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

Phillip Dampier December 6, 2011 Comcast/Xfinity, Data Caps 5 Comments


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.

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9 years ago

….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… Read more »

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9 years ago

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…

9 years ago

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… Read more »

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