Time Warner Cable (NYSE: TWC) will offer a usage-based billing option to cable modem customers in every state it offers service except Hawaii by the end of December, CEO Glenn Britt said Monday.
The nation's second largest cable MSO began testing usage-based pricing on systems in southern Texas in February. Subscribers that choose the usage-based option and take an "Essentials" version of its broadband service can download just 5 GB of data each month. Customers who exceed 5 GB of data usage are charged $1 per GB that exceeds the allotment, with the overage fees capped at $25 each month.
Britt told attendees at a UBS conference in New York that Time Warner Cable's strategy isn't to place usage caps on the broadband product. "I don't like the idea of caps. That's a negative connotation. What we think is that we should always offer unlimited service but that we should offer a choice of a lower price with the consumption to match in for people who don't need unlimited. So that's quite different than what other people have talked about," Britt said.
While Britt didn't detail the number of subscribers in Texas who have selected the usage-based billing option, he said, "Not many people have taken the lower offer." The usage-based option has not had much of an impact on average revenue per unit, he added.
Time Warner Cable has seen an increase in the number of homes that choose to only subscribe to its high-speed Internet service. It added 400,000 broadband only subscribers in the year ending Sept. 30, Britt said.
The MSO, which gained 85,000 high-speed Internet subscribers during the third quarter, began charging $3.95 monthly fees in October to lease cable modems. The modem fees are "essentially a price increase" for broadband service, Britt said. While Time Warner Cable allows subscribers who don't want to pay the fees to use modems purchased at retail outlets, only about 3 percent of subscribers are buying their own modems, Britt said.
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