The IT Nerd

You might recall that Time Warner had decided to go down the road of usage based billing. Now they’re thinking twice about it. Check out this post from Time Warner COO Landel Hobbs. First, he claims that this is all a big misunderstanding:

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.

Sure dude. Whatever. But I’ll humor him and give him the benefit of the doubt. Here’s his olive branch to pissed off consumers:

• 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.

That must have went over really well with consumers because protests are now planned in Rochester N.Y. and Senator Chuck Schumer is planning make a point of his own. Not to mention that there’s a Facebook page that is organizing a similar protest in the Greensboro, North Carolina area.

Here’s the bottom line: Users don’t want this, and if there are alternatives (such as Frontier who has said that they are ditching caps in Time Warner markets), Time Warner is going to be bleeding customers like a gunshot victim in South Central L.A. in short order.

Other ISP’s who want to go down the road of usage based billing (Cogeco, are you paying attention) may want to take note of that.

Here’s an idea that is guaranteed to anger users of Time Warner Internet. Usage Based Billing is on its way to several markets in the U.S.:

In April, Time Warner Cable will begin collecting information on its customers’ Internet use in the Texas cities of Austin and San Antonio and in Rochester, N.Y. Consumption billing will begin in those cities later this summer. In Greensboro, N.C., the billing changes will begin sooner. Spun off from Time Warner (TWX) this month, Time Warner Cable had been testing a plan to meter Internet usage in Beaumont, Tex., since last year.

By charging a premium to the heaviest broadband users, much the same way cell-phone providers collect fees from subscribers who exceed their allotted minutes, Time Warner would upend a longstanding pricing strategy among Internet service providers. Typically, phone and cable companies charge flat fees for unlimited access to the Web. “We need a viable model to be able to support the infrastructure of the broadband business,” Time Warner Cable CEO Glenn Britt says in an interview. “We made a mistake early on by not defining our business based on the consumption dimension.” Time Warner Cable has 8.4 million broadband customers.

Note this sentence from CEO Glenn Britt: “We made a mistake early on by not defining our business based on the consumption dimension.” Draw from that what you will. In any case, you can expect lots of customers to be defecting from Time Warner as I doubt users will put up with nonsense like this for long.