Time Warner Cable Expands Internet Usage Pricing

In a strategy that's likely to rankle consumers but be copied by competitors, Time Warner Cable is pressing ahead with a plan to charge Internet customers based on how much Web data they consume. Starting next month, the company will introduce tiered pricing in several markets. In April, Time Warner Cable will begin collecting information on its customers' Internet use in the Texas cities of Austin and San Antonio and in Rochester (NY). Consumption billing will begin in those cities later this summer. In Greensboro (NC) the billing changes will begin sooner. Spun off from Time Warner this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont (TX) since last year. By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. "We need a viable model to be able to support the infrastructure of the broadband business," Time Warner Cable CEO Glenn Britt says in an interview. "We made a mistake early on by not defining our business based on the consumption dimension." Time Warner Cable has 8.4 million broadband customers. Consumer advocates and Web site owners say tiered Web-use pricing limits customer choice and could stifle innovation by crimping demand for high-bandwidth services such as online video and music. Cable and phone companies say they need flexibility in setting prices for use of large, expensive, heavily used broadband networks.