ROCHESTER, New York -- The recent news that Time Warner Cable wants to implement tiered Internet usage rates has set off wildfire responses around the country.
According to the proposal, the new pricing structure for the company's Roadrunner Internet service would start at $15 for a plan that allows 1 GB a month with an overage charge of $2 per GB. This equals, for the most part, roughly three hours of online video or half of a rented standard-definition movie.
The company would also offer a $150 unlimited download plan; this amount would not include packaged service that might incorporate cable TV and home phone. Right now the average user pays $40 a month for broadband.
Time Warner says users who devour the most bandwidth aren't paying their fair share and claims if it doesn't bring in enough money to build new infrastructure, it could lead to problems such as "Internet brownouts."
Opponents call this preposterous and among them is Rochester-area Democratic Rep. Eric Massa.
According to the Rochester City Newspaper, the freshman congressman said that SEC filings indicate TWC's connection costs are declining.
Massa called the plan to switch 8.4 million cable broadband customers to metered Internet billing an "outrageous plan to tax the American people."
Time Warner is the only provider of high-speed Internet service in many parts of Massa's Congressional district.
"It's all being done because they are an unregulated monopoly," he told regional media Tuesday.
Opponents of the usage caps have said it will not only cost user more, but also stall Internet tech development as many users will consciously cut back on usage they will no longer be able to afford.
Massa plans to introduce a bill as early as the end of this week that would foster broadband service competition and regulate regional monopolies.
"They are providing a utility and frankly you should not be able to impose cascading rate increases without justifying them," he said. "What Time Warner is saying is not true, and their own SEC filings show that. This is AIG-style greed."
A Time Warner Cable spokesman claimed the company is only testing the waters at this stage, adding it could not comment on legislation it hasn't seen.
According to the company's 2008 annual report, its high-speed data costs did decline -- by 12 percent -- to $146 million. In contrast, subscribers increased by more than 10 percent and related revenues jumped to more than $4 billion.
But TWC told Wired.com the $146 million is just part of variable costs, and costs such as maintenance labor, equipment, transportation and such have not been factored in, and all increased with more subscribers.
Time Warner is far from the only Internet cable provider to seek caps and tiered usage plans. Last November, AT&T announced plans to test monthly caps, and Comcast set a 250GB limited last summer.
Time Warner plans to test tier pricing in San Antonio and Austin, Texas were recently delayed by the company, following massive protests, though the company claimed it just wasn't prepared yet. Nonetheless, tests in Rochester and also in Greensboro, N.C. reports DailyTech.
"Time Warner's decision has the potential to more than triple customers' current rates," said Rochester's Massa. "And I think most families will find this to be too taxing to afford."
Other vocal opposition includes consumer group FreePress, which also see Time Warner as just being greedy.
"Charging consumers penalty fees on top of what they are already paying to download a movie or show will cripple online video," said campaign director Timothy Karr. "This is a win-win situation for Time Warner. Congress must investigate these anti-competitive practices before they become a nationwide problem."
Michael Greeson, president of market research and consulting firm The Diffusion Group, told the Wall Street Journal it's almost a duck-and-cover move for Time Warner and other services.
"Cable operators know it's only a matter of time before broadband access reaches the TV set, and that could be a disaster for the industry under its current pricing model," he said. "Internet usage is skyrocketing, and consumers have grown accustomed to an all-you-can-eat broadband subscription, so the cable companies are looking for a way to put this genie back in the bottle."