Time Warner needs to work on its internal memo mechanism, because apparently someone at either HBO or Time Warner's Road Runner broadband service didn't get one last week. At the same time that Time Warner is busy planning a trial of usage based billing for web access in an attempt to stem network congestion resulting from the growing popularity of online video, HBO is also readying trials of its streaming video and movie service. Huh?

The HBO on Demand service is being rolled out to customers of HBO in Wisconsin who are also users of Time Warner's broadband cable Internet access product. The HBO service will make a rotating list of 600 movies and shows available each month for online streaming.

The usage capped broadband, meanwhile, is going to be tested sometime in the next quarter in Beaumont, Texas. So for the time being, the two services won't overlap.

According to Time Warner, the reason for the trial of usage based billing net access, is because the growing popularity of online video is causing congestion on their network. Why, then, introduce a service at the same time that will only serve to increase the amount of online video being downloaded over your network? Of course, by tying the HBO service to the Road Runner broadband service, Time Warner is essentially passing the cost of a "free" product to consumers by raising rates elsewhere.

If Time Warner wants to encourage users to stream more video over its network, it can't also penalize users who stream more video over its network.

As Ars Technica points out, the whole thing is short-sighted. Per usage billing won't fly with consumers who have unlimited use broadband options elsewhere, and competition is only going to get stiffer for the cable industry. Verizon, for example, has no plans to try usage caps with its DSL or FiOS services, and on the horizon we can look forward to 4G wireless broadband, a possible wireless broadband service on the 700MHz spectrum being auctioned off starting this week, and Sprint's Xohm WiMAX network. Not to mention continued roll-outs and improvements of Verizon's FiOS and AT&T's U-Verse services.

"Instead of developing plans designed to discourage consumers from feeding at the bandwidth trough, cable companies would be better served in the long run by making investments in new technologies like DOCSIS 3.0 and the kind of infrastructure improvements necessary to meet bandwidth demands," writes Ars Technica's Eric Bangeman. It seems likely that in the face of competition and potential consumer distaste over proposed usage limits and practices like bandwidth throttling, cable companies may be forced to make just that type of investment, even though it might be unpopular with shareholders.