Responding to irate customers who got wind of Time Warner Cable's tiered Internet pricing tests, the company will introduce higher and lower bandwidth caps in trial cities.
Testing of the caps is set to begin this August in Rochester, N.Y., and Greensboro, N.C., according to a statement from Landel Hobbs, COO of Time Warner Cable. Trials will begin in San Antonio and Austin, Texas, in October, with lessons learned from the earlier testing.
Tier sizes will include 10 GB, 20 GB, 40 GB and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages. A 100 GB plan will be offered in Turbo only for $75 per month. Overage charges for all these plans will be $1 per GB. Additionally, the company will offer a 1 GB per month plan with 768 KB/128 KB for $15 per month, with $2 per GB overage charges. Customers in the trial cities will be provided with two months of usage data, plus a month grace period in which they can decide on an appropriate plan (or take their business elsewhere, presumably).
Overage charges will be capped at $75 per month. That means a customer would pay no more than $150 for "virtually unlimited" Internet access at Time Warner Cable's highest speeds, Hobbs said. The word "virtually" makes me think there will still be some sort of high usage cap.
Previous reports indicated that the Internet service provider would cap bandwidth at 10 GB, 20 GB and 40 GB per month, with a $1 per GB for overage charges. Hobbs said those reports "were premature and did not tell the full story," but admitted some fault on Time Warner Cable's part. "With that said, we realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused."
Hobbs said the higher prices are needed to invest in its infrastructure. Otherwise, customers could suffer brownouts. "It will take a lot of money to fix the problem," he said. "Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more."
Yesterday, Ars Technica did some rough math on this issue, before Hobbs' latest reply. In short, the website found Time Warner Cable's price-per-gigabyte to be significantly higher than its competitors, but it doesn't address how much Internet service providers will have to pay for infrastructure improvements.
And that's the big question, because if the costs are high enough to consider Time Warner Cable's prices to be fair, then anyone who streams and downloads movies or plays lots of online games will soon pay a lot more for Internet, no matter which company is providing it.
Another thought before I go: Time Warner Cable has repeatedly said that most users only eat up a small amount of bandwidth per month, and it's not fair to stick them with higher costs. That means customers who use lots of bandwidth will see their costs shoot up. Who will pay for the infrastructure if these users switch to DSL?
