Time Warner Cable is giving itself the option of imposing bandwidth caps with the introduction of new service agreement terms. Discovery of the new terms have led to an uproar among consumer advocates on the Web.

The company has made no public statement about reviving the expansion of testing of bandwidth caps, or of instituting the technique on a commercial basis.

Earlier this year, TWC said it would expand its tests of bandwidth caps from Beaumont, Texas, into several other markets, but backed off when consumer groups protested and convinced several congressmen to consider intervening. TWC backed off the plan to expand its tests.

Some interpreted that as a disavowal of service caps, but that was never the case. Quite the opposite – CEO Glenn Britt called the whole thing a misunderstanding and talked about having to educate the market.

The entire communications industry was unprepared for the rapid and enormous increases in Internet traffic over the last few years, spurred in large part by the unanticipated popularity of Web-based video. The cable industry’s position is that its broadband network resources are not infinite and so, given the circumstances, must be managed. Imposing bandwidth caps is just another management technique. TWC is leading the effort in the U.S. to introduce that management technique and, as Britt indicated, educating people about bandwidth caps is going to be a prerequisite.

Part of the education effort was equipping all TWC systems with software that can meter usage and provide each individual customer notice of his or her usage (story here). That capability was cited by Rogers Cable as critical to its success in preparing its customers for the introduction of bandwidth caps.

The introduction of the new service terms is apparently the next step in TWC’s education campaign. TWC now explicitly reserves the rights to introduce bandwidth caps and to take steps to penalize those who exceed their caps.

Here is the relevant language in the new service agreement (from GigaOm).

6. Special Provisions Regarding HSD Service.

(ii) I agree that TWC or ISP may change the Maximum Throughput Rate of any tier by amending the price list or Terms of Use. My continued use of the HSD Service following such a change will constitute my acceptance of any new Maximum Throughput Rate. If the level or tier of HSD Service to which I subscribe has a specified limit on the amount of bytes that I can use in a given billing cycle, I also agree that TWC may use technical means, including but not limited to suspending or reducing the speed of my HSD Service, to ensure compliance with these limits, and that TWC or ISP may move me to a higher tier of HSD Service (which may result in higher monthly charges) or impose other charges and fees if my use exceeds these limits.

(iii) I agree that TWC may use Network Management Tools as it determines appropriate and/or that it may use technical means, including but not limited to suspending or reducing the Throughput Rate of my HSD Service, to ensure compliance with its Terms of Use and to ensure that its service operates efficiently. I further agree that TWC and ISP have the right to monitor my bandwidth usage patterns to facilitate the provision of the HSD Service and to ensure my compliance with the Terms of Use and to efficiently manage their networks and their provision of services. TWC or ISP may take such steps as each may determine appropriate in the event my usage of the HSD Service does not comply with the Terms of Use. I acknowledge that HSD Service does not include other services managed by TWC and delivered over TWC’s shared infrastructure, including Video Service and Digital Phone Service.

Spokesmen for Time Warner Cable were not immediately available for comment.

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