Time Warners Usage-Based Billing Is Bad Business

UBB an ‘Operational Misstep’

Time Warner Cable (TWC), the second largest Multi-Service 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 gobble up fifty percent of the bandwidth. A new Insight by Strategy Analytics, “Usage-Based Broadband Billing: Where’s the Love?” 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.

“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 market.”

About Strategy Analytics
Strategy Analytics, Inc focuses on market opportunities and disruptive forces in the areas of Automotive Electronics and Entertainment, Broadband Connected Home, Mobile & Wireless Intelligent Systems Implementation Strategies and High Frequency Market intelligence. Headquartered in Boston, MA, with offices in the UK, France, Germany, Japan, S. Korea and China, Strategy Analytics works with clients through annual multi-client services, management team workshops and custom consulting engagements. For more information, please visit http://www.strategyanalytics.com