ACA Summit: Metered Bandwidth Pricing Is Coming
At Sunflower Broadband, The Practice Has Already Arrived
John Eggerton -- Multichannel News, 4/28/2009 3:31:09 PM
National Harbor, Md. — Metered bandwidth pricing for Internet service is coming, said cable executives gatherered for the American Cable
Association's annual summit here Tuesday.
Patrick Knorr of Sunflower Broadband, currently ex-officio chair of ACA, pointed out to reporters during a press
conference that his company has been employing metered pricing for the past four years. For his part, current ACA chairman Steve Friedman said his company, Wave Broadband, is gearing up for metered pricing. It has not been deployed yet, he said, while the company focuses on informing customers about it
Both were joined by ACA President Matt Polka in arguing that such pricing will be a necessity going forward as
they become broadband companies rather than just cable companies and the demands for delivering high-
bandwidth-consuming video and other services increases.
Friedman emphasized that they were not out to inhibit content but to insure quality service for their customers,
saying he wasn't sure Time Warner Cable had done a very good job of explaining that. Time Warner Cable caught grief from some lawmakers and advocacy groups over testing metered pricing, and was forced to discontinue testing, at least for now, though it also said metered pricing might need to be the model of the future.
Polka said metered pricing is in the early stages of development, but that "the outcome is certain." He said there was
no limit on the build-outs that his members have to do to meet customer demand, and with new services coming down the pike, his members won't be able to provide all that at $40 per month. He said he would like to pay the same price for heating bills all year round, but that he has to pay more in those Pittsburgh winters when he uses more.
Knorr added that the grandmother who just wants to read e-mail should not have to subsidize the HD movie afficianado or the college kid who wants to download a bunch of movies to watch later. Knorr said his company currently caps low-end use at one gig, with a $2 per gig overage charge. The company, according to Knorr, is reviewing that, and adds that it can be as low as 50 cents per gig for blocks of extra bandwidth.
Knorr says bandwidth-based billing is the only way to manage infrastructure. He says that its simply a case of raw math that there is not enough infrastructure to accommodate the growth in HD downloads.
Unlike satellite, broadcast and cable, the Internet is not a particularly efficient way to deliver that high-resolution video, and that there has to be a way to rationalize his business model by putting some of the responsibility on the customer. Knorr suggested that if the government stepped in intervene in metered pricing, he could hear customers of the future complaining that they only wanted to pay for what they used. Does that sound like an argument you have heard before, he asked reporters.
A flat rate, he said, "is not a sustainable business model."A la carte for the net," he said, " is consumption-based billing."
ACA members are in town for some facetime with legislators and regulators, where Polka said one of the conversations would be about metered pricing.
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I am very happy to see metered access finally becoming mainstream. However, I believe that any company considering "metered" internet access should check the United States Patent Office (USPTO) as there are several patents issued regarding this technology. I know of one company: Slingshot Communications out of Arizona that has a couple of patents for "metered" internet. I started using Slingshot back in 2001 and have been quite happy with their solutions from dialup to dsl and now mobile broadband.
Blaze Christian - 4/29/2009 4:43:11 PM EDT -
Consumption-based billing is fine. Charging a dollar a gig of bandwidth, when the actual market-cost of a gig of bandwidth is something on the order of a fraction of a cent, is NOT fine.
How can Cablevision in New York City offer unlimited usage at 101Mbps for $100 a month when these companies can't seem to offer 50Mbps at $150 a month or more when these policies go into effect?
This is what happens when competition is stifled.
Jeremy Schrimpf - 4/29/2009 10:15:00 AM EDT
