msnbc.com news services
updated 4/16/2009 5:13:34 PM ET 2009-04-16T21:13:34

Time Warner Cable Inc. is shelving its plan to bill customers based on how much Internet traffic they generate, following mounting public and political outcry.

Time Warner Cable's capitulation doesn't bode well for the future of metered billing of the Internet, in which people who use more bandwidth pay more.

Frontier Communications Corp., a Time Warner Cable rival in one key test market, Rochester, N.Y., also has dropped its plans for metering Internet use.

"We have gotten hundreds of calls from Time Warner customers into our call centers," said Ann Burr, the head of Frontier's Rochester unit, in an interview with The Associated Press. "I guess it's been a public relations crisis for Time Warner."

Stamford, Conn.-based Frontier had 579,900 Internet subscribers at the end of the year. New York-based Time Warner Cable had 8.7 million, making it the third-largest Internet service provider in the country.

The cable company started testing metered billing in Beaumont, Texas, last year, offering plans with 5 gigabytes to 40 gigabytes of monthly traffic, then charging $1 extra for each gigabyte over that.

Many ISPs cap their subscribers' monthly traffic usage, but the thresholds are usually much higher — at Comcast Corp., it's 250 gigabytes. It's also very unusual for ISPs to charge extra when customers go over their limits.

By charging by the gigabyte, the cable company said it hoped to shift the cost of providing Internet service, and the cost of upgrading the network, from those who use the Internet the least to those who use it the most. All ISPs find a small percentage of Internet users consuming most of the bandwidth, usually by downloading or watching movies.

But Lauren Rich Fine, research director for ContentNext Media, called consumption-based broadband billing "a huge step backwards."

She added, "Inner-city youth's ability to go online is the best way to give them broad access societally. Consumption-based models will end up being a bigger burden on less affluent people."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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