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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.

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RE: competition?
By Oregonian2 on 4/29/2009 3:36:07 PM , Rating: 2
I agree with you 94% (which is mostly!).

Governments do have a slight advantage in terms of probably having lower capital costs (their bonds may be tax deductible, and have a lower rate) plus the obviousness of not "needing" to profit off of the investment and that they are probably can incorporate some of the overhead of billing and/or building space with existing city services.

Probably not a dramatic advantage, but perhaps enough to make competition impractical for services (not saying that it does, but it's not unreasonable that it *might*, depending upon a particular city's circumstances).

RE: competition?
By Oregonian2 on 4/29/2009 3:38:37 PM , Rating: 2
P.S. - Also cities charge ISPs (etc) fees to dig up roads, they charge yearly to allow ISPs having their lines 'be' there (I know cities here do), etc. A city may not charge itself those fees. :-)

RE: competition?
By AEvangel on 4/29/2009 6:15:39 PM , Rating: 2
Which why they cannot compete with the city fairly, but had TWC and Embarq not stifled advancement in that area and/or provided the service with out gouging the customer then the city and the community would have never have had to gone to the length they had gone to in order to get the service they were asking for at a price that was fair.

That is really the problem here it's not that I would have a problem with higher prices as long as they were justified but their not, it's just simply the cable companies gouging people for lack luster service.

Also what is to stop them from providing wireless service themselves that would eliminate allot of overhead(cables), but instead they keep stifling advancement and maximizing profits, because for them it's cheaper to buy off politicians and file law suits then to actually give the customer what they want.

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