Time Warner Cable's tests of a usage-based price plan for Internet subscribers will expand to four more U.S. cities.
BusinessWeek is also reporting on specific data tiers and a price range, giving consumers an idea of what they'll be paying if the plan goes nationwide.
The price structure, which began testing last year in Beaumont, Tex., will be expanded to Austin and San Antonio, Tex., Rochester, N.Y., and Greensboro, N.C. Time Warner Cable will set caps at 5 GB, 10 GB, 20 GB and 40 GB. For each gigabyte over the customer's cap, the company will charge $1. Exact corresponding prices are unknown, but bills will range from $29.95 to $54.90 per month based on consumption and connection speed.
For homes that use a lot of bandwidth -- particularly by replacing television with Internet streams -- the costs can quickly become astronomical. A report by Sanford C. Bernstein, cited in the BusinessWeek article, guesses that a family streaming 7.25 hours of online TV per week could spend $200 per month without factoring in music downloads and other uses. I hope homes in the test cities will be properly notified of potential costs before the new pricing begins this summer.
I'm not surprised or even appalled by the news. As costly cable subscriptions drop, and people look to the Internet and other venues for entertainment, it's fair for cable companies try to recoup the costs elsewhere, and why penalize light Interet users with high costs?
But if, in fact, bandwidth costs can spiral as quickly out of control as Bernstein's report suggests, there needs to be some sort of way to contain them. BusinessWeek equates tiered pricing to the subscription levels offered by cell phone companies, but if that's the case, an unlimited plan for heavy users will be essential.
