• by Wendy Davis , Staff Writer @wendyndavis, June 3, 2008

The sorry state of broadband access in the U.S. just got a little sorrier with Time Warner's new bandwidth caps.

The cable giant tomorrow will start testing a plan to charge users based on how much they upload or download per month. For the initiative, taking place in Beaumont, Tex., customers can choose from a range of plans. At the low end it's $29.95 a month for speeds of 768 Kpbs and a 5GB cap. The most expensive is $54.90 for speeds of 15 MBps and a monthly cap of 40GB. Customers who exceed their limits will be charged $1 for each extra GB.

With Internet service companies complaining that bandwidth-intensive video is clogging traffic, it's understandable why metering is under consideration. But Time Warner's new plan offers customers far too little for the money.

Consider, 5GBs, the limit for those on the cheapest plan, is barely enough bandwidth to download three standard-def movies, which tend to require around 1.5 GBs. One high-def movie could easily surpass 5GBs.

Typically, when one supplier raises prices, consumers are free to shop around and find another who can offer lower prices. But the normal competitive pressures are muted in the broadband access realm, where many U.S. customers can only choose between a few companies.

GigaOm's Stacey Higginbotham asks point blank: "Is Time Warner Cable crazy?"

"By offering tiered service at 15 Mbps it's promising me faster speeds that I will have limited opportunity to use," she observes.

The low caps and limited options have spurred observers to jeer the plan. Techcrunch's Michael Arrington accused the cable companies of "standing in the way of economic growth and innovation."

"Many new startups, particularly those focused on video and online gaming, rely on their customers having access to high bandwidth, all you can eat connections," he wrote. "I'm almost never in favor of government intervention of markets, but monopolies are an exception. We need to encourage data usage by consumers, not the opposite."