Time Warner Broadband Plan Sparks Tiers of Fear

Time Warner's metered Internet pricing scheme is only a test, argues the cable industry, but Internet consumer watchdogs contend that it is a serious enterprise and only the tip of the iceberg when it comes to what and how broadband service providers plan to deliver high-speed Internet services.

The cable industry stepped forward April 15 and defended Time Warner Cable's proposed tiered and metered Internet pricing scheme. Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, cable's principal trade group, made a CableTechTalk blog post supporting the idea of consumption-based broadband billing.

Time Warner is planning 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 will also 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 pricing scheme has drawn a firestorm of criticism from customers, Internet advocacy groups such as Free Press, and even Congress.
"Time Warner Cable has merely suggested that they are interested in conducting a limited set of trials of a new pricing model-in a careful and transparent manner-that may serve the vast majority of their customers better by reflecting the growing reality that some consumers utilize far more high-speed bandwidth than others," McSlarrow wrote.
McSlarrow dismissed critics who have called for Congress to investigate Time Warner's plans. He also slammed Free Press, a perennial thorn in the cable industry's side, for its "tiresome" complaints and the group's "shoot, ready, aim mentality."
"The Internet ecosystem seems to be one of the few really healthy, growing and creative parts of our economy, with continued investment and innovation taking place every day," he wrote. "At a time of economic and financial challenges for our country, I for one would rather Congress spend its time on real problems, not fictional ones."
McSlarrow's blog post seemed to do little to defuse the issue. Indeed, it seemed only to add fuel to the fire.
Sen. Charles Schumer announced he plans to visit Rochester, N.Y., one of Time Warner's test markets. Schumer will hold a media event in Irondequoit, N.Y., at the home of a Time Warner customer. Schumer said he didn't want his constituents used as guinea pigs for Time Warner's pricing schemes.
Rep. Eric Massa has already promised legislation to curb tiers, particularly in areas where a broadband provider owns a monopoly on service.
Free Press had its own choice words for McSlarrow and the cable broadband business.
"When a major national Internet service provider expands a practice from a small trial to a big trial, it's a serious enterprise. And we can reasonably expect it is the tip of the iceberg-and that we'll soon see other major ISPs follow," Free Press Policy Director Ben Scott wrote from Germany, where he is traveling on business. "We need only look at the banking sector to note that erring on the side of caution when it comes to congressional oversight is not a bad idea. Asking Congress for an inquiry is simply raising some red flags about a plan that has many troubling questions surrounding it."
Free Press Research Director Derek Turner told eWEEK there is nothing wrong in the "abstract concept of tiered pricing plans," but said Time Warner's plans are "completely divorced from economic reality." Turner contends that Time Warner is trying to foist network upgrades on customers and penalize use of new innovations.
"On Time Warner's lowest tier, they are saying you should not do anything other than light Web surfing," Turner said.