Thursday, January 17, 2008
Time Warner to Test Usage-Based Internet Billing
Posted by Jeremy Charette in "Digital Home News" @ 08:00 PM
"Time Warner Cable will conduct a billing test in Beaumont (Texas) to see if it can reduce “network congestions” by making heavy users pay more than light users. Time Warner describes the situation like this: heavy users are 5% of the customers, but use 50% of the bandwidth. I think that Time Warner Cable is trying to improve its 6.84% profit margin rather than solving a “network congestion” problem that few customers, if any, complain about. What is not clear to me is what would happen to the “light users”. Will they be billed on usage as well – or would they stay on a flat-fee plan? As a consumer, I think that if Time Warner wants to use a pay-per-usage (or pay per Gigabytes) billing, every account should be subject to it, so that people who use little bandwidth can save."
Scary. What about customers who use VOIP phone services? Or online gaming such as Xbox Live? Or download songs from iTunes? I see a lopsided profit-driven pricing model like the one that Ubergizmo is suggesting, in which 95% of users pay the regular flat rate fee, and the 5% of "heavy users" pay extra per GB. Of course Time Warner could just adjust the bandwidth "cap" depending on how much profit they need to make each month. Sounds like the ISP makes more money while the consumer gets screwed.
