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Time Warner: Bandwidth hogs, pay up!

Cable company decides heavy bandwidth users will pay an additional monthly fee.

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The all-you-can-eat bandwidth buffet that cable modem users enjoy may soon come to an end.

Later this year, Time Warner Cable will begin charging users a fee for downloading more than a monthly limit. The company has yet to release specific pricing changes.


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The reason behind the move? Cable modem hogs cost cable companies money. Their networks are based on a shared infrastructure with several homes or businesses sharing a local access pipe. If one home or business is using its connection to transfer large amounts of data, performance for all other homes or businesses that rely on the same access pipe is affected. Ultimately, to ensure better performance for cable modem users on that portion of the network, the cable company has to segment the network by installing new equipment.

"Some users take up an inordinate amount of bandwidth," says Mike Luftman, a spokesman for Time Warner Cable. "Anyone staying below a total amount of bits moved per month won't pay more. But if you consistently go over the limit, you're going to have to pay."

Telework programs for large enterprise customers won't likely be affected because they're already subject to special pricing plans handled by the cable companies' business divisions. But corporate teleworkers for smaller companies, who regularly upload and download large graphics files, for instance, stand a greater risk of being affected than those who use their cable connection mostly for e-mail.

Unlike some restrictions imposed on cable modem users in the past, such as not letting teleworkers connect to their businesses via VPNs, the bandwidth limits are not aimed solely at business users. But in some cases, the restrictions could make cable access a more expensive proposition than companies had expected.

While charging heavy cable modem users more per month may drive some of them to other access methods, such as DSL, that's not necessarily a bad thing for cable providers, says Matthew Davis, an analyst with The Yankee Group.

Heavy users cost the cable companies a lot of money by forcing them to make network changes, and it's not necessarily worthwhile for the providers to keep the heavy users happy, Davis says. The cable providers will likely ensure that the additional charges aren't large enough to drive away droves of users, he adds.

Any pricing scheme the cable providers come up with is unlikely to deter telework programs from continuing to rely on cable modem access, says Dana Tardelli, an analyst with Aberdeen Group. "If it's $40, $50, $60 or $70 per month, it shouldn't matter because access is access and the job still needs to get done," he says. "If they doubled the price, it might be a problem, but I doubt they'd do anything that drastic."

While Comcast and Cox Communications each say they have no immediate plans to follow Time Warner's lead, now that technology that lets providers monitor network usage is available, it may be only a matter of time before they too move to a usage-based system. Another sign of things to come: Cox has begun user trials of a tiered service for which customers pay more for guaranteed 128K bit/sec symmetrical speeds, says spokeswoman Amy Cohn.

In moving to a tiered pricing model, Cox is following in the footsteps of DSL providers.

Most DSL providers offer a variety of services. Consumer-class offerings typically provide download speeds of up to 384K bit/sec and upload speeds of up to 128K bit/sec with no service-level agreements (SLA). But DSL providers also offer business-class services, with symmetrical speeds, some SLAs and enhanced customer support at a premium price.

DSL providers seem happy with their tiered approach and have no imminent plans to introduce usage-based pricing. Part of the reason may be that DSL networks are less susceptible to bandwidth hogs than cable networks. DSL connections are dedicated until they hit the DSL access multiplexer (DSLAM) at the local central office. But bandwidth hogs could still affect performance for other DSL users on the same DSLAM if the connection from back into a service provider's Internet point of presence was not large enough.

Another reason DSL providers may not yet be looking at usage-based billing is because "they are more focused on troubleshooting their networks," Davis says. Ultimately, though, Davis says he thinks DSL providers will move down the same path as cable providers and begin to charge heavy users extra.

Pricing plans
Here’s how three major cable providers stack up now and a glance at where they’re headed.
Company Price Plans
Time Warner $44.95 per month. To charge heavy users extra later this year. changes.
Comcast $39.95 per month; $44.95 with modem rental. No impending pricing
Cox Commnications $34.95 per month; $49.95 with modem rental. To introduce 128K bit/sec symmetrical services later this year.

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Contact Senior Writer Michael Martin

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Reaction: Here's what some Fusion users are saying about this article:  

  • This is incredibly bad news  
  • AOLuzers go away!  
  • Ok...  
  • Agree  
  • Time Warner/Direct TV and options  
  • Some ISPs already do this with DSL  
  • Get a clue!  
  • NOT a moron  
  • plug??  
  • ...  
  • AOL needs to go away  
  • Re: AOL needs to go away  
  • Monopoly in action?  
  • AOL needs to go away.  
  • Time Warner did not raise prices  
  • Time Warner Spy  
  • AOL needs to go away.  
  • who makes money here  
  • Yes I am  
  • please...
  • More messages (188 more )

    What do you think? Add your comments to the thread

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