Time Warner Stops Pay-As-Use Internet Tests

Time Warner Cable said today it will stop testing a new pricing model where customers were being charged for how much Internet bandwidth they used after public uproar against the billing practice.

The cable television and Internet service provider was testing the consumption-based service in Beaumont, Texas and planned to launch similar experiments in Rochester, Austin, San Antonio and Greensboro, N.C.

In the experiment, users were offered various price plans based on how much data they consumed and for various access speeds. And like some cell phone minute plans, users were charged more when they went over their monthly allotment, Time Warner said.

The company said that bandwidth on its network was being consumed disproportionately by a small group of users. To prevent charging all customers more for all-you-can-use plans, the best solution was to charge heavy users more, Time Warner said.

Public interest groups and Sen. Charles Schumer (D-NY) complained that such practices would hurt consumers. Users could end up paying more for Web use, and they might limit use at a time when more applications have lured people to the Web.

"It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing," said Time Warner Cable chief executive Glenn Britt. "As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met."

Free Press, a public advocacy group that launched an online campaign against Time Warner's practices last week, said such billing practices are unrealistic as more people use the Web and as applications like video are data intensive. They believe network operators should not be able to limit the use of consumers.

"Let this be a lesson to other Internet service providers looking to head down a similar path," said Timothy Karr, campaign director for Free Press. "Consumers are not going to stand idly by as companies try to squeeze their use of the Internet. This is a major victory, but the fight for a fast, open and affordable Internet is far from over."

By Cecilia Kang | April 16, 2009; 4:37 PM ET | Category: Cecilia Kang

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