UPDATE - 3 p.m. Time Warner announced this afternoon it is scrapping plans to test-run its metered-internet pricing plan because of initial reaction from customers.

In a statement Time Warner Cable Chief Executive Officer Glenn Britt had this to say:

"It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on
consumption based billing. As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met. While we continue to believe that consumption based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process."

In the release the company went on to say that they plan to roll-out tools for customers to measure their bandwidth use in the home. Seeing as that was one concern of critics - how is the average customer supposed to know how much bandwidth they use - it likely means Time Warner still has hopes for the usage-based pricing plan.

This saga is far from over.

Original post continues below:

You have to wonder with all the outrage being spilled on the Internets about Time Warner's plans to go to usage-based billing for broadband Internet, how much would people be paying to take shots under a new system?

If there is one thing that sets the Internet on fire faster than a celebrity freak-out, leaked film footage (also, sex tape footage), or a glitch that makes thousands of books disappear, it's when you threaten people's ability to get what they want online.

Last week, Time Warner rolled out a trial plan to go from a flat-rate pricing system for Internet service to a model based on Internet usage.

This is not entirely new. Time Warner tried to quietly start testing usage-based broadband pricingin Texas in January 2008. But now the plan is spreading out, leading some to worry it could become a reality for all Time Warner customers soon. For the time being the new pricing models are being test run in a handful of cities, including Rochester, NY, and Greensboro, N.C.

According to Time Warner, the basic package would start at 1 GB and would cost $15 a month, up to a Road Runner Turbo 100 GB package costing $75 a month. The catch here is that under the new system, going over your monthly allowance results in a fee, $1 - $2 per GB.

This is potentially problematic if you plan on watching more video online, downloading music, playing online games or using any bandwidth-hungry applications. This past February, 75.5 percent of the total US Internet audience watched online video, according to ComScore, with 13.1 billion videos viewed during the month. Thanks to sites like Hulu and others that's only going to increase.

As the crew over at GigaOM point out, Time Warner's top-shelf, unlimited broadband plan roughly works out to how much it would cost if you used broadband for all your TV, Internet and phone needs.

Already sensing the rage, Time Warner's early response has been that the change is needed because as the use of broadband expands, so does the cost of doing business. Specifically, they say among their high-speed Internet customers the usage is increasing by 40 percent a year.

But in some communities, like Maine, where the competition for broadband service doesn't exist (or in the case of Fairpoint, is ramping up), does Time Warner's plan amount to unfair limiting of access, or is it just the free market at work?

I contacted Time Warner Cable of New England's spokesman for comment on whether they've received questions or concerns about the change from Mainers. Spokesman Peter Dewitt promised to get back to me by 1 p.m. today, but e-mailed to say he was still gathering information. (I'll update when he gets back to me)

If we keep an eye on Rochester, we might get some clues for Maine. The Rochester Democrat and Chronicle Editorial Board had a few questions for Time Warner, but the company pulled out of an editorial board meeting at the last minute. Possibly because the meeting was supposed to be broadcast online. (But wouldn't that translate into dollars for TW?)

(Strangely enough, a Time Warner competitor in the Rochester area has dumped plans for its own metered internet plan. That translates into dollars for them.)

Rochester's congressman is not happy and is apparently looking into legislation to stop metered broadband pricing.
And already one consumer advocacy group is looking for a Congressional investigation into broadband metering.

Sound Off: Is Time Warner's plan unreasonable? A justified response to broadband's growth? The hammer coming down on the wild west days of Internet access?

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