Time Warner Cable to Begin Internet Usage Fees Test (Update1) By Todd Shields June 3 (Bloomberg) -- Time Warner Cable Inc., the second- largest U.S. cable television company, will begin metering Internet subscribers on June 5 in a test in Texas and levy higher fees on the heaviest users.

The test in Beaumont, where Time Warner has 90,000 customers, will run indefinitely as the company gathers data, spokesman Alex Dudley said today. New customers will be subject to extra fees after two months, as will subscribers who upgrade service and exceed usage limits, he said.

Time Warner and other cable operators are wrestling with how to keep high-speed Internet services operating smoothly as demand soars for features such as streaming video that place heavy demands on networks.

``Five percent of our users use over 50 percent of our bandwidth'' or capacity, Kevin Leddy, Time Warner Cable's executive vice president of advanced technology, said in an e- mailed statement. ``Metered billing has the potential to be one of the tools we use to ensure that all of our customers have an optimal online experience.''

The plan offers four options based on data use, measured in gigabytes. For $29.95 monthly, customers get five gigabytes, enough for 350,000 e-mails or 15 hours of standard definition video. Those paying $54.90 get a 40-gigabyte plan allowing 2.8 million e-mails or 124 hours of standard video, Dudley said.

Excess Use

The cost for additional use will be $1 per gigabyte, Dudley said.

The charges are preferable to having companies block Internet access, the non-profit interest group Free Press said in January. The Florence, Massachusetts-based organization also said fees could chill innovation by deterring consumers from using some applications.

Federal regulators are investigating whether Comcast Corp., the largest U.S. cable company, improperly blocked some Internet users. The company says it delayed heavy users at times of peak network demand.

Time Warner Cable rose 54 cents, or 1.8 percent, to $30.28 at 12:59 p.m. in New York Stock Exchange composite trading. The shares had gained 7.8 percent this year before today.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

Last Updated: June 3, 2008 13:03 EDT