Free Press: Metered Billing Going Nowhere FastGroup suggests throttling vs. metering a bogus debate...
(
old news - 02:46PM Monday Aug 11 2008)
tags: prices · business · bandwidthThe FCC's
decision to "sanction" Comcast for throttling P2P traffic has shifted the network neutrality discussion from throttling to caps and metered billing. Sanford Bernstein analyst Craig Moffett, frequently a well-quoted cheerleader for the cable industry, suggested to a number of news outlets last week that if Comcast can't throttle (which they still can if it's transparent and targeted), usage based pricing is their "
only viable option." That clearly annoyed consumer group Free Press, who issued an
essay (pdf) saying that the supposed need for either a throttled or metered connection is a "false choice."
The arguments for the “need” to switch to limitation pricing essentially rest on the premise that we’ve somehow reached a magical bandwidth threshold that throws the entire industry pricing model out the window. We are being told that despite predictable growth, supply can no longer keep up with demand. The old "oversubscription" model has failed, and the only way to recoup costs and manage user behavior is through metered pricing.
In reality,
analysis shows that Internet growth is more than manageable with fairly inexpensive network upgrades. Particularly egregious users, whom ISPs say consume the vast majority of network resources, can simply be migrated to more expensive (and perhaps even business) tiers. Carriers are primarily interested in metered billing as a way to minimize the competitive impact of broadband video on their TV revenues. For their part, Free Press seems convinced that despite all the talk of metered trials, nothing will actually come of them:
It is quite reasonable for prices to reflect costs. But there is simply no indication that the underlying cost
structure of the ISP market has been or will be radically transformed by the predictable increases in bandwidth consumption. It is likely that ISPs will once again abandon this flirtation with limitation pricing and instead shift to more sensible solutions.
AT&T, Comcast and Time Warner Cable are all exploring the idea of usage-based billing. AT&T recently called such a pricing migration "inevitable," and a company spokesman repeated that position to me this morning.
"Given the usage trends we're seeing, a form of usage-based pricing for those customers who have abnormally high usage patterns is inevitable," says AT&T spokesman Brad Mays. "Usage based pricing is one way to deal fairly with Internet usage, which is very uneven among broadband users."
