Print 106 comment(s) - last by Hieyeck.. on May 4 at 8:21 AM

ACA claims metered pricing is the only sustainable pricing model

Consumers continue to be outraged when cable companies try and move from flat fee models for internet access to tiered pricing plans based on usage. Early dial-up ISPs tried the pay per usage plan and found across the board that unlimited usage scenarios were much more popular with customers.

Today, broadband connections around the country for the most part are unlimited and users can download as much content as they want (in theory). The reality is that most ISPs today already attempt to throttle users who use what is deemed excessive bandwidth. At the same time, many ISPs are pushing new tired pricing plans that force users to pay significant fees for each gigabyte of data downloaded or transferred after what are typically very low monthly allotments of bandwidth.

Time Warner was the most recent large ISP to announce trials of tiered pricing that would have seen customers paying $150 per month for unlimited bandwidth as opposed to the roughly $40 per month an unlimited plan costs today. The outrage from customers and lawmakers was much stronger than Time Warner had anticipated and the company announced that it would be dropping its tiered Internet pricing plans for now.

According to the American Cable Association (ACA), metered bandwidth Internet pricing is coming and will be a necessity. According to Patrick Knorr of the ACA, his company, Sunflower Broadband, is already charging customers metered rates for internet access and has been doing so for several years.

The ACA argues that metered pricing is going to be a necessity as demand for bandwidth increases with the adoption of high-bandwidth video services. According to ACA chair Steve Friedman, the metered charges are not intended to inhibit content, but to ensure quality of service for all customers using the service. Friedman says he isn’t sure that Time Warner did a good job explaining that. That rationale is the same used by cable companies when they tried to block certain types of content with the claim that it was to prevent piracy and offer quality service to all users.

ACA President Matt Polka says that while metered internet is in early development, that outcome is certain. Polka claims that there is no limit to the build-outs that ACA members have to do to meet customer demand and with new services coming ACA member simply won't be able to support all of that at $40 per month.

Polka likens internet usage to his heating bill saying that he would like to pay the same amount year round, but in the winter when he uses more, he has to pay more. If Polka's heating company suddenly decided that he was only allowed 4 cubic feet of gas before an overage charge of $2 per cubic foot was assessed to support the need to install more gas pipelines to "ensure quality service," he might feel like the majority of Internet subscribers do.

Knorr insists that bandwidth-based billing is the only way to manage infrastructure and that it is simply a case of raw math that the infrastructure to accommodate the growth in HD downloads isn’t there at this point. He continues saying that the only way to rationalize a business model is to put some of the responsibility on the subscriber.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: In theory....
By MozeeToby on 4/29/2009 12:17:58 PM , Rating: 5
Exactly, every time a city tries to take over a service that should be private it all goes to hell.

Ok, seriously now. Look at all the cities that have city run trash collection, water, sewer, power, and gas. Thousands of cities in the US run these utilities as well or better than private enterprise could.

Then there's a whole group of services that could (in theory) be privitized that no one argues for. Police, fire department, and roads come to mind. No reason they couldn't be performed by private enterprises, except for the fact that the city can do it better.

RE: In theory....
By BailoutBenny on 4/29/2009 4:56:57 PM , Rating: 1
How about we actually try privatizing that stuff to see what would happen, then we could make the claim that the city could do it better. The fact is we would have to completely deregulate everything and have a true free market in this country to pull that off. The big companies don't want that because they like the suppressed competition. Regulation BENEFITS industry, despite what the companies would like you to believe. They moan that it will hurt their business with competition and cost so much but they will pass the cost on to their customers and in reality it prevents competition.

The government won't give up control of whatever they control now because they want you dependent on them. Dependency = money and power. If people started realizing that they didn't need the government, all those politicians with money and power would start to feel threatened. Being a politician is extremely lucrative and much like anyone else who feels threatened that their money and power will be taken from them, they will fight back to keep it.

For the free market to work it has to be free. Free from ALL regulation and other government intervention. It requires well defined and enforced private property rights and well defined and strictly enforced contract law, neither of which we have in the US.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
Related Articles

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki