Time Warner Cable to Expand Trial of Internet Caps

NEW YORK (AP) February 4, 2009 — Time Warner Cable Inc. last year became the first major U.S. Internet service provider to charge customers extra if they exceeded a certain amount of data traffic every month. That trial run apparently went well, because the company said Wednesday that it will expand the test to other cities.

Many ISPs have imposed caps on how much their subscribers can download each month. Time Warner Cable broke from the pack by setting relatively low limits — for instance, 5 gigabytes for subscribers paying $30 a month — and then charging $1 for each gigabyte over that limit.

It takes thousands of e-mails and Web pages to reach a gigabyte of usage, but video and software downloads consume much more data. A DVD-quality movie is roughly 1.5 gigabytes.

Consumer advocates have criticized the caps, saying they could discourage people from using the Internet and could stifle online video as a competitor to cable TV.

Time Warner Cable spokesman Alex Dudley said his company's trial, in Beaumont, Texas, had shown that the system is capable of metering and billing accurately. It will soon be expanded to four more markets, for now undisclosed, to give the company a better understanding of how the system works.

The intent behind charging by the gigabyte is to have subscribers who use the Internet more pay for the upgrades necessary for the company to keep up with increasing traffic, Dudley said.

"It's clear to us that customers want online video, which requires substantial investment in the network," Dudley said. "We're willing to make that, and we're trying to find an equitable way to distribute the cost of that investment."

Dudley said a "small but vocal percentage" of users in Beaumont were unhappy with the amount of data they could use (the top tier is 40 gigabytes per month). The company plans to address that by introducing plans with larger monthly "buckets" of data, as well as cheaper ones for casual users.

Time Warner Cable is the third-largest ISP in the country, with 8.7 million subscribers. AT&T Inc., the largest ISP, late last year started experimenting with bandwidth caps of 60 to 150 gigabytes per month in Reno, Nev.

Comcast Corp, the second-largest ISP, has capped use at 250 gigabytes for everyone.

Among the top four ISPs, only Verizon Communications Inc. has no caps on its wireline broadband.