Time Warner Cable rolls usage-based billing option in southern Texas, testing waters for broader launch

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Look for Time Warner Cable (NYSE: TWC) to expand a usage-based pricing option for high-speed Internet access nationwide, if a program that offers $5 monthly discounts to light Internet users in southern Texas doesn't spark a backlash.

Time Warner Cable unveiled the usage-based test Monday in a carefully worded blog post, explaining that subscribers who take an "Essentials" version of its Standard, Basic and Lite high-speed data services would receive $5 discounts on their bills if they download less than 5 GB of data each month. Subscribers who exceed 5 GB will be charged $1 per GB, with overage fees capped at $25 each month.

When Time Warner Cable first announced plans to test consumption based broadband in 2009, it said would cap overage charges at $75 monthly. CEO Glenn Britt scrapped the tests after subscribers and legislators complained.

The MSO appears focused at finding a way to introduce usage-based billing options without generating the negative publicity it received three years ago. It said that it will always offer subscribers an unlimited broadband option if they order its Turbo (20 Mbps), Extreme (30 Mbps) or Wideband (50 Mbps) packages.

"Having a usage-based pricing plan isn't going to be for everyone, and that's fine, too. A tiered plan might not be right for me, but my Mom's not going to be passing Final Cut projects through DropBox to her friends at church anytime soon--she may benefit by saving a few dollars on Web capacity she's never going to need," Time Warner Cable director of digital communications Jeff Simmermon wrote on a blog post Monday.

TWC my internet chart

TWC's MyInternet meter, which subs can use to track their usage.

Time Warner Cable won't charge Standard, Basic and Lite subscribers who don't opt for the "Essentials" usage-based billing fees for exceeding bandwidth allotments, spokesman Justin Venech said. He noted that the MSO will allow subscribers to switch back and forth between Essentials and unlimited billing at any time.

While Time Warner Cable is publicizing the broadband meter and usage-based billing option on its corporate blog, it isn't yet touting the option to new subscribers in Texas. A search for offers available to subscribers in Laredo and Corpus Christi showed that Time Warner Cable is pitching a triple play priced at $89.99 monthly for 12 months that includes three free months of HBO, Cinemax, Showtime and The Movie Channel.

Time Warner Cable charges subscribers of its Lite service (speeds of 768 Kbps) fees of $29.99 monthly if they take it as part of a bundle. Basic (1. 5 Mbps) costs $39.99 and Standard  (10 Mbps) costs $49.99 monthly as part of a bundle. Those fees are for unlimited downloads. Subscribers that pick the usage-based billing will get a $5 monthly discount.

Jerry Kent's Suddenlink Communications could help Time Warner Cable break the ice with usage-based broadband in Texas. Suddenlink began notifying Texas subscribers earlier this month that it was implementing usage caps, but Suddenlink isn't giving subscribers who take its 10 Mbps tier an unlimited data option. The MSO is charging subscribers who exceed 150 GB of data from its 10 Mbps cable modem service fees of $10 for every 50-gigabyte increment that exceeds that cap.

Venech said Time Warner Cable plans to expand usage-based billing options to other systems, but it hasn't set the timing for launches in other markets.

As online video products from Netflix (Nasdaq: NFLX), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL) and other providers continue to gain popularity--and make it easier for cable subscribers to drop premium cable networks (e.g., cord shaving)--other cable MSOs will likely follow Time Warner Cable and Suddenlink with usage-based billing options. Cox Communications recently launched broadband meters, and began warning subscribers that exceed usage allowances. But it hasn't begun charging subscribers who exceed allowances such as 50 gigabytes monthly for its Essential service and 200 gigabytes monthly for its Preferred Internet service.

For more:
- see the Time Warner Cable blog post

Related articles:
Suddenlink rolls broadband usage caps in Texas
Cox warns high-speed Internet subscribers who exceed usage allowances
Moffett: Major MSOs will pursue usage-based broadband
TWC ponders tiered Internet access due to video traffic
CenturyLink to impose usage caps on high-speed Internet subscribers