Time Warner Cable has released new pricing for consumption-based Internet billing the company is testing in some areas of the United States. The tiered pricing, which the company plans to roll out in other regions this year, includes unlimited service for $150 a month.
In announcing the new pricing, Landel Hobbs, chief operating officer for Time Warner Cable, said a pay-what-you-use model is the fairest option for customers while generating the revenue needed to cover the rising costs of an insatiable demand for more bandwidth.
At Time Warner Cable, usage among high-speed Internet subscribers has been growing by about 40% a year, increasing costs to maintain and upgrade the company's network, Hobbs said in a statement posted on the Web Thursday. "This is a common problem that all network providers are experiencing and must address."
Hobbs warned that without expensive network upgrades, Internet demand in the United States would outpace capacity within a few years, possibly as soon as 2012.
"This could result in Internet brownouts," Hobbs said. "It will take a lot of money to fix the problem."
Therefore, Time Warner Cable has chosen what it believes is the fairest approach, one that has people pay more if they use more, Hobbs said. The new pricing options included $15 per month for 1 GB of data a month at download speeds of 768 KB per second and upload speeds of 128 KB a second. People using more than their allotment would be charged $2 per gigabyte per month. About 30% of Time Warner Cable customers use less than 1 GB per month.
Options for 10 GB, 20 GB, 40 GB, and 60 GB a month also will be available with overage charges of $1 per gigabyte a month. For $75 a month, a customer can get 100 GB a month at download speeds of 10 MB per second and upload speeds of 1 MB.
The last offering would include overage charges of $1 per gigabyte a month, which will be capped at $75. "That means that for $150 per month customers could have virtually unlimited usage," Hobbs said.
Time Warner Cable is upgrading its network to a standard called DOCSIS 3.0, which is expected to increase download and upload speeds to 50 MG and 5 MB a second, respectively. Once available, the higher-speed tier will be offered in trial areas for $99 per month. Customers in trial areas will get two months of usage data before having to choose the option they want, and then get a one-month grace period before being charged for going over their plan.
Time Warner Cable plans to being trials in Rochester, N.Y., and Greensboro, N.C., in August, expanding to San Antonio and Austin, Texas, in October.
Hobbs said the latest pricing isn't final and changes are possible. "The Internet is dynamic and continually evolves, so our plans will evolve as well and aren't set in stone," he said.
Time Warner Cable isn't the only company to experiment with consumption-based pricing. AT&T is also running trials, and Comcast, Charter Communications, and Cox Communications are using different methods to monitor and manage bandwidth use. Tiered pricing also is used by network providers in other countries, including Canada, Britain, and New Zealand.
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