Time Warner backs down on broadband cap. Sort of.

[Update 4/17/09 - According to StoptheCap and a press release from Time Warner Cable, it seems TWC's plan to test tiered pricing has been shelved for now. Stay tuned for updates—Ed.]

Call it a major victory for proponents of the "all-you-can-eat" broadband Net access pricing model. After igniting a firestorm of consumer criticism and possible legislation action, Time Warner Cable (TWC) will postpone tests of "consumption-based pricing" plan for its high-speed online service in Rochester, N.Y.

According to WHAM, an ABC network affiliate in Rochester, the announcement was made by Senator Charles Schumer (D-NY). Congressman Eric Massa (D-NY), one of the legislative opponents of TWC's plans, whose district includes Rochester, called it a "true grassroots victory," according to Wired.com.

The background

TWC argues that a flat rate broadband billing structure—say, $50 per month—is unfair to the low-volume users who make up 30 percent of its customer base.

Let's say your grandma spends only a few minutes online each day checking e-mail, while you are a veritable media glutton, consuming hours of Family Guy episodes, playing online games, and streaming full-length movies. (Disclaimer: This may or may not be autobiographical.) You hog much more of TWC's available bandwidth, yet you're both charged the same rate.

The company sees tiered pricing as a more equitable approach. "When you go to lunch with a friend, do you split the bill in half if he gets the steak and you have a salad?" asks TWC Chief Operating Officer Landel Hobbs. Under the proposed rate plan, high-volume users would pay $150 for "virtually unlimited usage."

Opponents like Rep. Massa and Philip Dampier, editor of StoptheCap (who commented on yesterday's blog) call the usage cap plan unaffordable and unjust given TWC's monopoly in regional markets. Mr. Dampier notes:

A metered billing system for Internet usage is not inherently a bad idea…but there is insufficient competition to guarantee fair and equitable pricing for consumers."

What's your opinion?

Although Time Warner Cable customers in Rochester might breath a sigh of relief, the pricing battle will rage on. So far, there's been no official word if Time Warner will suspend the tiered pricing trials in four other cities—Greensboro, N.C., San Antonio, Beaumont, and Austin, Tx. And other service providers may soon follow suit, warn opponents such as StoptheCap.

If you're a light user, do you feel like you're now paying too much for Internet access? If you're a bandwidth junkie, can you really afford $150 a month to keep your current level of Web use? Let us know. —Nick K. Mandle