More Time Warner customers to get usage caps

Emboldened by no resistance from regulators in it s Beaumont, TX test, Time Warner is readying new caps and overage charges for more of its broadband customers. While the market is starved for real competition, the cable guy will continue to ration while charging more at will. The new caps will come in tiers.

They will create a “super tier” that offers up to 100 GB before overage charges apply, but they haven’t yet decided how much it will cost. Also, Time Warner will monitor downloads starting in April but the actual metered billing in San Antonio and Austin, Texas, will begin in September. Three months before they plan to charge folks under the tiered plans, they will notify customers, offer them a meter and let them see how the metered billing will affect them. Read the official statement.

Time Warner is joining other ISPs in trying to squeeze more money from their broadband pipes, generally in the name of needing to upgrade the network or to stop bandwidth hogs.  But in truth, caps and tiered plans are about limiting competition (especially from online video), and squeezing customers, because a lack of competition means they can. Here’s the money quote from the BW article:

“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.”  (Giga Om)

Now, by the virtue of maximum speeds the service was already sold in tiers with limits. In effect TW is adding a new tier of charges. Perhaps they should open a customers pipe to a maximum speed and just charge by the bit if usage is really the issue. The reality is that it’s not. Infrastructure keeps getting cheaper and needs ever fewer people to keep it working. New subscriber growth is slow, and this is a predictable reaction by the cable guy to grow revenue. When there’s no real competion it’s easier to raise prices instead of creating new value or winning new customers with better service.