Time Warner Scraps Consumption-Based Broadband Billing

Caving under pressure from consumers and Congress alike, Time Warner Cable said April 16 it would drop plans to begin consumption-based broadband billing trials in summer 2009 in four U.S. markets.

"It is 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," Time Warner Cable CEO Glenn Britt said in a statement. "As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met."

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Time Warner had planned a four-city test of the pricing scheme that would offer a basic tier of Internet access capped at 1GB per month for $15, with an extra $2 for every additional gigabyte. Time Warner also planned to offer higher-capacity plans ranging from $29 to $75, each with overage fees. Under the plan, the highest possible Internet bill would be $150 per month, more than double what current Time Warner customers typically pay for unlimited usage.

The company is currently testing the pricing scheme in Beaumont, Texas, and had planned to launch trials Rochester, N.Y.; Austin and San Antonio, Texas; and Greensboro, N.C.

The pricing scheme drew a firestorm of criticism from customers, Internet advocacy groups and lawmakers, including Sen. Charles Schumer of New York, who said he didn't want his constituents used as guinea pigs for Time Warner's pricing schemes. Rep. Eric Massa, who represents the Rochester area, vowed legislation to curb tiered broadband billing, particularly in areas where a broadband provider owns a monopoly on service.

"While we continue to believe that consumption-based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process," Britt said. "We look forward to continuing to work with Senator Schumer, our customers and all of the other interested parties as the process moves forward, to ensure that informed decisions are made about the best way to continue to provide our customers with the level of service that they expect and deserve from Time Warner Cable."

The consumer Internet advocacy group Free Press, which led a letter-writing campaign opposing the pricing plan that resulted in 15,000 protest letters, hailed Time Warner's decision.

"We're glad to see Time Warner Cable's price-gouging scheme collapse in the face of consumer opposition. Let this be a lesson to other Internet service providers looking to head down a similar path," Timothy Karr, campaign director of Free Press, said in a statement. "Consumers are not going to stand idly by as companies try to squeeze their use of the Internet. This is a major victory, but the fight for a fast, open and affordable Internet is far from over."