Time Warner Borrows A Page From The Dial-Up Playbook

Time Warner Cable, soon to be independent from its parent Time Warner, is trying out an idea that America Online (AOL) challenged more than ten years ago (AOL is a unit of Time Warner). Showing that it hasn’t necessarily learned anything from its parent, the internet provider announced earlier this month that it will start testing bandwidth limits on new subscribers. Metered billing, much like your cell phone, limits the amount that a customer can download before paying a fee for the data transfer. The practice was widespread when dialup was first becoming available and popular, but AOL introduced an unlimited-use plan in 1996 that drastically changed the internet service landscape. Before, customers limited their internet usage. Now, we readily download video and music from iTunes, stream videos from Youtube, and post our entire photo album to flickr. All of these services use a lot of data, and Time Warner Cable wants to rein in the abusers among us.

According to an Associated Press article on the plan, which will be tested in Beaumont, Texas, 5% of Time Warner’s customers use nearly half of its network capacity. The metering trial is aimed squarely at this group. For the other 95% of Time Warner’s subscribers, the change is likely to go unnoticed (only new subscribers will be subjected to the limits, specifically those who subscribed on or after June 5, 2008). Most users would have their usage capped at 40 gigabytes (GB) per month, enough bandwidth to view 120,000 web pages or read 600,000 emails without attachments. Some users, however, may run into that limit using video services like iTunes or Netflix to rent full-length movies. A standard-definition movie, for example, would use roughly 1.5 GB, whereas a high-definition movie can use upwards of 8 GB. Such limits could hurt those services, in turn damaging the reputation of and customer satisfaction with Time Warner Cable.

Other major cable providers are considering similar steps, but with much higher limits. Comcast, for example, has hinted at a 250 GB per month limit.

Source:Time Warner Cable tries metering Internet use,” Associated Press, June 2, 2008