Time Warner Cable's COO responds to criticism of the company's plan to cap bandwidth usage on its broadband Internet services by announcing a new pricing structure for the plan.
In response to a slew of criticism over its plan to cap customers' bandwidth allowance, Time Warner Cable announced new price tiers for a three-state trial.
In addition to 5, 10, 20 and 40GB caps, the company said this week that it would offer a 100GB tier for heavy users. Prices (so far) would range from $29.95 to $75.00 a month, and users would be charged an extra dollar for every additional gigabyte they download, up to a maximum of $75. An "unlimited" bandwidth plan, therefore, tops out at $150.
Time Warner's Chief Operating Officer Landel Hobbs released a statement
on April 9 expressing regret for not adequately communicating to customers its plan to initiate consumption-based billing trials for its broadband Internet services. "We realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused," he said in the statement. "We've heard the passionate feedback and we've taken action to address our customers' concerns.
Hobbs said the "ever-increasing flood of content on the Internet," which is causing bandwidth consumption to grow exponentially, is a good thing. However, he noted the costs associated with this increased Internet usage. "Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40 percent a year," he said. "As a facilities based provider, we've built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself."
Rival company Comcast also imposes a bandwidth cap on users, with the basic service topping out at 250GB and costing around $43 a month. "This is a common problem that all network providers are experiencing and must address," Hobbs said, noting other providers, such as AT&T and Cox Communications, have instituted consumption-based billing.
Hobbs also offered an olive branch to customers in affected areas, explaining that once the trial is implemented, Time Warner will not immediately start billing customers for overage. Rather, it will first provide two months of usage data and then a one-month grace period in which overages will be noted on customers' bills, but they will not be charged. "So, customers will have an opportunity to assess their usage and right-size their service packages before usage charges are applied," he said.
Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August. Hobbs said the company would apply what it learns from those two markets when it launches trials in San Antonio and Austin, Texas, in October. "The Internet is dynamic and continually evolves, so our plans will evolve as well and aren't set in stone," Hobbs said. "We'll look forward to more dialogue as we progress in these trials."