate.
-Time Warner Cable
As for pricing, the company says that users on the company's Standard, Basic and Lite tiers are all eligible to switch to the plan at any time. Prices for these tiers vary by market and local competition, but usually start at $30 if bundled with TV. Users on Turbo, Extreme and Wideband customers can't switch to metered billing and continue as usual. Should you switch, the company claims users can see up to a $5 monthly savings, depending on usage. In their own words, the company says the option provides users:
1) Up to 5GB/month of data transmission for a $5/month discount from one’s current monthly bill. All Standard, Basic and Lite broadband customers will be eligible. Turbo, Extreme and Wideband customers will continue as always, with access to unlimited broadband and no optional tiered plan or discounts.
2) The ability to opt-in and opt-out of a tiered package at any time.
3) A “meter” that tracks usage on a daily, monthly, weekly or even hourly basis, enabling customers to accurately gauge usage. Below is an example of the hourly meter:
3) (sic) A 60 day/2 billing-cycle grace period to allow customers to adjust usage patterns. During this time we will notify customers of overages but won’t charge for them.
4) Overages will cost $1 per GB, not to exceed a maximum of $25/month.
The company has been working on a new usage meter
these customers can use to track consumption. There's no word yet on when the company hopes to expand the offer into additional markets. Obviously we'll have to see how this measures up when put into actual use and users start seeing real bills, so keep an eye on our Time Warner Cable user forum
. Being able to save $5 off of a slow-speed tier if you agree to a 5GB cap is not a revolutionary value proposition. While the optional part is certainly nice, and it's warming that Time Warner Cable actually listened to users this time, there's still obviously some concerns here.
Usage-Based Billing in the U.S. is Never, Ever About Saving you Money or Congestion
A lot of Time Warner Cable's website rhetoric
still suggests that Time Warner Cable's motivation here is simply to save users money and "enhance the value of the subscription." Wanting users to spend less has simply never been a goal of any publicly traded cable company, and in fact most cable operators go out of their way
to avoid actually competing on price. As such, the argument that this is about cost savings remains disingenuous. On the TV front, while Time Warner Cable has been paying a lot of lip service to less affluent customers lately
, their TV essentials product aimed at this segment has a ridiculous number of caveats
and lacks any real value.
usage-based billing might save a user money (a $5 a month tier with reasonable overages), what Time Warner Cable is proposing again isn't real usage-based billing -- it's flat-rate pricing with overages layered on top. Real per-byte pricing would be welcome by consumers, but it would lose ISPs money -- as every grandmother in the country -- with their diet of just e-mail and occasional weather forecasts -- would wind up paying virtually no money.
If usage-based billing isn't about saving you money as carriers claim, it's about managing congestion, right? Nope. You'll recall Time Warner Cable originally tried to insist
that they needed to meter because if they didn't, the Internet would grind to a halt and suffer "brownouts." You'll note that nowhere in the blog post
or their website
does the company mention congestion as a reason for the service this go round, so we'll assume they've finally given up on that argument.
So what is this really about? Despite the flowery language, trying to impose this kind of pricing comes from executives and the investment community, who simply can't give up this dream. These folks are solely interested in imposing usage surcharges and creating artificial scarcity on a product that's getting increasingly less expensive to provide. It's about ramping up profits in the face of Internet video and imposing control out of fear of becoming a "dumb pipe" -- it always has been.
ISP Meters Aren't Accurate and Regulators Don't Care
Every single company that has imposed meters and overages across North America is having trouble metering and billing users accurately
. That's not hyperbole. Every carrier that's imposing overage fees -- from AT&T in the United States to Cogeco in Canada -- is having trouble accurately monitoring your usage. Worse, despite these ISPs claiming they should be able to bill like a utility, there's no regulatory agency overseeing any of this -- meaning it's up to you to make sure you're not overpaying. We've seen absolutely no
interest from any regulatory agency in North America when it comes to making sure you're not being ripped off -- and as a result, many broadband users are.
I am Altering the Deal. Pray I Don't Alter it any Further.
While it's nice that Time Warner Cable has promised to always keep an unlimited option available, there's obviously nothing holding them to such a promise. In their first attempt at metered billing Time Warner Cable failed to heed the old boiling frog anecdote
, and threw users into the pot at full boil. This time you can be sure that they'll turn up the heat more slowly. Why? There's absolutely nothing stopping them. Regulators don't care -- they think this kind of pricing experimentation is "creative." That leaves the free market to keep this pricing experiment in check, but most users live in monopoly or duopoly markets.
In more than half of their markets, Time Warner Cable's most intense competition comes from sluggish DSL -- where speeds often top out at just 3 Mbps. Real competition drives real price competition, and Time Warner Cable simply doesn't face the kind of competitive pressures that would drive real price competition. Both Verizon and AT&T have halted their next-gen upgrades
, and Time Warner Cable's looking at a decade of easy phone company pickings.
With such tepid competition, there's really nothing stopping them from making this a mandatory affair over time. Don't believe us? Ask Canadians, who thanks to limited competition now enjoy some of the lowest caps and overages in the world. Meanwhile, while it's nice that Time Warner Cable created a $25 monthly overage ceiling, we've watched Canadian ISPs constantly nudge these ceilings upward over time, resulting in some ridiculous user bills
Getting the picture yet? This is a soft sell with a hard landing. Is it possible for an ISP to creatively offer usage-based pricing that really works and saves consumers money? Sure. Is it likely that a U.S. ISP with limited competition in their footprint and a track record of utter disdain for price competition is going to? Not so much.