“Adam L. Penenberg”:1, an assistant professor at New York University and assistant director of the business and economic reporting program in the school’s department of journalism, “writes a great piece for Slate”:2 that if Telcos honestly can’t sustain their networks, then they should just start charging people based on usage:
bq. If the telcos and cable companies get their way, we’ll have a Balkanized Web. Content providers who can afford to pay for premium service will market superior products to consumers with fast connections. Everyone else will make do with second-class companies at second-class speeds.
bq. The business model that this most resembles is cable television. There’s one key difference, though. In the cable world, the service providers pay channels for the rights to broadcast their shows. In the system that telco-cable is proposing for the Internet, the content providers—who provide the services that make customers clamor for broadband in the first place—would have to pay for the privilege of being included.
bq. Not all content providers are taking this lying down. Business 2.0′s Om Malik reports that Google has been buying up miles of “dark” fiber — unused fiber-optic cable — at severely depressed prices. Malik believes that Google plans to “blanket major cities with Wi-Fi,” including San Francisco, Washington, D.C., and New York. Given Google’s ethos, its Wi-Fi would probably be free, with revenue derived from targeted advertising. Obviously, the telcos and cable companies would have trouble competing with that. Even if telco-cable is successful in implementing a two-tiered Internet plan, another workaround could be municipal wireless networks, like those being built in Philadelphia. (No wonder Verizon has been fighting them tooth and nail.)
bq. There’s a far better solution than Verizon charging Google to use its bandwidth or Google becoming a service provider itself. What about having subscribers pay for the bandwidth they consume? Just like you buy variable rate cell-phone plans and pay for electricity based on how much you use, your broadband bills should be calculated the same way. That way, heavy Net users could subsidize the Internet for those who don’t use it as often, and access would be available for anybody who wants it. Then content would remain free, and everyone would benefit.
[1]http://www.penenberg.com/
[2]http://www.slate.com/id/2134397/
Filed under: Network Neutrality, News
Paying for what bandwidth is consumed is indeed an interesting concept, particularly when one drills-down to the specific services, yet some who are doing so in other countries long for flat-rate pricing…..
Ewan Sutherland, Executive Director of INTUG, the International Telecom User Group, noted in a speech to a European Parliament Committee on March 16, 2005 regarding wireless data:
“Flat-rate data pricing, what some people call ‘all you can eat,’ is now commonplace in North America and North-East Asia, while in Europe we must pay by the kilobyte. Europe falls further behind on all the obvious measures.” (his overall topic was international roaming and mobile termination rates, which are excessively high in Europe)
In reviewing a number of technology rollouts, one can surmise certain areas of the world are further ahead/behind others…..obviously Mr. Sutherland believes that in this aspect, Europe is behind others, while some in other countries with flat-rate pricing may have just the opposite opinion…..both based on their experiences with one methodology and probably no practical experience with the other methodology.
Admittedly, there can be many reasons why one methodology succeeds in one area and does not in another. However, it is wise to study both the successes and failures of a methodology in various areas to more clearly determine the likelihood of success elsewhere.
Randal Hayes
Randal,
You make some very good points. Unfortunately, there’s no silver bullet. Personally, I believe I would pay less to buy by the minute (or megabyte). I pay over $80 for a 3mbps DSL line, and my prices (and the prices of all broadband in NYC) haven’t budged in 5 years (if not longer). I have to believe that with some basic amount of competition, and a pay-per-use plan, that prices would go down per megabyte, as they have for backhaul bandwidth.
The problem with all-you-can-eat plans is that its too easy for ISPs to hide the behind their pricing. So while their infrastructure costs go down, their prices stay flat.
Yeah, they wish!! It reminds me of the Sony Music vs. Apples iTunes service. It’s all about that envy: Google makes loads of money. We KNOW for sure our users regularly do Google so why not just make all these guys pay. Hmm, actually the sad part is they wanna sucomb the users who pay their bills and fill ISP-s fridges so they dont starve, when this way Google is supposed to be the loser.
Anyways, telcos will not have it their way, the traffic thinghy way! Not since there are alternative operators and services. Take for example the all Romanian-based small c*free wireless. Since their birth barely a year ago, the two 24-year olds have made it into a blast providing absolutelly free wi-fi in public areas and now aiming metro meshes.