$5 discounts fail to lure Time Warner customers to broadband data caps

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For the vast majority of Time Warner Cable customers, a measly $5 discount isn't enough to give up unlimited Internet.

Out of Time Warner's roughly 11 million customers, just “thousands” have taken the discount in exchange for a 30 GB data cap. Time Warner Cable Chairman and CEO Rob Marcus revealed the slow uptake for tiered data at an industry conference in Florida, LightReading reports.

Marcus said subscribers' median data use is in the “high twenties” every month, suggesting that many users would be better off with capped data. This arguably overlooks the notion that customers don't want to feel restricted by a monthly cap, or risk overage charges of $1 per GB on the months where they do exceed the cap.

Time Warner has been trying to make tiered data work for years. In 2008 and 2009, the company experimented with usage-based billing, forcing customers in certain cities to stay under 40 GB per month or face overage charges. The backlash was so severe that Time Warner abandoned those plans, while suggesting it would come up with another way to make tiered data work. (Then-CEO Glenn Britt said in 2009 that the public response showed “a great deal of misunderstanding” about the company's plans.)

Time Warner's new strategy is to offer an optional discount, called “Essentials Internet,” for customers who want a data cap. But the original offer—$5 off with a 5 GB data cap—was pretty insulting, so Time Warner has made adjustments. Now, customers can get $5 off with a 30 GB cap, or $8 off with a 5 GB cap.

It's clear that customers aren't interested in limiting their home Internet use, but Marcus is undeterred. At the industry conference, he said the company wants to establish the principle that the more data customers use, the more they should pay. Even so, predictions of an “exaflood,” in which rising data use causes Internet “brown outs,” have turned out to be bogus, so it's unclear why strict usage-based billing is necessary except to boost profits. (Not that Time Warner is struggling to turnprofit right now, routinely beating quarterly earnings estimates, and apparently planning more rate hikes this year, according to LightReading.)

If Time Warner Cable is acquired by Comcast, customers can't hope for relief. Comcast is moving from strict data caps to tiered plans, though its current tier limits are much higher.

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