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Another Statement from Time Warner – Sit Down For This One

Phillip Dampier April 9, 2009 Time Warner Cable 48 Comments

Statement from Landel Hobbs, Chief Operating Officer, Time Warner Cable

RE: Consumption based billing trials
4-9-09

Some recent press reports about our four consumption based billing trials planned for later this year were premature and did not tell the full story. With that said, we realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused. We’ve heard the passionate feedback and we’ve taken action to address our customers’ concerns.

With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That’s a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we’ve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.

This is a common problem that all network providers are experiencing and must address. Several other providers have instituted consumption based billing, including all major network providers in Canada and others in the U.K., New Zealand and elsewhere. In the U.S., AT&T has begun two consumption based billing trials and other providers including Comcast, Charter and Cox are using varying methods of monitoring and managing bandwidth consumption.

For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the 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.

If we don’t act, consumers’ Internet experience will suffer. Sitting still is not an option. That’s why we’re beginning the consumption based billing trials. It’s important to stress that they are trials. The feedback we’ve received from our customers has been very helpful. We’ve made changes to the terms in our current and upcoming trial markets as follows:

• To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.

• We are increasing the bandwidth tier sizes included in all existing packages in the trial markets to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively. Package prices will remain the same. Overage charges will be $1 per GB per month.

• We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.

• Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.

• Once we implement this trial, we will not immediately start billing customers for overage. Rather, we will first provide two months of usage data. Then we will provide a one-month grace period in which overages will be noted on customers’ bills, but they will not be charged. So, customers will have an opportunity to assess their usage and right-size their service packages before usage charges are applied.

• Trials will begin in Rochester, N.Y., and Greensboro, N.C., in August. We will apply what we learn from these two markets when we launch trials in San Antonio and Austin, Texas, in October, but we will guarantee at least the same level of usage capacity in these trials.

• As we launch DOCSIS 3.0 in the trial markets, we plan to offer a 50/5 MB speed tier for $99 per month.

Again, the Internet is dynamic and continually evolves, so our plans will evolve as well and aren’t set in stone. We appreciate the feedback we’ve received. We’ll look forward to more dialogue as we progress in these trials. You can send your comments and feedback to us at [email protected]

Landel Hobbs
COO
Time Warner Cable

For questions, etc:

Jeff Simmermon
Director, Digital Communications
Time Warner Cable

Find us on Twitter at: @jeffTWC, @MsmarTWC, @MelissaTWC_TX

Currently there are 48 comments on this Article:

  1. Bob Jenkins says:

    Wow! Unlimited internet for only $150 a month, and right now I’m paying $50 a month! That’s only an extra $1200 a year! What a great deal for me!

    • Lee Dykeman says:

      For any of you on twitter please join me on http://www.twitter.com as I start my personal campaign against Time Warner my username is ne0ngreen4 that is a ZERO not the letter o in Ne0ngreen4. More to come

  2. ralfvin says:

    • As we launch DOCSIS 3.0 in the trial markets, we plan to offer a 50/5 MB speed tier for $99 per month.

    With a 1GB cap you’ll be paying overage charges in a matter of seconds…ROFLMAO!!!

    • Wes S says:

      Of course this is a different “trial market”. I am still skeptical that they plan on releasing DOCSIS in the cap trial markets.

  3. Michael Armijo says:

    Not enough. Keep the pressure on until they put forth reasonable plans.

  4. Paul Reed says:

    No. Keep the pressure on until they eliminate the cap. No plan that contains a cap is reasonable.

  5. Josh Beck says:

    Once again, it’s the principle behind capping that is at issue.
    As the internet grows, those caps will eventually become irrelevant, putting companies like Time Warner back in the position we see now. They’ll have the flexibility to modify pricing and modify overage charges. The variable rate home loans that sunk the banking system worked similarly. It looks to me like Time Warner is attempting to leave the door open.

    On the other hand, should Time Warner offer me a 50/5 MB speed package for a flat rate within a price range comparable to say Verizon’s FIOS, I’d be ok paying that higher flat rate. (Eggs at the store have gone up this year.)

    Two things I don’t like:
    1.) It’s being rolled out in a marketplace where competition is limited. Time Warner is taking advantage of their position as a monopoly. Roll that same deal out in a competitive environment, and they’d have to hire extra call-center staff to handle the service cancellations.

    2.) The capped bandwidth model looks to me like nothing more than an introductory rate. They are greasing the wheel so to speak. Open internet access and competitive markets are fundamental American values. We deserve better.

    Josh Beck

    On

  6. Tormut Rose says:

    So, based on this, their best offering, pre DOCSIS 3.0 is going to be half the speed of FiOS at roughly 3 times the cost. Way to hand all your business over to Verizon Time Warner.

    This whole they’re saving you money theory is patently ridiculous. 1GB a month with $2/Gig overages??

    They’ve already started the bump the cap up damage control which at this point is still a laughably poor effort, not even doubling the original pitiful caps and still way below even other competitor caps.

    If they justify it based on some providers in Canada and New Zealand, what are their excuses about Japan’s service vs. cost? Why make it a race to match the weakest competition in the world rather than strive to compare with the strongest? What other industry sectors follow such horribly flawed logic? None that have any real competition in them. Imagine if oil companies tried to triple or more our gas prices on the grounds that gas is more expensive in England. There’s an industry who really has us as a captive audience and even they don’t have the gall to try and pull that and that’s with a fossil fuel that truly does have a limited supply in the entire planet, unlike broadband which is functionally limitless. We should run out of IP addresses before we run out of functional broadband.

    It’s ironic that TWC’s subscription rates are going to plummet like Wile E. Coyote chasing the Road Runner when these markets get competition. I’m in Raleigh now but have had TWC’s Road Runner since it was first available in Rochester and was happy to continue to get it after I moved. Now with this, and FiOS already in Durham, I only hope I can jump ship before they try to move the caps here.

    Really can’t wait to see this fail on an epic scale as soon as they leave their “safe” captive markets.

  7. John says:

    This is awesome, so when they upgrade to DOCSIS 3.0 I can totally use my entire month’s internet in ~34 minutes!

    I pay $40/month now for RR Turbo…

    I am a college student and will not be in Rochester during the this grace period they speak so fondly of, so I won’t be able to properly asses my internet usage until they’re actually billing everyone…

    I am a college student, and I can not afford to pay $150/month for internet…

    This is absurd…

  8. Steve S says:

    I have Road Runner Turbo, which has an unlimited 22.5 Mbps down, which I pay $60/mo for. This fall, I’ll get a 100 GB cap, 44% of the speed, and all for 25% more money at $75/mo. Of course, I already blow through that cap. By November I’ll probably max out that $75 extra.

    So I get less than half the speed I get now, for 2.5x what I pay. Awesome.

  9. Cat says:

    So wait.. I’m confused.

    If TW implements the tiered system, and people pay but won’t change their current internet habits, how does that help the original problem of bandwidth consumption and the battering the TW equipment takes.

    basically- we pay more without fixing the problem.

  10. preed4962 says:

    Amazing how that works, isn’t it?

  11. Craig says:

    They are all over the place . . . seems like we are getting to them keep up the preasure

  12. fourgotn6 says:

    this is ridiculous.

    imagine a typical user who picks up a 2 or 4 gig cap, for their shiny new computer which they purchased with a vanilla copy of windows xp or vista. 2-3 gigs of patches and updates later, and they can no longer access the internet for an entire month without risking overages?

    Then there’s users like me and i’m assuming some of the others posting here… What kind of insanely overpriced plan am i going to have to settle for to replace all of my music or steam apps after a reformat? how about movies and other downloads? No way am I paying more for a slower, capped service!

    Sorry TW, but if this actually goes through, you have just lost a 10 year customer.

  13. Mazakman says:

    I normally am restrained and try not to call people names, but this Hobbs guy is an ass. He is not living in the real world.

  14. Mike says:

    And now we reach the “false compromise” portion of our programming.

    For those not familiar with what is one of the oldest tricks in the book, this is where you propose something absolutely ridiculous and then, when everyone’s all riled up about your horrible plan, you propose to “settle” for what you REALLY wanted and everyone praises your generosity and willingness to listen.

  15. ralfvin says:

    Well said. In fact, perfectly elucidated. How incredibly stupid do Hobbs and his cronies think we are? Amazing, absolutely amazing. I am consistently underwhelmed by their condescending attitude.

    • preventCAPS says:

      I think TWC’s real plan is to pull the bandwith caps stunt to force their user base to other ISPs. No users on TWC’s network means no bandwith problems.

  16. Joe says:

    Solution #7

    1) Sign up for TWC business class service.
    2) Buy a Linksys or Asus router for $59.95, install DD-WRT firmware and config as a bridge.
    3) Share the business class connection across four or 5 households.

    Bingo – you’ve got unlimited bandwidth at faster speeds than you had before for the same money or less.

    This is going to take the title for the worst business move away from Coke and their two versions blunder. There are too many ways around this cap for it to ever work. And as soon as TWC starts getting into people’s pockets they will learn fast.

  17. Robert Foreman says:

    Well as a TWC customer for 15 years and and RR for 10 the only way I will stay with them is if they offer the 50/5 and no cap, But I don’t see that happening. I live in Greensboro NC and I don’t have much choice. I was thinking about Earthlink but if they are going to cap also I’m SOL. The last time I checked my phone lines are not good enough for DSL (I hope that has changed) and FIOS is not anywhere near me.

  18. Erich says:

    Haha, right. That really makes us happy. Here’s the great part: He said prices for the other tiers will remain the same, that still means that if i decide to pay the same amount of money per month as I do now, my usage will still have to drop to less than 20 gigs. NOT GOOD ENOUGH TIME WARNER

  19. preventCAPS says:

    “we realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused.”

    -Yes, a lot of frustration has been caused. Why has it taken over a week to get some concrete answers?

    “Weve heard the passionate feedback and weve taken action to address our customers concerns.”

    Great! You finally realised that internet caps are not fashionable! Oh wait, I read on…

    “Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year.”

    -So our caps should increase 40% every year, or grow monthly accordingly automatically.

    “As a facilities based provider, weve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.”

    -And you still remain profitable

    “This is a common problem that all network providers are experiencing and must address. Several other providers have instituted consumption based billing, including all major network providers in Canada and others in the U.K., New Zealand and elsewhere. In the U.S., AT&T has begun two consumption based billing trials and other providers including Comcast, Charter and Cox are using varying methods of monitoring and managing bandwidth consumption.”

    -Verizon FiOs has no caps
    -Frontier Abandoned caps due to customer backlash (hint hint)
    -Comcast’s smallest cap, 250gig, is larger than TWC’s proposed largest cap, and can be almost clasified as a lofty cap to prevent abuse.
    -AT&T is beginning trials, but they may actually value their customers and like Frontier, revert
    -Other providers in say, Japan, are offering 100M connections for very reasonable prices with out caps.

    “For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the 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.”

    -Millions in profit times 3 years is a lot of money. I could understand rate hikes if profitiability was minor.

    “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.”

    -Your tiers should remain based on the size of the pipe of the service. Inherintly, that limits consumption as you can only shove so muh through a pipe.

    “consumers Internet experience will suffer. Sitting still is not an option. Thats why were beginning the consumption based billing trials.”

    -Great plan. Forcing consumers to another ISP eliminates TWC’s bandwith problem. 0 customers = 0 gig in consumtpion.

    “The feedback weve received from our customers has been very helpful.”

    -It must be a great supply for the rear ends at TWC as now have lots of toilet paper. NO CAPS != LARGER CAPS

    “We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.”

    -Or I could get Road Runner Business Class for $80 per month and have no caps and no overages, and oh, what do you say, a more balanced connection (4MB/3MB)! Oh, and this whole tier plan was supossed to save me money… This is 3x what I pay now!

    “As we launch DOCSIS 3.0 in the trial markets, we plan to offer a 50/5 MB speed tier for $99 per month”

    -Speed is useless with caps. I can use my whole months alotment in less than an hour!

    Again TWC, CAPS=LOOSING ME AS A CUSTOMER.

  20. ralfvin says:

    OUCH! It seems like the only person drinking the TWC Kool-Aid is TWC… they are getting hammered everywhere I look…

    http://www.dslreports.com/shownews/Rochester-NY-Versus-Time-Warner-Cable-101836

    http://www.dslreports.com/shownews/Time-Warner-Cable-Offers-Weak-Concessions-101838

  21. Thanks for confirming that I am, in fact, living in the reality based world. I had to ponder for several moments whether or not it was just me that was out of touch.

    Nope… it’s still them.

    • Erich says:

      Definitely them. Most of the people I know seemed to have heard it first from me, and just about each person I told about the good times we’d soon be facing just looked at me with jaws dropped and asked me if i was serious.

  22. FallenMystic says:

    for the fifty-cent question of the day… if volume is their problem, (the amount that people are downloading isn’t really bandwidth,) then how logical is it to introduce faster speeds which would put a greater strain on their already strained system…

    Seems to me they really haven’t thought their excuses… errh I mean reasons through all that much.

    Now lets see how much ‘bandwidth’ I can chew up by pulling down a few ISO’s….

  23. Josh Beck says:

    I opened up an irc channel at irc.freenode.net

    join #stopthecap

    Thanks,
    Josh

  24. ralfvin says:

    If you are opposed to TWC’s attempt to institute consumption based metered bandwidth, please contact NY US Congresssman Eric Massa with your concerns. Eric understands the issues and is working with 400 of his fellow Congressmen to fight the attempts of TWC and other ISPs to institute consumption base metered Internet services. Your voice is important, let it be heard. http://massa.house.gov/?sectionid=7&sectiontree=4,7

  25. Scott Wee says:

    Mr Hobbs is being disingenuous. By his own admission, Internet usage is projected to grow by 40% each year. Supposing I manage to cap my monthly usage at 10GB (hypothetically), and I sign up for the 10GB/month tier. Next year, my data consumption would have grown to 14GB, forcing me to essentially swallow a $4 price hike every month next year. Unless Time Warner is saying that they are planning to increase the caps by 40% each year, having those caps in place don’t make any sense at all beyond the first year.

    Taking the argument a little further: behaviour modification. Let’s say, this little rationing “experiment” works, and users actually reduce their Internet consumption, thus changing their online behaviour. This would totally negate the 40% growth projection figures then, and would also negate the so-called “expenses” related to being forced to upgrade their network to accomodate the now non-existent traffic.

    Time Warner’s logic fails, either way.

  26. Ken says:

    This statement from Landel Hobbs really offends me. I feel he/she is truly insulting my intelligence.

    I’m going to continue to steer my friends/family away from Time Warner.

  27. Mazakman says:

    I was trying to get my dad to switch to Roadrunner and the TW phone service also , but this weekend I am telling him to stay right where he is with Frontier. We will be soon to follow … as soon as cable internet service in this town is officially capped.

  28. Dude says:

    I’ll switch to DSL damm it!

  29. Al says:

    Switch to earthlink

  30. Mazakman says:

    My post from DSLReports….

    “Time Warner wishes to bill us as a utility does, so I say that in the same way that we can purchase electricity from different providers and the power comes through the same lines, that we should be able to purchase internet service from as many companies that would or could be allowed to use Time Warner’s lines. Right ? So in all fairness, this is what should happen. That way Comcast or some other provider would be allowed to provide us with internet service in the same way as Time Warner is now.

    I just got off the phone with the local TW office.. the gentleman sounded disinterested when I said that I was calling to find out the exact day that my one year Roadrunner special deal ends. Well he sounded like … “oh well”… when I said that on or before June 17th that we would be dumping Roadrunner to go with a provider that will not be capping our service. So about the beginning of June I shall be making the arrangements to go with Earthlink Cable or Frontier.”

  31. AKI says:

    “Our usage data show that about 30% of our customers use less than 1 GB per month.”

    I don’t really get Time Warner. They want to lose revenue by charging these 30% of people less. Smart move you fucking idiots. This will be the downfall of Time Warner. The End.

  32. Eric Bentsen says:

    I just got a new computer last summer. I have a program called NetMeter installed that tallies up how much I download & upload and keeps Daily, Weekly, & Monthly totals and also projections on how much I’ll use for those time frames. I’ve used between 30-65 GB each month so far. I mostly watch YouTube (which recently went HD for some videos, one 10 minute HD video could be 150MB), but I just started watching Hulu.com shows this week (I missed Terminator, Sarah Connor Chronicles on Fox when they first aired, so I can catch up a bit).

    I’ll surely switch to Earthlink or Frontier in the fall depending on availability & circumstances. DSL is not fast enough for YT HD. This is a horrible marketing decision for TW, but so was banning 80,000 newsgroups.

  33. Eric Bentsen says:

    My parents DSL connection could probably qualify for the 1GB plan over 2 computers, except I come over to visit and ruin their curve by listening to internet radio and getting required updates they refuse to even know about. They may like this plan and switch TO RoadRunner, but they’ll ban me from their computers & they won’t get their required updates.

  34. DOWN_with_TWC! says:

    What a joke. I’m am so sick and tired of TWC trying to justify there reasons for this cap. We all know for the $40/mo we pay they are making a huge profit. There is no way they would be in business this long if they weren’t.

    A few things really get to me. They call what they are doing a “trial” yet they already have pricing plan in place. They are conducting these “trials” at the worst possible time of the year. During the summer when college students have gone home, nice weather means less time indoors and on the computer, family’s on vacation, kids out of school so there is no need for the internet for homework.

    They have the market cornered in all 3 places and they know it, they could never do this in Buffalo or Syracuse because of Verizon. I’ll be dropping all my TWC services once this is put into place. I hope they crash and burn the greedy a-holes!

  35. DOWN_with_TWC! says:

    I forgot to add this to my post.

    “Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.”

    They make it sound like its a great deal. So for only $110 more than I pay now I can have the same exact thing. Good luck with that campaign.

    I’ve had a bandwidth monitor on my computer for a week now and i’m already at 21GB used and this was a light week for me. Only streamed a few TV shows and only online gamed a few times. Its unacceptable!

  36. twc says:

    time warner sucks, i work for time warner and get free cable and internet and wont even use it, i went out and purchased dsl.

  37. Eric Bentsen says:

    Since Earthlink will have to buy their bandwidth from TW, TW says Earthlink will institute the same caps as TW…no reply from Earthlink yet. Frontier tried caps last year and will likely try again once TW gets theirs in place.

    So my parents have Verizon DSL, but I don’t know if Verizon will serve my apartment successfully. I looked at the Verizon Turbo package with 7Mbps download & that’s what I need for HD from YouTube.

    • Everyone is waiting on Earthlink. There is also LocalNet, which has a webpage that looks woefully out of date. I was told their speed was actually the same as Road Runner, but don’t know that first hand.

      Frontier will not impose caps or even revisit the cap issue until 2010 at the earliest, according to a company spokesperson. No need to be in a hurry towards Frontier this second, but if you need a cap free guarantee, a multi year price protection agreement will give that.

      Verizon should be able to tell from the customer service center whether your place is pre-qualified for DSL.

  38. Eric Bentsen says:

    Every Tier is gonna be capped with overage charges. This doesn’t just affect heavy users, it affects everyone. People are gonna throw out their routers so bandwidth doesn’t get stolen. I’d say 90% of the people are gonna discontinue service no matter what. There will be a strike by customers against TW and it could last for years and bankrupt TW, then we’ll have no TV either.

  39. Anita says:

    To put a cap on the internet is to limit the full potential of the internet. The internet is a collective and an ever-expanding thing, with vast untapped potential that is only capable with the faster speeds. We are living in a time with incredible technology, don’t you think we are capable of devising more efficient resources in managing our internet consumption? Time Warner is trying to advertise the horse and buggy in the time of the automobile. It’s not going to work, their options only resonate how out of touch and obsolete they are inevitably going to become. You cannot put a cap on the future; It is here, and you must adapt accordingly or die.

  40. DENNIS TEEL says:

    I fully agree with all the posters here/.i’ve been online since 1997 (webtv),and later went netzero(another slow dialup service) and in 2003 went high speed(comcast which here in dallas went time warner)./ i use the net for downloading music tracks from emusic.com,who’m i have a membership with./i love to watch stuff on youtube and i enjoy streaming my cam (via my ip number,using wecamxp software)a few hours a day so i can chat with friends and family./i’m disabled and these things have become part of my life on a daily basis./i pay twc slightly over 160 bucks a month for digital cable(including 2 premium channels,hbo and starz)plus the high speed./this crapping idea they have will probably put an end entirely to my streaming webcam,my downloading music(100 tracks monthly) as well as the youtube and vidoe blogging/.these are things that take up alot of my daily time/.i pleasure in them greatly…twc has lost me as a customer as soon as i know for sure that they’re going to be charging me a fortune(which i won’t be able to afford)for things i’ve been doing on a daily basis for years uncrapped!

  41. POE says:

    I WILL IMMEDIATELY CANCEL MY TIME WARNER ROADRUNNER SERVICE WHEN THIS HAPPENS. I AM IN THE GREENSBORO AREA AND THIS WILL AFFECT ME. I PLAN TO SWITCH TO SATELLITE FOR MY TV AND EITHER AT&T OR WHOEVER DOESN’T CAP THEIR INTERNET. I REALLY WISH VERIZON OFFERED INTERNET IN MY AREA, I WOULD INSTANTLY GET IT IF THEY DID.
    VERIZON, PLEASE MAKE YOUR WAY TO GREENSBORO NOW!! WE NEED YOU!!

  42. Dave says:

    Well so much for home based internet businesses… I’ll drop the Road Runner, the cable TV AND the phone…. There ARE other ways to get on the internet without getting further screwed by these gouging freaks.

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