Congressman: Time's Up For Time Warner Metered Billing

by Wendy Davis , April 8, 2009

A lawmaker from New York is vowing to stop Time Warner from forging ahead with its controversial plan to roll out a new pay-per-download billing system.

"This is an incredibly ill-conceived idea and a very repressive step backwards," U.S. Rep. Eric Massa (D-N.Y.) said of the cable company's plan. "At the very moment when access to digital information is at the heart of economic recovery, they're going to go for corporate greed."

Massa added that he is considering introducing legislation to rein in the company. "In many markets they are a monopoly and we are going to invoke every tool necessary to ensure they don't proceed with this," he said.

Massa's district includes Rochester -- one of four cities in which Time Warner plans to test the new pay-per-usage billing system. The others are Austin and San Antonio (Texas), and Greensboro, N.C.

Massa also issued a statement Tuesday criticizing Time Warner's plan as "an outrageous, job killing initiative."

Time Warner's new model is similar to the tiered pricing systems used by many cell phone companies. For the initial test, which began last year in Beaumont, Texas, new Time Warner subscribers were offered a choice of four plans that allow them to download set amounts each month. The plans ranged from $29.95 a month for 5 GB to $54.90 a month for 40 GB. Those who exceed the allotment were charged $1 for each GB over the limit.

The company said that 86% of subscribers in the recent test in Beaumont stayed within the caps. The 14% that exceeded their limits paid an average surcharge of $19 a month.

Time Warner intends to add at least one additional tier with a 100 GB cap. Pricing for that has not yet been determined, a spokesman said. Downloading one high-def movie takes around 5 GB on average.

Time Warner says pay-per-download is fairer than more conventional broadband pricing, which charges consumers a flat fee for unlimited access.

A Time Warner spokesperson said that not all broadband customers will pay more as a result of the new pricing system.

Critics view the new pricing structure as a ploy to extract more money from consumers and/or discourage people from watching video at free online sites rather than paying for cable subscriptions.

Drawing on recent populist sentiment about corporate greed, Massa compared Time Warner to insurance giant AIG, which recently made headlines for giving executives bonuses after receiving a government bailout. "If this is a monopoly that's going to abuse the American people like AIG did, then it's time to break it up," Massa said. "I look at this as an economic threat," he added.

Time Warner isn't the only company experimenting with broadband caps. AT&T also is testing metered billing, but with caps ranging from 20 to 150 GB. In addition, Comcast imposes a 250 GB-per-month cap on all Web users.

Some of those caps seem like more than enough bandwidth, but advocacy groups like Free Press argue that average use will only increase as more video becomes available online. "You can't pick a number that a consumer won't exceed in a short amount of years," said Free Press policy counsel Chris Riley. He added that the migration of video to the Web will only hasten increased use. "Hulu will drastically expand the amount of bandwidth that the average consumer uses," he said.

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5 comments about "Congressman: Time's Up For Time Warner Metered Billing".

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Elizabeth Rhys from KTS, April 8, 2009 at 7:55 a.m.
I would rather pay extra for more usage than be threatened with cancellation of my account if I go over the limit, with no way to know how many units I am using, as a Comcast customer. Since Comcast put its cap in place last October, I have been afraid to watch tv shows or movies online for fear they will cut off my account, which the way they deal with people who are using too many GBs per month.
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Martin Edic from WTSsocial, April 8, 2009 at 9:26 a.m.

I live in Rochester and the reaction to this has been overwhelmingly negative. Time Warner has a virtual monopoly here on residential broadband access because the only competitor, Frontier requires phone company long term contracts with cancellation fines.
The buzz on Twitter and facebook has been instantaneous and I think Time Warner has a PR disaster on their hands. Massa is exactly right- we need better broadband, not more expensive crappy broadband.
This opens up an opportunity for a savvy wireless provider to take away their business.

Greg Young, April 8, 2009 at 12:24 p.m.

I actually like the concept. It needs to be better fine tuned but I would prefer it over paying $65 a month for 300 channels when I really only watch about 6 hours of programming a week. That being said, it would only be valuable if they offer all their programming online, not just the major 4 networks. If I could stream the Daily Show or Weeds when I wanted, then the service would have value to me. If you really think about it, this is the ala carte cable service everyone has been screaming for for decades now. Obviously there are some other issues that are underlying this but the concept is a good one.

John Holt, April 8, 2009 at 4:38 p.m.

@Greg Young:

Perhaps you are reading this incorrectly? They are not putting a different billing plan into effect for their cable television services. The new plans are aimed solely at broadband services they provide. They are keeping the blanket television access, but they are using the same arguments that make some sense for 'ala carte cable service' to make spurious claims about the average internet usage.

What they are saying is that every episode of Weeds that you download from Itunes, every HD movie you stream on Netflix, every spam email you get, every advertising banner, every program update, every hour logged on online videogaming, will eat away at your allotment of internet usage. The breakdown is about $1 per GB when paying for the average plan (which is ether what you are paying now, or $10 dollars more if you are paying if you have a cable/internet bundle). If you pay for less bandwidth per month it is as much as $4-5 per GB. So that movie you DL'd from Itunes cost you 4 bucks? well it was HD, so that's 4GB, which doubles the cost of your movie.

Greg Young, April 8, 2009 at 5:59 p.m.

@John Holt:

You're right, I read this more as a new and innovative service offering rather than the restricting of the bandwidth pipline. Thank you for the clarification.