Time Warner's Broadband Cap Plans Draw Lawmaker's Ire

By Roy Mark  |  Posted 2009-04-11

Time Warner's broadband cap plan may result in federal legislation aimed at unfair tiered price structures from Internet providers. Angered over Time Warner's pricing plans, U.S. Rep. Eric Massa of New York says that's exactly what he has in mind, promising a bill to curb tiers, particularly in areas where a broadband provider owns a monopoly on service.

If Time Warner thought that its hastily revised broadband cap plan to include an unlimited usage tier would appease U.S. Rep. Eric Massa, the cable broadband provider was wrong. Massa, who represents a New York district where Time Warner is planning to roll out its cap plan, said April 10 he is drafting legislation to prohibit unfair tiered price structures from Internet providers.

Massa responded sharply April 7 when Time Warner said it was introducing a tiered usage cap plan in a three-state trial pricing program. Massa called it "nothing more than a large corporation making a move to force customers into paying more money." The next day, Time Warner said it would offer an unlimited usage tier.

It didn't make Massa any happier.

"I am taking a leadership position on this issue because of all the phone calls, e-mails and faxes I've received from my district and all over the country," Massa said in an April 10 statement. "Time Warner has announced an ill-conceived plan to charge residential and business broadband fees based on the amount of data they download. They have yet to explain how increased Internet usage increases their costs."

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."

The revised Time Warner plan added the unlimited usage plan to its previously announced idea of having 5GB, 10GB, 20GB and 40GB caps. Prices 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 decision has the potential to more than triple customers' current rates, and I think most families will find this to be too taxing to afford," Massa said. "Time Warner believes they can do this in Rochester, N.Y.; Greensboro, N.C.; and Austin and San Antonio, Texas, and it's almost certainly just a matter of time before they attempt to overcharge all of their customers."

Massa added that while he favored a "business's right to maximize their profit potential, I believe safeguards must be put in place when a business has a monopoly on a specific region." Massa also pointed out that for a consumer to receive the same unlimited Internet that they currently do for around $40 per month, they would be billed $150 per month under the new plan.

"At a time when millions of Americans have lost their jobs and businesses are struggling, I am compelled to fight against additional, unnecessary burdens placed on my constituents," Massa said.

While Massa did not release any details of his proposed legislation, he said the bill will also address the importance of helping broadband providers create jobs and increase their bandwidth while increasing competition in areas currently served by only one provider.

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