Time Warner Cable said today it’s not going forward with plans to charge people for how much internet bandwidth they use. The reason? Too many people complained about it.

Here’s what TWC’s CEO Glenn Britt said in a statement:

“It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing. As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met.

While we continue to believe that consumption based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process.”

The test markets were supposed to be: Rochester, N.Y.; Greensboro, N.C.; and San Antonio and Austin, Texas. TWC had planned to charge a buck or two for every gigabyte used over a certain cap. But customers and at least two Congressman threw a fit about it. New York Congressman Eric Massa started drafting a bill.

Here’s the response from Timothy Karr of Free Press, one of the groups that campaigned against metered pricing:

“We’re glad to see Time Warner Cable’s price-gouging scheme collapse in the face of consumer opposition. Let this be a lesson to other Internet service providers looking to head down a similar path. Consumers are not going to stand idly by as companies try to squeeze their use of the Internet.

But a column on Zdnet had a different opinion:

Let Time Warner Cable charge whatever it wants for bandwidth on the Internet. This is a free country.

If you decide to go elsewhere, that’s the penalty to TWC. But TWC should not back off on its usage-metered billing plans. People who don’t download movies should not have to pay for the bandwidth consumed by those who do.

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This thing is far from over. In fact, Time Warner said it’s developing measurement tools so that people can see how much bandwidth they actually use and what it would cost them. But TWC shot itself in the foot by rolling this out without first educating people about it.

So now… tiered usage = price-gouging + Congressional oversight.