Verizon CTO: Metered Bandwidth Is Inevitable
Telco's Tech Chief Says Flat-Rate Pricing Isn't Sustainable
Todd Spangler -- Multichannel News, 9/29/2009 4:57:24 PM
Broadband Internet service providers will need to charge customers based on usage at some point, Verizon Communications chief technology officer Richard Lynch said at an industry conference Tuesday.
"We're going to have to consider pricing structures that allow us to sell packages of bytes, and at the end of the day the concept of a flat-rate infinitely expandable service is unachievable," said Lynch, speaking at the 2009 FTTH Conference & Expo in Houston, according to GigaOm.
The issue of bandwidth metering has been politically explosive, at least in the U.S.
Time Warner Cable this spring was attacked by politicians, interest groups and individual subscribers when it proposed to expand tests of usage-based Internet billing to four markets. The company shelved the plans, "until further consultation with our customers and other interested parties, ensuring that community needs are being met," Time Warner Cable CEO Glenn Britt said in a statement at that time.
But according to Lynch, service providers "cannot continue to grow the Internet without passing the cost on to someone," Telephony Online reported.
While he said Verizon was "not announcing a new pricing plan," Lynch noted that wireless data providers already charge based on consumption because of bandwidth constraints.
The model of charging Internet users for what they use has been instituted by major providers in Canada, including Rogers Communications and Cogeco Cable, as well as those in the U.K. and New Zealand. In the U.S., AT&T has been conducting usage-based billing trials. Comcast, Cox Communications and Charter Communications impose monthly maximum-usage limits but currently do not bill for additional bytes consumed.
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We operate the networks at the University of Wisconsin-Madison, as well as WiscNet, the statewide ISP serving schools and other public-sector customers.
Sorry to present evidence to the contrary. Our cost of Internet traffic has been going down for years. As Ethernet capacity goes up, the cost-per-bit goes down. We do not increase cost to customers if their consumption increases.
Note that this takes extraordinary planning and strategy.
But in the big picture, the inevitable direction of bandwidth cost is down.
Dave
David Devereaux-Weber, P.E. - 10/19/2009 1:52:20 PM EDT -
The most shocking aspect of his statement is how sensible it is. Today it's like paying a fixed electrical bill regardless of how many lights you leave on. A lot of confusion is created around Net Neutrality, but that comes down to your electric company dictating what appliances you can buy. That shouldn't happen except for compatibility issues (got to be 60Hz, 120v, etc.) Same with broadband -- stay compatible but if someone uses a lot, they naturally pay more.
Jim Gable - 10/7/2009 11:52:31 AM EDT -
This is just another excuse to line the pockets of the executives and shareholders. Residential customers already have limitations. Residential Verizon ADSL customers have to go through weeks and weeks of phone calls to tech support to get their data path changed from interleaved to fast so they can have decent latency. Cable customers have monthly usage caps and traffic policing. Providers advertise fast speeds and make it sound like you are getting exactly what they are advertising. They need to realize most people don't only surf the web and download baby pictures through e-mail. Providers get enough money for the high costs of residential services, and provide as little as possible to the customer. For me, it's been a week and a half on the phone with Verizon to try to get my data path changed from interleaved to fast after a 7M ADSL bandwidth upgrade. It still has not gotten done. And they have the nerve to impose metered billing on me?
Now, once we talk about a business account where you pay a couple hundred to a couple thousand dollars per month, no limitations or restrictions at all. Circuits are always working, and problems are fixed within a day.
Jonathan Rizzo - 9/30/2009 2:33:03 AM EDT
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