Broadband Reports breaks a story that I (sort of) got wind of last week: Time Warner is testing a broadband usage-based system in at least one cable system. The cable operator is mounting a test effort to charge customers who consume a lot of bandwidth more for their extra use of the pipeline.
However, the primary goal of a consumption-based system isn't to generate new revenue streams. It is to implement a pricing-based way of managing the network, particularly given that efforts on the part of cable companies to "throttle" applications or to otherwise implement traffic prioritization have already caused stinging backlash among consumers and in Washington.
Although some folks think a broadband usage meter would be decidely anti-consumer, in fact it's the opposite, economists say. The most efficient way to solve any bandwidth bottleneck is through pricing and not through awkward mechanisms such as traffic throttling.
Indeed, I mentioned this metered bandwidth rumor yesterday to Wharton's Gerry Faulhaber (who will serve as a moderator at The Internet Video Policy Symposium) and he drew the parallel between this kind of metered system and the 2003 imposition of $8 tolls placed on cars that drive into the center of London. Two months following the implementation of the toll, traffic into the heart of London dropped 20%, relieving congestion on the city's overburdened thoroughfares.
But, political and technical realities may make metered broadband usage a greater idea in theory than in practice. First, consumers are accustomed to flat-rate, all-you-can-eat broadband service pricing and any deviation from this well-accepted concept is likely to spark suspicions of why broadband providers would change pricing models.
It doesn't help that emerging third-party Internet video services, such as Hulu, the joint venture by NBC-U and News Corp., or even Google-owned YouTube, would be the first Internet services to feel the pain of metered billing. Given that cable and phone companies are the leading multichannel TV video service providers as well as the top broadband service providers, it's almost certain that web-based video service rivals would see anti-competitive intent in metered usage.
Moreover, it's not easy to measure bandwidth consumption. Unlike increments of time, which mobile voice providers use as the basis for their metered usage billing plans, bandwidth is messy and subjective and it's hard to pinpoint exact levels of usage.
Time Warner will presumably get answers to the measurement question in its test-bed(s). Whether consumers, competitors and regulators will accept metered plans won't be as easy to answer.
Cynthia Brumfield at 5:59 PM|Comments(2)
Dear Anon,
In terms of cable systems, right now the architecture of the networks allows operators to track bandwidth consumption very well down to nodes, which feed multiple homes. But, below the node, the systems aren't very well configured to specify precisely which homes are consuming what, and as far as I know, not a lot of good technology has been developed to assist in the process (although Time Warner must be using something new in its test bed). When bandwidth hogs are suspected, the tracking can be done on a manual basis, but it's very labor intensive.
In addition, there's a tricky issue of high-bandwidth content (video players that launch when pages load, etc.) getting pushed to users without their explicit permission, and some consumers might dispute tallies of bandwidth consumption as higher-bandwidth content becomes standard on web pages.
Cell phone networks are truly closed environments where data transmission can be easily tracked. This is not true on the iPhone, for example, which is one reason why, I think, that AT&T offers unlimited data usage with the Apple device.
Posted by: Cynthia Brumfield at January 17, 2008 10:01 PM
"Moreover, it's not easy to measure bandwidth consumption."
Huh?
Wish you'd have elaborated on this point.
Other countries have been charging for data.
Some cel-phone companies *cough*verizon*cough* currently charge rates per kilobyte of data transfer.
I'm left wondering what you is so messy about something that is done all the time.
Posted by: anon at January 17, 2008 7:41 PM
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