What Kind of Alternate Business Models Could ISPs Use?

esocid writes "After reading multiple stories over the past few months about the practices of ISPs within and outside of the US I have started to actually contemplate the benefits of the pay-per-use broadband service. Monopolistic practices have strangled broadband to the throttled money-draining cesspool that it is today. Would a pay-per-use option, or some other strategy, be better than the flat fee offered by companies today? When you think about it you are paying for an XMbps connection, when in actuality you get an 65-85%XMbps connection that you may or may not use all of the time. In addition to that, speaking as a Comcast customer, you get a throttled connection that limits your usage of certain protocols. Essentially you pay about $60-70 for a connection that you only squeeze maybe $35-45 worth of usage out of it. If a pay-per-usage option were implemented, how do you think the best way to charge for it would be? Is there some other scheme that would deliver customers the kind of QOS and value they seek?"

Comments

Re:Split Solution

[Spy Hunter]

The problem with most charge for usage schemes is that people might get stuck with huge overage fees and not understand why, because people have no idea how much bandwidth different things take. Or, your computer could get infected with a trojan and use terabytes of bandwidth to send spam and you'd get stuck with the bill.

However, charging for usage *is* a better solution, for many reasons. The most important is that it aligns the ISP's interests with those of its customers. Right now an ISP's best customer is one who doesn't use the product at all; heavy users are their least profitable customers. This is the root cause of all the problems people have with their ISPs (port blocking, BitTorrent blocking, not upgrading infrastructure, cooperating with RIAA subpoenas, terrible customer service, outspoken opposition to bandwidth-using services like online video); it all stems from the fact that ISPs have a huge incentive to *discourage* use of their product! Under a charge-for-usage scheme, that's all *reversed*. ISPs would make the most money from the heavy users, and so would encourage usage by eliminating all blocking and filtering, upgrading infrastructure, telling the RIAA to get lost, improving customer service, and encouraging bandwidth-using services like online video.

In addition to making ISPs the friends of their customers, charge-for-usage would also solve some of the Internet's big problems. Suddenly people with trojaned Windows zombie machines would be charged for all the crap they spew, giving them an incentive to secure their machines. P2P users, instead of being subsidized by the majority who use less bandwidth, would see the real costs of their traffic in their bill. If there's any truth to the "bandwidth crisis" the ISPs keep whining about, charging for usage would solve it.

So charging for usage is desirable, but how can we do it without huge overage fees? It's easy. Instead of paying for bits transferred directly, we should pay for the *speed* of transfer, almost like we do now, but with one addition: each bit transferred lowers your speed cap slightly. This cap is explicit with a big speed gauge and graphs showing your usage (it is important that this graph be very user friendly so people can figure out what is using their bandwidth). Here's the key: at any time (not necessarily monthly) you can press a "speed boost" button that charges your account and raises the cap, but it's not automatic. Under this scenario there are no explicit tiers and not even a fixed monthly payment. You pay exactly the amount you want, when you want, and get service commensurate with your payment; blazing fast or just enough for email, it's up to you. There are never overage fees; instead your service just becomes slow. If your computer gets trojaned your service will slow to a crawl, you'll look at your graph and see a giant spike of traffic from the computer in question, and you'll know to fix it *before* you press the "speed boost" button.

I hope someday ISPs and ISP customers alike will come around and see that some method of charging for usage is the only sensible way to do things. With this scheme we get all the advantages of charging for usage, but none of the drawbacks. No overage fees and no hard caps.