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Time Warner Abandons Plan to Gouge You - For Now

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Metered bandwidth both illogical and wildly unpopular.

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Finish downloading that song and check your e-mail one last time: The Internet can't handle all this traffic, and it's going to die!

Cable and internet providers have been selling us that line for a few years now - ever since high-speed connections sprang up throughout the country. But these doomsday warnings hit a fever pitch when free online video sites like YouTube (GOOG) and Hulu began competing with network TV programming. As viewership drops, traditional media companies have to supplement lost revenue via other means.

Their inevitable solution: Make heavy Internet users pay through the nose for the privilege.

Time Warner Cable (TWC) is in the midst of "testing" tier-based metered data plans in select cities throughout the country. (Check your local listings!) Under the revamped plans, those who download more than a specified limit would be charged up to a $75 fee. Since the highest-priced package limits you to 60 GB per month -- a jaw-droppingly low figure -- customers are offered unlimited Internet access for a mere $150 per month.

Remember: That amount doesn't include phone or cable.

Curiously enough, the data-cap roll-out won't be implemented in areas where Verizon's (VZ) cheaper and very popular FiOS service is already available as an alternative. How very strange.

But the best-laid plans of cable monopolies often go awry. This month, Time Warner was to introduce the new "usage-based" pricing structure in Rochester, NY, but it hit a bit of a snag: boycotts, protests and government intervention. Senator Chuck Schumer met with Time Warner CEO Glenn A. Britt to discuss his opposition to the plan; hundreds organized outside the company's local headquarters to denounce the data caps.

In response, Time Warner has delayed their metered broadband test so that they may "educate a vocal minority." (Even when they lose, they're insufferable.)

Time Warner isn't alone: Comcast (CMCSA) has implemented a monthly 250 GB download cap since last year, and smaller providers have been known to throttle bandwidth -- decreasing download speeds -- of those they suspect are heavy users.

Critics have taken issue with the claims that the Internet is "overloaded." Network costs are no different for light or heavy use, and are equipped to readily handle expanding peak periods.

Sound dubious? Here's Tony Werner -- Comcast's chief technical officer -- on the record with the New York Times: "All of our economics are based on engineering for the peak hour. Just because someone consumes more data doesn't mean they drive more cost."

Speaking of cost, the price for providers to upgrade their networks has also steadily decreased. Comcast has claimed to investors that the cost of doubling a neighborhood's internet capacity would cost a mere $6.85 per home.

To give you an idea of how little American ISPs invest in upgrades, here's our standing in average bandwidth by country: We're seventeenth, with an average of 3.9 megabits per second. Compare that to Japan: Its largest ISP offers connections up to 160 megabits for only $60 per month.

How much was that unlimited Time Warner service plan, again? Oh right, $150 - just enough to prevent the entire Internet from collapsing under 1/40th the download speeds of Japan.
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