Technology | Media | Telecommunications

Tuesday, January 22, 2008

Cable Co to Test Usage Based Broadband

Time Warner Cable (TWC), the second largest Multi System Operator (MSO) in North America, confirmed plans last week to test market usage-based billing (UBB) in its Beaumont, Texas market.

TWC estimates that roughly five percent of its High Speed Internet service users consume fifty percent of the bandwidth. However, a new assessment by Strategy Analytics questions the wisdom of this move.

"Moving towards UBB is an operational misstep, and runs the risk of confusing customers, creating bad blood and further tarnishing the already low customer satisfaction scores Broadband Service Providers (BSPs) typically garner," says David Mercer, Vice-President of the Strategy Analytics Digital Consumer Practice.

Continued broadband penetration depends on the BSP's ability to win customer wallet share. Customers have grown accustomed to paying for their broadband service in a certain way, and appreciate and expect a predictable monthly bill.

Dramatically altering the model, with no discernible added value, may prove to be a big mistake. But for customers in small markets like Beaumont, Texas -- with minimal competition -- customers may have no choice but to accept the new service agreement.

"In an increasingly commoditized broadband access market, BSPs need to find effective and rational ways to differentiate," says Ben Piper, Director of the Strategy Analytics Broadband Network Strategies service. "TWC, with its proposed pricing plan, runs the risk of differentiating itself out of the competitive markets."