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: They dont get it....
By FITCamaro on 4/29/2009 12:39:19 PM , Rating: 5
Exactly. I'm not against a bandwidth cap. I'm against an unreasonable one that stifles innovation of web based services. $55 a month for 40GB? Or even 60GB a month for $60?

They got what they wanted years ago. No competition. So they should either provide a quality service that continuously improves at the rate of the rest of the world at a good price or charge whatever they want for crappy service and lose the right to be the sole provider for an area.

I mean in 10 years we've barely seen any increase in broadband speeds vs. when it first rolled out. I remember reading I think last year about new modems developed in Australia that required no new investments in infrastructure but would drastically raise speeds. Whatever happened to that?

The fact is that if 100 Mbps services were offered, completely internet based high def TV service would be able to be offered by companies other than cable providers. And then cable providers would lose revenue from sales of their TV services. So they have little desire to offer internet at faster speeds.

That is why competition is needed.

RE: They dont get it....
By BailoutBenny on 4/29/2009 4:45:34 PM , Rating: 2
Well Cablevision is coming out with a 101Mbps uncapped super service for 100/mo.

RE: They dont get it....
By FITCamaro on 4/29/2009 6:41:09 PM , Rating: 2
And if I lived in an area where they were, I would get it.

But I live in SC. Belly button of the south.

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads
Related Articles

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