Activist Groups Mixed on TW's Test of Flexible Data Pricing

Cable Operator to Test Pricing by Customer Usage vs. Flat Rate
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Public Knowledge, which has pushed for more consumer control of the Internet experience, praised Time Warner Cable's decision Thursday to test flexible pricing for its Internet service, while Free Press, another network neutrality fan, was less sanguine.

Time Warner said Thursday that it would test pricing by customer usage rather than a flat rate.

“Time Warner’s pricing test could be a welcome development for consumers and for the cable industry," Public Knowledge president Gigi Sohn said. "Consumers will have a better idea of how they are using their Internet connections and will have the flexibility to adjust according to the rates. Cable companies could be able to better manage their networks and costs so that they won’t have to resort to cutting off customers for exceeding phantom usage levels or throttling some applications."

But she warned that the plan should not be used to raise prices for everyone -- only the heaviest users.

Ben Scott, policy director of Free Press, said the move was better than disconnecting users or impeding traffic, but building better networks and adopting open access policies is the better way.

"Compared to that approach, Time Warner's proposal is better -- at least customers will know what they're getting into," he said in reaction to the news. "But metered prices may chill innovation in cutting-edge applications because consumers will have a disincentive to use them. Viewed in the context of our long-term national goals for a world-class broadband infrastructure, telling consumers they must choose between blocking and metered pricing is a worrying development."

Time Warner said Thursday that it is planning to test tiered pricing for usage of its high-speed-data service rather than one flat rate for unlimited downloads. The trial will be conducted in its Beaumont, Texas, system for new customers only.

The tiers will be set at 5, 10, 20 and 40 gigabytes, but pricing levels for those tiers has not yet been set. Timing for the trial was not announced, either, although it is not likely to start in the first quarter. The trial will test whether charging users by the amount they download will improve the performance of the system.

In defending its network-management practices from critics, including Federal Communications Commission complainants, Comcast said it also has to deal with a small percentage of users who take up large amounts of bandwidth, which risks degrading the overall experience for other customers.