• by Wendy Davis  @wendyndavis, June 1, 2009

In a move that could pave the way for a large-scale rollout of pay-per-byte broadband service, Time Warner has quietly revised its terms of service to allow for metered billing.

The new language will let Time Warner cap the amount of bytes subscribers can consume and enforce that limit by reducing users' speed and/or moving them to a more expensive billing tier. Time Warner declined to comment on the change in its subscriber agreement.

Currently, Time Warner offers most broadband customers unlimited Web access for a flat monthly fee, often between $40 and $50. But the company, which recently trialed a pay-per-byte program in Beaumont, Texas, has repeatedly said it wants to experiment more broadly with metered billing.

Earlier this year Time Warner said it would conduct tests in four additional cities -- Austin and San Antonio (Texas), Greensboro, N.C. and Rochester, N.Y. -- but the company shelved the initiative in the face of overwhelming backlash by residents, advocates and politicians. Had Time Warner gone through with the plan, the company would have charged consumers between $15 a month for 1 GB and $150 a month for unlimited bandwidth. A user can consume around 5GB by downloading just one high-def movie.

Time Warner argued that metered billing is fairer than all-you-can-eat plans, but many residents complained that they would have paid more under the proposed plan. Some advocates also alleged that the new billing was designed to discourage people from watching video for free online rather than via paid cable subscriptions.

Advocacy group Free Press called for a congressional investigation of the plan, while Rep. Eric Massa (D-N.Y.) said he intended to introduce legislation, the Massa Broadband Fairness Act, to rein in Internet service providers. On Monday, a spokesperson for Massa said he expects to draft a bill by next week.

Chris Riley, policy counsel of Free Press, indicated that he is taking a wait-and-see attitude towards the new subscriber agreements. "The new terms of service that Time Warner put out are broad and ambiguous, so because of their breadth, it's hard to say too much about them," Riley says. But, he adds, he would be concerned if Time Warner has changed its terms in an effort to breathe new life into a plan for metered billing.

In addition to enabling usage-based pricing, the new terms of service also appear to allow Time Warner to prioritize its commercial subscriber traffic over rivals' traffic -- a tactic that broadband advocates say violates net neutrality principles.

Monday, advocacy group Public Knowledge called for Congress, the Federal Communications Commission and the Federal Trade Commission to investigate whether Time Warner is hindering the flow of information online and whether it's acting in an anticompetitive manner.