Time Warner Cable will try selling consumers broadband service based on how
much bandwidth they use, a move that could turn the home broadband pricing model
in the U.S. on its head.

In a trial planned for later this year in Beaumont, Texas, the service provider
will offer four tiers of service at different prices. Customers who used more
bandwidth would pay more.

The details of the tiered pricing plan haven't yet been set, according to Time
Warner spokesman Alex Dudley. The offer will only go out to new customers, he
said.

Some service providers charge different rates based on the speed of a service,
but in the U.S. they typically allow each customer to send and download as many
bits as they like in a month. Under that model, some subscribers who exchanged
large files through peer-to-peer services reportedly have been cut off. Comcast,
the biggest U.S. cable operator, has said it sometimes slows peer-to-peer traffic
during peak demand periods.

In some other countries, Internet users have long endured bandwidth caps. And
Web hosting companies typically charge site owners based on how much data they
exchange with visitors.

Tiered pricing could help settle the ongoing argument over the fairness of
certain subscribers and online content providers using up more network capacity
than others, according to Ovum analyst Mark Seery. In fact, he thinks the whole
industry will go down this path eventually.

"It's difficult to charge, appropriately, different customers if they
have such widely divergent uses of bandwidth," Seery said. And trying to
target one type of application, such as illegal peer-to-peer file sharing, raises
political issues, he added.

"There's no justification for blocking legitimate uses of peer-to-peer,"
Seery said. "The right focus is on who's using what (bandwidth) and what
they should be charged for it."

Many other transport industries, such as shipping, rail and courier services,
charge different rates based on how much the customer uses, Seery said. Some
have shifted to that system over time. For example, toll bridge operators once
charged trucks based on the value of what they wanted to carry over, and U.S.
railroads could arbitrarily carry goods from one customer and not from another,
according to Seery. Neither model lasted.

Time Warner operates in 33 states but is a relative underdog in the U.S. broadband
industry, with 7.4 million high-speed data customers. Comcast has 12.9 million.

IDG News Service

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