News

Verizon CTO Says Users Will Pay Per Byte

10/03/2009 2:00 AM Eastern

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 last week.

Lynch’s remarks, at the 2009 FTTH Conference & Expo in Houston, appeared to be the first time one of the telco’s executives has backed the idea of consumption-based pricing.

“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, according to technology news site GigaOm.

The issue of charging Internet users based on bandwidth usage has been politically explosive, at least in the U.S.

Time Warner Cable this spring was attacked by politicians, interest groups and 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,” said Time Warner Cable CEO Glenn Britt in a statement at that time.

According to Verizon’s 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.

Consumption-based billing 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.

Several major U.S. providers — including Comcast, Cox Communications and Charter Communications — impose monthly maximum-usage limits but currently do not bill for additional bytes used. Instead, they alert individual subscribers if they’ve exceeded the caps.

Last week, Cox increased the maximum data-usage limits for broadband customers, including more than doubling the limit for its popular Preferred package to 200 Gigabytes per month. Also, while the operator previously specified different bandwidth allowances for downloads and uploads, the operator has combined those into single caps representing all bandwidth used.

September