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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: This is pointless
By lordatreus on 5/1/2009 2:11:34 AM , Rating: 2
quote:
Isn't that like cutting off your nose to spite your face? So you'd rather spend $500+ a month for a 1.5mb T1 connection than pay 40 or 50 bucks a month for a 8mb connection from a leading cable company?

Here in Canada I currently pay $55 per month for a 10mb connection capped at 95 GB. If I go over my allotted monthly cap, it'll cost me $2 per additional GB up to a maximum charge of $25. So technically I have unlimited downloads if I am willing to pay $80. I consider this pretty reasonable if it means I'm always guarenteed my 10mb of bandwidth.

Let's face it, bandwidth is a limited resource, and the demand for it is growing faster than the infrastructure is. The reality is, you have to pay for it one way or the other. We may complain about caps, bandwidth, etc. But I remember getting my first cable internet connection back in '98 and paying $40 a month for 750kb of bandwidth and I thought it was great, at least compared with what I had prior to that, a 56k modem dialup connection.

All in all, while I agree that cable companies should provide a fair service and do what they can to improve customer satisfaction, I don't think there's some big conspiracy by cable companies to gouge their customers. I think if you asked any executive that worked for a major cable company, they would tell you that their profit margins are no different than any other company.

FYI, I don't work for a cable company, just trying to balance the argument.


I live in Canada too and I just had to step in on this comment.
You are obviously talking about Rogers and I hate people with your mentality as it's bad enough we already have practically no choice when it comes to high speed providers as it is but when consumers like you don't see when a company is playing the boil the lobster slowly game you don't realize it.
Cable and DSL prices have increased over time and they increase depending on the speed of your access already.
Why do you think you are paying increased prices over time if not for the equipment and lines they are upgrading to keep up with the speed offering to you?
If you were a customer of High speed DSL or Roger's for a long period of time you would remember somehow they used to be able to offer you lower speeds for obviously a smaller price.
Speeds available rose because of the technology and we could purchase higher speeds at higher prices.
And then silently they introduced bandwith pricing structures and made them as easy to stomach so the sheep wouldn't realize they were being led into the barn.
So the customers accepted it and now it has stuck and the precedent has been set.
Do you really think that $2 per additional GB will stay the same or do you think they will raise it to say... $3 saying it's more expensive blah blah.
And then of course eventually they will remove the maximum charge.
Our Canadian companies are only more sensible from a business standpoint on how to get the money out of us than the Time Warner grab they are just as money hungry and you will see prices slowly increase just as you might have noticed they keep doing.

Incidentally I work for a Telecom and I happen to know from a Canadian backbone standpoint between Roger's , Telus, Videotron, Allstream, Bell, the consumer markets are not even close to saturating what is in place.
And while a new 10 Gig access card on a GSR, Optera or what have you usually costs in the tens of thousands you buy these things once and trust me you make the money back.

Charging for bandwidth is the company reaching into your pocket because you don't know how they are set up period.
We have no choice though so I pay like everyone else but I damn well dont approve of it.


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