Sky's The Limit: Time Warner's $150 Unlimited Bandwidth Plan
In a statement, Time Warner COO Landel Hobbs said early criticism of the provider's plans to trial bandwidth consumption limits was "premature."
"We realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused," Hobbs wrote. "We've heard the passionate feedback and we've taken action to address our customers' concerns."
To that end, Time Warner unveiled new pricing tiers for bandwidth usage. According to Hobbs, light Internet users will receive a low-price option offering 1 GB per month for $15 with speeds of 768 KB/128 KB and overage charges of $2 per extra GB. In addition, Hobbs said Time Warner is increasing the bandwidth tier sizes included in all existing packages in trial markets to 10, 20, 40 and 60 GB for its Road Runner Lite, Basic, Standard and Turbo packages. Prices for those packages, which range from $30 to $75 per month, will stay the same and overage charges will be $1 per GB per month.
For high-volume users, Hobbs said Time Warner will launch a 100-GB Road Runner Turbo package for $75 per month with speeds of 10 MB/1 MB with a $1-per-GB overage charge. Lastly, Hobbs said all overage charges will be capped at $75 per month, meaning that for $150 per month "customers could have virtually unlimited usage at Turbo speeds," Hobbs wrote.
According to Hobbs, capped bandwidth pricing structures have become a necessary evil as Internet usage continues to grow.
"With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially," Hobbs wrote. "That's a good thing; however, there are costs associated with this increased Internet usage."
In Time Warner's case, Hobbs said, consumption among its high-speed users is increasing by roughly 40 percent per year, which raises costs as the company builds out the network to support growing usage. Like Time Warner, Hobbs said network providers worldwide, including AT&T, have started consumption-based trials. Others, such as Charter and Cox, are using methods to monitor and manage bandwidth consumption. Time Warner rival Comcast also caps bandwidth usage, charging users just more than $40 for 250 GB per month for basic service.
"Internet demand is rising at a rate that could outpace capacity within a few years," he said, adding reports indicate that current infrastructure may not be able to accommodate the explosion of online content by 2012. "This could result in Internet brownouts. It will take a lot of money to fix the problem. Rather than raising prices on all customers or limiting usage, we think the fairest approach is to move to a tiered model in which users pay more if they use more."
Hobbs said "sitting still is not an option," and if providers do nothing customers' Internet experience could suffer.
Hobbs stressed that the tiered pricing models are just trials at this point and customers won't be immediately billed or impacted. Instead, Time Warner will provide two months of data usage and then a one-month grace period in which overages will be noted on customers' bills, but they won't be charged. That model, Hobbs said, gives customers a chance to access their usage and pick the right service package before charges are applied.
Initial trials will start in August in Rochester, N.Y., and Greensborough, N.C. Further trials will launch in San Antonio and Austin, Texas, in October.
"The Internet is dynamic and continually evolves, so our plans will evolve as well and aren't set in stone," Hobbs concluded. "We'll look forward to more dialogue as we progress in these trials."