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Time Warner halts metered billing tests

Time Warner Cable says it is suspending its trial of a new billing system that charges customers if they surpass a monthly cap on downloads.

Time Warner Cable has put the brakes on a trial that was testing its new "consumption-based billing" system for its broadband service, the company said Thursday.

Chief Executive Glenn Britt said in a statement that there has been "a great deal of misunderstanding" by consumers and lawmakers who have criticized the plan.

Britt said that the company still believes that consumption-based billing may be the best way to handle rising network costs among its heaviest bandwidth users. But he conceded the company will not proceed with tests until it consults further with customers and interested parties.

Sen. Chuck Schumer (D-N.Y.) and Rep. Eric Massa (D-N.Y.) announced Time Warner's change of heart during a rally in Rochester, N.Y., the Rochester Democrat and Chronicle reported earlier on Thursday.

Massa, who represents Rochester, was an early opponent of the plan and has promised to introduce legislation that he has said would protect consumers against companies introducing tiered services, such Time Warner's proposed billing plan.

Massa is still not giving up on his legislation that would ban metered billing.

Time Warner had quietly been testing its metered billing service in Beaumont, Texas, since last year. But last week, the nation's second largest cable provider said that it was planning to expand the test of the bandwidth caps to other cities, including Austin, San Antonio, Rochester, N.Y., and Greensboro, N.C.

The way the plan worked is that Time Warner would cap data downloads and uploads at 10 gigabytes to 60 gigabytes a month with prices ranging from $25 to $65 per month, depending on the region. The company also planned to introduce a new plan that would have offered 100GB of downloads for $75 a month. Additional downloads would be charged $1 a GB with a cap of $75 on the extra fee, essentially making an unlimited plan cost $150 per month.

Time Warner said that it was testing metered billing because some of its subscribers were using an inordinate amount of bandwidth. And as more video and peer-to-peer services come online, the company said that it needed a new business model to handle the rising cost of maintaining and managing its network.

But consumer advocates have argued that Time Warner is simply trying to protect its cable TV business by making it very expensive for users to watch competing video services online. Public Knowledge, one of the more vocal opponents to Time Warner's metering plans, was pleased with the company's decision to table the tests.

"The company properly listened to its subscribers, the public, and policymakers, all of whom were highly critical of the proposition in the first place," Gigi Sohn, president and co-founder of Public Knowledge, said in a statement. "It quickly became clear the plan had nothing to do with managing Time Warner's network, and everything to do with increasing profits at the expense of captive customers in an uncompetitive broadband market."