Time Warner Cable in Texas is testing out bandwidth caps on new subscribers.

Several folks sent along links to this Broadband Reports article about plans by Time Warner Cable try out hard bandwidth caps with possible overage charges in Texas:

Time Warner Cable may be exploring the possibility of implementing overage charges for its RoadRunner cable broadband service. According to excerpts from a leaked internal memo obtained by Broadband Reports, the company will be testing a usage-based system in the Beaumont, Texas market. The system is aimed at gaining additional revenue from “5% of subscribers who utilize over half of the total network bandwidth.” The trial will determine whether it’s practical to deploy such a system nationally.

The memo claims new customers in the Beaumont market will be placed on metered billing plans where overage charges will apply. Those customers will be given a special website allowing users to track their bandwidth consumption and upgrade to faster tiers if they consistently use more bandwidth than allowed for their tier. Existing customers will be able to track consumption, but will remain on flat-rate billing. An excerpt from the memo:

    The introduction of Consumption Based Billing will enable TWC to charge customer based upon usage, impacting only 5% of subscribers who utilize over half of the total network bandwidth.

    The trial in the Beaumont, TX division will apply to new HSD customer only, will provide a destination for customer to track usage for each month and will enable customers to upgrade from one tier to the next to avoid payment of overage charges. Existing and new subscribers will have tracking capability, however only new subscribers will be charged incrementally for bandwidth usage above the cap.

    Following the trial, a determination will be made as to whether or not existing subscribers should be charged. Only residential subscribers will be impacted. Trial in Beaumont, TX will begin by Q1. We will be testing technical backend as well as Marketing and Messaging to customers. We will use the results of the trial to evaluate results for possible future nationwide rollouts.

It is rumored that Comcast has also conducted such tests, but never implemented the system because they were afraid of consumer backlash. We recently spoke to several ISPs and an industry analyst, all of whom shared those same concerns. ISPs are under pressure from investors to gain more revenue from higher-consumption users, but have had great success marketing the “all you can eat” business model to consumers.

Except, of course, that none of the ISPs actually offer all-you-can-eat services, they just claim to do so. Comcast is particularly notorious for having secret bandwidth caps that, should you exceed them, will often result in the cancellation of your service, but they won’t tell you what those limits are or provide any tools for assessing if you’re in risk of crossing them. So the idea of “unlimited Internet service” is, at best, bullshit marketing speak.

My first thought was that I was surprised no one has tried to offer a variety of service levels based on how much bandwidth you use previously, but then I thought about how useful claiming “unlimited service” is for marketing purposes and realized I was being silly. If this were done correctly it could be a way for folks who don’t use a ton of bandwidth (like say my parents) to save a few bucks on their cable modem service. Even as connected as I am my bandwidth usage is probably way below what the top 5% of bandwidth hogs tend to use. While I do occasionally download a TV show episode (Doctor Who, Torchwood) or the occasional application, I’m not the sort who leaves his PC on all the time downloading huge video files or MP3s. Most of my bandwidth is used for blogging, browsing, email and online game playing. I have no idea how much bandwidth I use in a given month, but I’d be willing to bet that even in our house with no less than five PCs sharing the cable modem service we have that our total bandwidth consumption is relatively moderate.

If the cable companies started making their limits known and/or offering different levels of service for different prices, that wouldn’t necessarily be a bad thing. I think a lot of folk’s first instinct would be to go with whatever illusionary unlimited plan might be offered, but after a bit of thought and education it could actually be of benefit assuming that reasonable pricing prevails. For that matter, the cable companies should be considering offering service levels that offer not just obscene download speeds, but comparable upstream speeds as well aimed specifically at those users who do want to trade huge video/music files or host game servers again basing it on the bandwidth used. There’s already a fair number of people out there who are technically violating their TOS by hosting servers of one sort or another on their cable modem connections which shows there’s at least desire for such service offerings.

At any rate, it’ll be interesting to see how the Time Warner experiment plays out in Texas and how customers react to it. This could be a bad thing or a good thing depending on how they go about it.