Time Warner Cable Tiered Broadband Test Begins

from the if-only-there-were-competitors dept

Earlier this year, the story came out that Time Warner Cable wanted to experiment with capping its "unlimited" broadband, trying to force the heavy users to pay more. Even worse, it appeared to want to use exceptionally low caps that would discourage innovation. Despite all of the concerns, Time Warner Cable is moving forward with the test as planned.

The end result will be taking away value from customers -- not just in limiting how much bandwidth they get, but by adding a huge mental transaction cost. Basically, what Time Warner is doing, is adding a huge overhead in terms of whether or not users are willing to actually use the bandwidth they signed up for. Just the fact that people need to think about how much they're using will decrease usage significantly. While that may be what TWC wants, what it really does is annoy customers. This would never actually happen if there were real competition, but with very little competition out there, TWC can try out this plan. Any other broadband provider competing against TWC in areas where this test is going on should be hitting on the limits in any advertising campaign. TWC is free to do whatever it wants, of course, but it's never a good business move to take away features from customers -- especially if in doing so you add an annoying mental transaction fee.

Filed Under: broadband, broadband caps, cable, tiered service
Companies: time warner cable

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  1. identicon
    Michael Vilain, 2 Jun 2008 @ 10:44pm

    Re: Doesn't TW know there are alternatives

    I just got a flyer in the mail advertising AT&T's new TV and internet service. No cap were mentioned, just a tiered transfer rate. Their rates were something like $25/month for "up to" 1.5Mbps downstream, $30/mo for "up to" 3.0Mbps downstream, and $55/mo for "up to" 10Mbps downstream. This comes over phone lines and fibre to the home rather than cable.

    If this were offered in TW's market, I wonder how many people would be switching and contesting any sort of early termination fee (which is currently being litigated as a class-action lawsuit here in California).

    Why is TW shooting themselves in the foot here? Don't they see their monoply business model is a thing of the past and that it's only a matter of time before customers vote with their wallets?

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