Monday, April 13, 2009

We Want More Internet, Not Less

WASHINGTON -- In response to Time Warner Cable's announcement yesterday that it will move forward with plans to limit consumers' Internet use, Free Press is urging its 500,000 members to voice their opposition to Congress.

"People want more Internet, not less," said Timothy Karr, campaign director of Free Press. "But instead of meeting broadband demand, Time Warner is penalizing consumers for using the Internet. This nickle-and-dime approach flies in the face of efforts by Congress and President Obama to make cheaper, faster Internet a key component of our economic recovery."

Under Time Warner's new pricing model, consumers would be forced to pay excessive penalties for exceeding a low monthly usage limit. The company initially began testing this system in Beaumont, Texas, last year, but recently announced plans to expand the trial to Austin and San Antonio, Texas; Rochester, N.Y.; and Greensboro, N.C. All of these are areas where Time Warner faces no competition with Verizon's FiOS service.

Despite receiving widespread public backlash and opposition from public officials like Rep. Eric Massa (D-N.Y.), Time Warner plans to keep its overage fees in place. Yesterday, the company introduced a basic plan that would cost customers $15 per month for one gigabyte (GB) -- the equivalent of one 30-minute HD television show -- with a penalty fee of $2 for every additional GB over the limit.

"Watch one high-def episode of Lost online, and you're over the limit," said S. Derek Turner, research director of Free Press. "By putting the cost of Internet video at such a premium, Time Warner is obviously trying to ensure that consumers continue to subscribe to the company's cable television service."

Time Warner claims that the limits are necessary for "upgrading network infrastructure." But with hardware, bandwidth and network costs in decline and the company reportedly earning healthy broadband profit margins, many see this as an attempt to stifle the emerging online video market -- a competitive threat to Time Warner Cable's television service.

"Time Warner's new scheme is an innovation killer," Karr said. "Charging consumers penalty fees on top of what they are already paying to download a movie or show will cripple online video. This is a win-win situation for Time Warner. But it's consumers who are the biggest losers. Congress must investigate these anti-competitive practices before they become a nationwide problem."

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