Time Warner Cable Revises Contentious Internet Pricing Plans

The nation's second-biggest cable company just announced a revised pricing structure that may alleviate fears from gamers worried about a plan for their Internet use per Gigabyte.


Over the past two weeks, the United States' #2 cable company, Time Warner Cable, has upset gamers concerned that the company was going to make playing games online as well as downloading and streaming content from their PC, Xbox 360 and PS3 so expensive.

But tonight the company has revised its plans to accommodate some of those concerns.

"We’ve heard the passionate feedback and we’ve taken action to address our customers’ concerns."

"We realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused," the company's chief operating officer, Landel Hobbs, said in a statement. "We’ve heard the passionate feedback and we’ve taken action to address our customers’ concerns."

Time Warner Cable still plans to expand trials of a consumption-based pricing model for the Internet, a measure the company said is needed to finance in a fair manner the heavy Internet usage of some customers.

The new way of charging customers, the consumption-based model, would require users to treat their cable Internet bill like a cell phone plan. Instead of picking minutes like they would for their phones and paying charges for exceeding those limits, however, consumers would be picking a set Gigabyte limit on monthly bandwidth usage and pay extra for exceeding that.

The plan's initial trial, in Beaumont, Texas offered plans for 5 Gigabytes of Internet use a month, 10GB, 20GB and 40 GB. Late last month, Business Week reported that those plans would next be tested in Austin, TX, San Antonio, TX, Rochester, NY and Greensboro, NC. The plans would cost $29.95 to $54.90 per month, with a dollar surcharge for every GB of bandwidth used beyond that.

That March announcement sent many Internet users -- including big-bandwidth-reliant gamers -- into despair. The concern seemed logical. The download of a single video game demo might consume 1GB. A significant content update for "World of Warcraft" could use up 800 MB.

Lara Crigger, a gamer in one of the new test cities, Rochester, tracked her gaming downloads for the past month and drew some troubling conclusions.

Here's an excerpt from her Gamers With Jobs blog post entitled "The Meter Is Running,":

So in just one month, we've downloaded about 52.75 GB on our various gaming devices. If we were on the 40 GB/month plan, we'd be paying about $67 for our broadband service. (Currently, we pay $39.99.)

Note that she wasn't accounting for online play or Netflix movie streaming, let alone any other uses of the Internet from web-surfing to YouTube-watching.

Tonight, Time Warner Cable revised its plan, spelling out the following price structures to be tested in the new markets. From Landel's statement:

To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.

We are increasing the bandwidth tier sizes included in all existing packages in the trial markets to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively. Package prices will remain the same. Overage charges will be $1 per GB per month.

We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB).

Overage charges will be $1 per GB per month.

Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.

The company's new offering would appear to put Crigger in the market for either the 60GB $54.90 plan (requiring $7 extra from her based on her cited example, for a total of $61.90 for the month) or the 100GB $75 plan.  Both would still increase her cable Internet bill from its current $39.99, but a little less steeply.

""We hope that gamers in our footprint will find the [$75] 100 Gigabyte tier OK for them."

Time Warner also clarified today when the tests would begin in the new cities. The Rochester and Greesnsboro trials will begin in August. The San Antonio and Austin trials begin in October. The company will provide two months of usage data to consumers followed by a one-month grace period before billing begins. This is a revision of an earlier plan described to MTV Multiplayer by a Time Warner Cable spokesperson yesterday which was going to give customers three months' of usage history and then another three months to track their own usage before billing would begin.

"We hope that gamers in our footprint will find the 100 Gigabyte tier OK for them," Time Warner Cable spokesperson Justin Venech told MTV Multiplayer in a phone interview yesterday, a day before the company provided the price of that plan. He described the experiments with consumption-based pricing as necessary. "Bandwidth usage has grown exponentially, in recent years," he said. "The internet wasn't designed to handle the mass amounts of video [people now download]. The risk is, as consumption increases, service would slow to a complete crawl unless we're able to make investment in our network. These investments aren't cheap so we want to make sure customers are being billed fairly… The average users won't need to subsidize the uses of the few."

The revised plan may still prove costly for many gamers, but with Time Warner Cable already revising its plans, the impact of this new pricing strategy may not have as severe an affect on gamers' ability to afford their gaming hobby as initially feared.

MTV Multiplayer will have more on just how much bandwidth popular uses of major consoles require in a report tomorrow, along with feedback from some major players in the industry.