WASHINGTON (CBS DC) — Heavy Internet users may see their prices rise as Time Warner and other cable providers continue testing a new business model that charges customers based upon the amount of data they use.
“Usage-based pricing” – which is similar to most wireless plans – is what cable companies are looking to use for all Internet due to congestion they claim is clogging up many networks. In a December report, the New America Foundation said caps on data would restrict customers who want to stream movies, television shows or take online classes.
As services like streaming video, cloud data storage, and videoconferencing have increased online, the amount of Internet data consumed by individuals has simultaneously increased. However, while new services and applications require more data, most major Internet service and mobile providers in the United States are moving in the opposite direction by discouraging Internet usage by implementing more restrictive and costly data caps.
The industry’s move away from one price, all-you-can-use service is receiving criticism from consumer groups, regulators and lawmakers who worry that the new model is motivated by the cable companies’ desire to boost profits when users go over their caps – and to protect their own cable television from Internet services such as Netflix and Hulu.
Sen. Ron Wyden (D-Ore.) introduced a bill in December that would put limits on the cable companies’ new business model by regulating how Internet providers measure customers’ data use, and ensuring that data caps “are truly designed to manage network congestion.”
Wyden’s bill failed, and the cable industry ridiculed his legislation as “ill-conceived,” and said that it ignores the benefits to low-data Internet users.
“The innovative offerings by cable companies are positive developments for consumers and represent accepted and legitimate business practices as well as sound network management,” Brian Dietz, a spokesman for the National Cable and Telecommunications Association, said in a statement to The Wrap. “Many consumers don’t need as much data as those who stream video or music all day.”
Under one new pricing plan, Time Warner Cable customers could save $5 on their monthly bills if they accept a cap that’s the equivalent of streaming two HD movies. They would pay $1 for every gigabyte over the monthly limit.
Comcast, the nation’s largest cable provider, began offering a tiered system for billing in some markets last year. One option offered customers 300 gigabits per month — or about 130 hours of Netflix HD videos — and charged them $10 extra for an additional 50 gigabits.