• by Wendy Davis  @wendyndavis, April 10, 2009

Politicos and consumers are stepping up their criticism of Time Warner's plan to implement pay-per-download billing in four cities -- Austin and San Antonio (Texas), Greensboro, N.C. and Rochester, N.Y.

The critics argue that Time Warner is taking advantage of a lack of competition from Verizon's high-speed FiOS service to extract higher fees from consumers, while also discouraging people from watching online video for free rather than via pricey cable subscriptions.

"It's Internet rationing," says Phillip Dampier, who founded the site Stopthecap.com, which serves as a hub for opposition to the metered pricing. "It's designed to drive down usage."

Late Thursday, Time Warner chief operating officer Landel Hobbs issued a statement defending the company's plans. "Internet demand is rising at a rate that could outpace capacity within a few years," he wrote. "It will take a lot of money to fix the problem. Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more." He also said consumption among high-speed Internet subscribers is increasing by about 40% a year.

Meanwhile, by Thursday afternoon, stopthecap.com had received more than 20,000 hits since the beginning of the month, when Time Warner revealed the locales for the new pricing. Prior to that, the site received around 300 visitors a day. (Dampier launched Stopthecap.com last July, in response to reports that the Rochester telecom Frontier was going to impose a 5 GB-per-month bandwidth cap. Frontier has since retreated from that plan.)

Currently, many Time Warner consumers pay between $40 and $50 a month for unlimited Internet usage. Some consumers say their fees could more than double with the new pricing.

In Austin, residents complained Wednesday night about the caps at a meeting of the city's Technology and Telecommunications Commission, which is an advisory board to the city council. In addition, Austin mayoral candidate Lee Leffingwell, issued a statement condemning the plan.

Earlier this week, U.S. Rep. Eric Massa (D-N.Y.) of Rochester told Online Media Daily that he is working on proposed legislation to rein in Time Warner.

Greensboro mayor Yvonne Johnson also railed against news of the new tiered pricing. "I think it's bad for their customers and it's bad for the city," she said, according to the Greensboro News-Record.com.

When Time Warner tested the pricing in Beaumont, subscribers were offered a choice of four plans that allow them to download between 5 GB and 40 GB per month, at prices ranging from $29.95 to $54.90 a month. Users were charged $1 per GB for exceeding their caps.

The company said Thursday that it will revise the caps for the new tests. At the low end, it will offer a 1 GB per month for $15, with overage charges of $2 per GB per month. The company says that 30% of its customers currently use less than 1 GB per month.

Caps in the four other tiers will range from 10 GB to 60 GB, with overage charges of $1 per GB per month. Time Warner also will offer a 100 GB cap for $75 per month. The company also said the maximum overage charge for users who exceed their limits will be $75 per month.