Back in January of 2008 we were the very first to report that Time Warner Cable was conducting a trial in their Beaumont, Texas market that imposed caps ranging from 5GB to 40GB on the company's existing tiers of service. More controversial perhaps was the news that trial participants would be charged $1 per every additional gigabyte consumed, a huge markup for Time Warner Cable over cost, and a first for a major US ISP. The metered billing plan faced a temporary setback due to hurricane Ike in 2008.
The Beaumont trial isn't just about testing metered billing and tracking software. Time Warner Cable is perfecting its marketing of the unpopular metered billing idea to consumers. Carriers love the idea, as it gives them a way to monetize and/or control Internet video, which poses a very serious long term threat to their cable television revenues. Selling consumers on the idea requires some finagling.
New customers in Beaumont are put on metered plans automatically, while existing Beaumont customers are lured into the metered fold via some fine print trickery. Customers are promised twelve month price-lock guarantees, provided they sign a new contract. But the contract fine print holds some surprises: customers previously on unlimited plans are promised "guaranteed savings," only to find out they're now facing a $150 ETF, low caps, and $1/GB overage penalties.
In a conference call discussing their fourth quarter results this morning, Time Warner Cable COO Landel Hobbs said that the cable operator would be expanding their metered billing experiment into additional cities this year. Hobbs didn't say which cities would get the honor. A spokesman suggests to me that there will be four of them, but you can be sure it won't be anywhere the company faces competition from Verizon FiOS (NYC comes to mind). The carrier has yet to upgrade its network to the latest technology (DOCSIS 3.0), but has taken the industry lead on metered billing. Uncompetitive markets will feel the brunt of this "innovation."
Hobbs also stated that the cable company will be cutting 1,250 jobs across the country this year, saving the carrier about $90 million in the process. Time Warner Cable added fewer subscribers than Wall Street analysts predicted for the fourth quarter, and took a $367 million impairment on its $550 million investment into Clearwire Corporation. During the conference call, the company said they'll be offering Clear Mobile WiMax bundles in at least one city this year. By the way, Clear's TOS says they charge overages of $10 per gigabyte.
