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Time Warner Cable CFO Wants to Introduce Usage-Based Pricing “The Right Way”

Phillip Dampier December 6, 2011 Comcast/Xfinity, Internet Overcharging, Time Warner Cable 5 Comments

Esteves

Time Warner Cable wants to introduce usage-based broadband pricing for its residential customers, according to the company’s chief financial officer.

Irene Esteves told investors attending a UBS media investor conference the cable company sees broadband usage as a “complement to our TV offering,” but reassured Wall Street Time Warner has a “wonderful hedge” against the cord-cutting customer: usage-based pricing.

Esteves believes usage-based pricing for Time Warner Cable broadband will become a reality sooner or later.  Charging “heavy users” more would already be familiar to consumers used to paying higher prices for heavy use of other services, and she claimed light users would have the option of paying less.

But despite favorable reception to the idea of usage pricing by Wall Street, Esteves acknowledged the company’s past experiments in usage pricing didn’t go as planned, and she suggested the company will introduce usage pricing “the right way rather than quickly.”

Esteves’ view of broadband pricing echoes that of Time Warner Cable CEO Glenn Britt, who in 2009 approved an experimental pricing scheme that raised the price for flat-rate broadband to a whopping $150 a month.  The plan was shelved by Britt less than two weeks after it was announced because of consumer backlash and political pressure.

Time Warner Cable was the loudest proponent of usage pricing at the investor event.  Comcast CFO Michael Angelakis told the same conference while the company wasn’t opposed to the concept of charging customers for usage, he saw no immediate need to “nickel and dime customers” for broadband service.

Critics of usage pricing point to the enormous profits cable companies earn from existing flat-rate broadband service.  One Wall Street analyst says cable operators already collect a 95% profit margin on unlimited service, and Comcast pays costs of around $8 a month for broadband it sells for $40-50.

Esteves’ comments come the closest yet to admitting what Internet Overcharging critics have claimed all along — usage-limiting pricing schemes are about protecting revenue from cable television packages, and boosting profits that have waned on the television side of the business.  In the 2009 experiment, light users would have faced usage limits as little as 1GB per month, with a steep overlimit penalty, so critics doubt light users would realize any significant savings, and “heavy users” would face overlimit penalties that represent almost pure profit for the cable operator.

Currently there are 5 comments on this Article:

  1. Kevin says:

    ….and she claimed light users would have the option of paying less.

    BS!!! I don’t believe that for one minute. It’s the reason I am a loud voice against UBB. I admit to being a fairly light user compared to most, but you cannot for one second make me believe it will be any different than my electric bill. Meaning I get charged 1000 kwh @ a flat rate of $xx.xx and then every kwh after that @ a rate of .25 per kwh for ex. There are months I havent even come close to 1000khw of usage, but when calling the company was told, the average user at a minimum uses that, we cant actually adjust your pricing to reflect CHARGING YOU EXACTLY TO THE KWH what you use per month, there is no way to know and measure that for sure.

    How would this be ANY different? My bill would be $49.95 flat rate for a basic rate of 1 GB per month. And then $xx per every MB over. Now if UBB could be TRULY USAGE based, meaning it accurately to a MB measures what I use per month and charges a flat rate of $0.10 per MB or whatever, then I am ok with it. Because my bills would be around…$12.95 on average? But you cant for one second tell me the Telco or Cable company UBB would be set up that way. It will mirror the electric utility. Flat price we are guaranteed to pay (too much for maybe not even using that “average amount”) and a whole lot more for usage over. UBB indeed…two words industry..STUFF IT

  2. Oscar@SA says:

    We need to get ready for this crap yet again… I still have not cut the cable? Do I get unlimited?? Hell no.. Britt must be short on cash…

    • We never stopped getting ready. Britt is a true believer of Internet Overcharging, and his cheerleaders on Wall Street just love it.

      I think it might be time for consumers to invade Time Warner Cable’s quarterly conference calls that are traditionally populated by investment bankers and analysts and talk one on one with Britt and friends ourselves. He just doesn’t seem to be getting the message that customers DO NOT WANT these pricing schemes. It’s bad enough they keep raising the price on broadband service and continue to make piles of money on it. But the quest for more is unending, until they get too greedy and a PR and political tragedy makes them pull back.

      They need a reminder.

  3. Jeremy says:

    Why is he wearing a scarf?

    Anyways, they can kiss my cable and broadband goodbye as soon as Google gets fiber going here in KC. I don’t know what providers will pop up, but I’m sick of Time Warner’s sporadic internet signal and crappy cable box.

    They love to move channels around every time they increase prices and move channels to a higher price subscription, easier to confuse you in to thinking they didn’t take the channel away from you. I keep getting less and less, yet they keep charging me more and more. Yet they continue to plot how to steal from me even more in the future(yes, I’ll call it stealing, they are the only provider where I live, government sponsored monopoly).

    They are easily the worst company I have to deal with, service related or not.

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