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Time Warner Cable to Charge You Based on How Much Data You Consume, Again

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For smartphone users who are voracious consumers of data, the last refuge has been Wi-Fi connections from unlimited broadband internet connections at home. Subject to data usage caps on AT&T (T), Verizon (VZ) and T-Mobile, it’s often wise for a user to download all bandwidth-zapping apps, games, movies, and music on Wi-Fi at home, rather than risk exceeding your monthly limit and end up getting throttled or paying more.
However, if Time Warner Cable (TWC) has anything to say about it, even home users can kiss unlimited broadband packages goodbye. The Manhattan-based cable operator has begun rolling out consumption-based pricing plans for its broadband offerings, reports the Wall Street Journal.
This new Time Warner Cable experiment has begun in south Texas markers, where customers will pay $5 less for their monthly bill if they agree to a 5GB cap on data usage.
This consumption-based plan is available for three lower-speed tiers, with prices ranging from $34.99 to $54.99 a month. If customers exceed the 5GB limit, they will pay $1 for every extra gigabyte up to maximum of $25.
In a company blog post, the cable operator reassured that “Time Warner Cable customers will always have access to unlimited broadband at a flat monthly rate” and that these new plans were “designed to save light users money.”
Time Warner Cable’s definition of “light users” might be a bit restrictive though. If you’re one who only uses does web browsing or email checking, then this plan is good. But this is 2012, and households today have plenty of broadband-consuming devices all sharing a broadband connection -- your PS3s (SNE), Xbox 360s (MSFT), iPhones (AAPL), desktops and laptops, for example. If you, say, stream one HD movie off Netflix (NFLX) a week, then you’ll exceed the cap before the month is even up. I’d hardly consider someone like that a heavy user.
As the Journal notes, the company tried to introduce usage-based billing back in 2009 in upstate New York and some parts of Texas but ultimately changed its mind after an uproar from customers and advocacy groups. The company back then had admitted that the proposal was a “debacle,” but clearly, three years later, it has decided to test its luck with this path once again.
Meanwhile, wisely, Time Warner Cable’s competitors say they have no plans for similar consumption-based pricing. Comcast (CMCSA) chief financial officer, Michael Angelakis, told the Journal his company doesn’t not want to “rock the boat on that,” while Cablevison (CVC) also does not have plans for tiered usage pricing on the horizon.
POSITION:  No positions in stocks mentioned.