Time Warner plans pay-for-data option

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TESS VIGELAND: Most of us get billed the same amount every month for our Internet connections, no matter how much or how little we surf the Web, but Time Warner Cable is looking into a new business model. The country's second biggest cable provider says it's planning to test a system where Internet subscribers pay for the amount of data they download. Not good news for anyone who likes watching movies and music videos online.

Ashley Milne-Tyte reports.


ASHLEY MILNE-TYTE: Time Warner Cable starts testing in Beaumont, Texas later this year. Company spokesman Alex Dudley blames a small number of bandwidth hogs.

ALEX DUDLEY: Less than 5 percent of our users are at times using up to 50 percent of our network. Which means that they are negatively impacting on the experience for the rest of our customers.

He says the trial will tier customers based on how many gigabytes of data they download each month. He says the company hasn't decided how much each group will pay, but Porter Bibb of Media Tech Capital Partners doesn't believe light Internet users will pay any less, and he says Time Warner will charge heavy users a premium.

PORTER BIBB: And that's simply not going to fly. It's as nonsensical as saying if you have cable television and you don't watch much television you're going to pay less than someone who watches 24/7.

Bibb says this is just a way for cable companies to get an early piece of the online video pie, but Declan McCullagh of CNET says Internet service providers need to try new pricing models, because all that video clogs their pipes.

DECLAN McCULLAGH: It's very expensive to build new pipes, so what do you do? I think we're going to see experimentation. We're going to see some ISPs try to charge. We're going to see other ISPs, and Comcast is already doing this, trying to throttle.

That is, slow down the speed of the connection for those who use a lot of bandwidth. He says U.S. consumers may have got used to all-in-one pricing for Internet use, but he says bandwidth could eventually be like any other utility, where the free market dictates how much we pay.

In New York, I'm Ashley Milne-Tyte for Marketplace.

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