The Wall Street Journal has more coverage on the ongoing battle over net neutrality and pricing access to the Internet (Carriers Eye Pay-As-You-Go Internet, Oct 21, 2009). The article presents usage-based pricing as an ISP’s major threat.
“This could come down to carriers saying, ‘If you don’t allow us to manage our networks the way we see fit, then we will just have to cap everything,’ ” says Phillip Dampier, a consumer advocate focusing on technology issues in Rochester, N.Y. “They’ll make it an either/or thing: give them more control over their network or expect metered broadband.”
Apparently Time Warner Cable has run trials of usage-based pricing up the flag pole only to find that no one saluted. AT&T has also test pay-as-you-go pricing in a few markets with the following schedule:
To put these numbers in perspective, the average user downloads 15 gigabytes a month according to the article while 150 gigabytes is enough to download some 30,000 songs.
Of course, the naysayers insist that access without fear of crossing some limit is critical to Internet innovation. This essentially comes down to saying that no one would have ever tried illegally down songs on Napster if they had to pay their Internet service provider for each file. I find this something of a dubious argument. Yes, it is good to get things cheap but time and convenience also matter. Early adopters will be willing to experiment on the Internet as long as the basic experience is good. I am not convinced that unlimited access is essentially to making that happen. Indeed, most of these stories claim that is a few heavy users that really impact network performance.
I think that the real issue is that the telecoms have already backed themselves into a corner and will find it very hard to introduce usage pricing. That is, I am not sure this is a credible threat. There are two issues. Basically every telecom now pushes bundled pricing with phone, TV, and Internet all tied together. The fact that they all push these packages suggests that they like locking in customers and that the relatively opaque pricing of the bundle is advantageous. Breaking out usage for Internet only – which gives people more reason to shop for Internet service – doesn’t fit within that plan. Second, I have no idea how much broadband service I – or more accurately my household – uses. ISPs will need to educate customers on their needs before they can roll these programs out and that will be at least time consuming if not really expensive.