Remember a few days back when I offered some simple suggestions of what Time Warner Cable could have done to reduce the firestorm of negative publicity and word-of-mouth advertising they’ve received over their new broadband billing structure? If not, read this post before you continue.
Today, it appears that Time Warner is doing some serious backstroking. The COO of the company, Landel Hobbs, has released a letter in an attempt to do a little damage control. In the letter he states that,
“We realize our communication to customers about these trials has been inadequate and we apologize for any frustration we caused. We’ve heard the passionate feedback and we’ve taken action to address our customers’ concerns.”
Who allowed the communication ball to drop? He continued by saying,
“With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially. That’s a good thing; however, there are costs associated with this increased Internet usage. Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40% a year. As a facilities based provider, we’ve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself.”
He then explained that the cost of doing business is increasing as consumers Internet consumption increases and followed that with,
“If we don’t act, consumers’ Internet experience will suffer. Sitting still is not an option. That’s why we’re beginning the consumption based billing trials. It’s important to stress that they are trials. The feedback we’ve received from our customers has been very helpful. We’ve made changes to the terms in our current and upcoming trial markets as follows:”
This is a really important part of the letter. He has addressed that they screwed up a bit, and this is what their doing to correct the issues,
“To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.
We are increasing the bandwidth tier sizes included in all existing packages in the trial markets to 10, 20, 40 and 60 GB for Road Runner Lite, Basic, Standard and Turbo packages, respectively. Package prices will remain the same. Overage charges will be $1 per GB per month.
We will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.
Overage charges will be capped at $75 per month. That means that for $150 per month customers could have virtually unlimited usage at Turbo speeds.”
There is no doubt in my mind that Time Warner has done serious damage to their image in these trial markets and it is highly likely that they will lose customers. I’m extremely shocked that a company of this size didn’t handle this differently. Was everyone on vacation? Did they not think to do focus groups of some kind to determine they needed to further alter the new billing structure, per the additional changes announced in the letter from the COO? Lastly, could they have not picked a better economic climate to implement this test?
One thing I have learned over time is that no matter how much your customers love you, the minute you mess with their money in a negative way they will abandon ship quicker than you’ve ever imagined.
