April 10, 2009, 1:07 PM — Time Warner Cable decided it wanted to play with bandwidth capping, but after intense backlash from customers, the company has backed off its original plans.
At first, Time Warner yapped about unrolling a trial tiered pricing program in Beaumont, Texas, and then expanded the plan to hit Austin and San Antonio,Texas; Greensboro, N.C.; and Rochester, N.Y. The tiered pricing plan forced customers to choose between a 5GB and 40GB download cap per month, and outrage ensued.
The noise got so loud that Landel Hobbs, the chief operating officer of Time Warner Cable, wrote a response to customer complaints that slightly tweaked the plans but did not, as many had hoped, do away with them.
Under the new plan, customers can choose between 1GB and 100GBs on various pricing schemes. The 1GB per month plan offers speeds of 768KB download and 128KB upload for $15. The 100GB plan -- called Road Runner Turbo -- brings 10MB download, 1MB upload speeds for $75 per month; anything over that costs $1 per gigabyte up to $150. That means if you want turbo speeds and unlimited Internet access, you'll have to pay $150 per month.
In the face of a recession, Time Warner is seeking to boost the bottom line, and, in the process, gouging the customer. And while capping Internet usage will bring money to its table, there are problems with Time Warner's math. Broadband DSL Reports, for instance, states that no data supports Time Warner's claim that tiered pricing is wanted or necessary. Ars Technica crunches the numbers and discovers that even at the lowest rung, Time Warner is charging customers $6 per GB monthly -- a number exponentially larger than its main competition, whose fees range from 9 cents per giabyte (AT&T) to 17 cents per gigabyte from Comcast.
ISP bandwidth caps are all the rage lately. AT&T does it, Comcast does it; and while neither company particularly gets away from the decision without a few scrapes and bruises from its customers, Time Warner's current scuffle with the public is unique for a few reasons. One, it shows a massive coalition of journalists and citizens rallying together against a company's bad decision. Two, it highlights how companies are able to adapt to demands and communicate its changes via the Internet -- it's not often that COOs of major corporations Twitter to customers.
Despite the outcry and Time Warner's response, the caps are still likely to be implemented, which spells bad news across the board.