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Web Usage-Based Billing On Its Way
tripleevenfall writes with this excerpt from SFGate:
"The days of watching movies on the cheap via the Web may soon be over. Time Warner Cable and U.S. pay-TV companies are on the verge of instituting new fees on Web-access customers who use the most data. ... U.S. providers have weighed usage-based plans for years as a way to squeeze more profit from Web access, and to counter slowing growth and rising program costs in the TV business. While customer complaints hampered earlier attempts, pay-TV companies are testing usage caps and price structures that point to the advent of permanent fees. ... Cable's best option is to find ways to profit from the online shift, said [analyst Craig Moffett]. If the companies were to lose all of their video customers, the revenue decline would be more than offset by lower programming fees and set-top box spending. 'In the end, it will be the best thing that ever happened to the cable industry,' Moffett said."
We can make your entire industry irrelevant with a single referendum. Tread lightly, telecoms.
This has been on the horizon for some time here in Canada. We came damn close recently (but massive public outrage managed to stop it), but they are talking about it yet again.
I wish we could just skip through this long painful phase where the established dinosaurs hold back natural progress for as long as possible. We all know this is the future.. and it annoys me that I may not actually see in my lifetime things we could be doing from a technological standpoint right now because some huge established companies refuse to adapt or get out of the way and have the piles of money and armies of lawyers/lobbyists to keep it up for decades.
Honestly, while I don’t have much faith in governments doing things properly nor illusions that it wouldn’t be influenced.. I think at this point I’d love to see Internet access become a government run utility.
I could get behind this if it's done reasonably. Figure out what the top 10% of users use, draw a line there and say it's an extra $5 each month you surpass it. Likewise, figure out what the bottom 20% use, draw a line there and knock off $10 for each month they don't surpass it.
Of course, asking these guys to be reasonable is like asking Apple fanboys to use Windows...
We are trying to kill off Netflix because they had the foresight to get rights to stream our tv shows before we thought it was a good idea. Now we are losing millions of people to hulu and netflix and others so we are gonna charge you for using thier service and make you use our service since you won't choose us.
Sincerely,
The Cable Dinosaurs
I've always maintained they should align their price structure with actual costs. Maybe this won't get us all the way there, but it may end up being closer than their structure is now. Bundle their fixed costs into a fixed fee then recoup the rest in per-usage fees. To differentiate different plans based on max bandwidth, either up the fixed fee or up the per-usage rate for plans w/ higher bandwidth. Since they're now charging per usage, the telecoms have very little (legitimate) incentive to do any sort of throttling, enforcing of limits or traffic shaping.
Then stop telling me that is what you're providing. If somewhere upstream can't handle the rate and limits it, that is one thing. But I don't give a rat's ass about your oversubscription issues. If Comcast tells me "20 Mbps", then under no circumstances but the rarest should COMCAST ever throttle me. The upstream provider can rate limit as they need to.
Honestly, I don't mind paying for what I use. What I mind is getting LIED TO about it under the guise of "advertising".
Learning HOW to think is more important than learning WHAT to think.
The big problem I have is that the internet is not a consumable resource. Yes, if I drive a lot, or eat a lot, or use a lot of electricity, my gas, food, and electrical bills will go up- but that's because those are resources that can be consumed. The internet (and phone access, by the way) isn't consumed when I access it. It's just There.
Sent from my CR-48
1. It's not inline with the operating costs. For gas or electricity, the more you use the more of the resource is used up. Hence, it just makes sense to pay for usage. With bandwidth, it's not exactly the same. There is a large base cost to having a given infrastructure; the additional cost to actually use the infrastructure is comparatively small (routers and switches transferring packets do consume a bit more electricity than routers and switches idling... but this is small compared to the base cost of installing and maintaining the routers and switches at all). In general, people find it unfair for consumer costs to be highly unrelated to actual production costs (it feels arbitrary and like price gouging).
2. Related to #1, it's just generally inefficient not to use data-transmission infrastructure at near 100% capacity. Once the infrastructure is in place, it's cheap to just use it. Thus, it's overall more efficient (in terms of productivity per amount of resource used) to encourage people to use the Internet to capacity. Usage-based billing has the opposite incentive: it encourages people to ration what is in not a traditional resource. (Unused bandwidth is wasted, not banked for a rainy day.)
3. In an overall technological/economic trend sense, usage-based billing has the effect of keeping society locked into a fixed data-transmission infrastructure. The incentive to expand and improve the network, add bandwidth and capacity, is eliminated. Thus progress in telecommunications is stalled. Most people would agree that the deployment of telephones and the rapid expansion of the Internet have been overall beneficial to our economy and technological progress. Thus, it seems like continuing to expand our communications infrastructure would be a good thing. Usage-based billing maintains the status quo instead of encouraging expansion of our networks.
4. As others have pointed out, to the consumer, data bandwidth is more like cable TV or landline telephones: both of which have traditionally been a "pay per month; unlimited usage" model (with many exceptions, of course: long-distance calling, pay-per-view, premium content,
Why is Internet use seen differently?
I think the short answer is: "Because it's different." Bandwidth is not a tangible resource like gas or food. Treating it as one is not efficient.
It's the DEGREE of fees. It would be like going to a restraunt and finding that the first steak is $10 but if you want more food the "overrage" steak is $50. That is, if you left the restraunt and came back you could eat 2 steaks for $20, or if you sat down and ate 2 at once it would cost you $70.
That's how these overrage fees work. Since there's generally 0 or 1 competitor that can offer a comparable product (no, satellite and wireless internet is not really the same tier as a wired system) they can get away with this.
Now, if these extra charges were REALISTIC compared to their costs + 15 percent profit I'd be fine with them.
What would a realistic fee be? Well, how much is actually providing the bandwidth (versus running the wires themselves or advertising or tech support etc) actually costing the company? That is, what percentage of their total revenue goes to upgrading network switches, paying for higher quality wire, etc.
That percentage is roughly what your fees should be going up by. The math isn't hard to understand.
Suppose there's a $20 "base fee" that gets you 50 gigs a month, and providing more bandwidth costs 30% of the ISP's budget. Then the fee to double the 50 gigs to 100 gigs should be about 6 dollars.
The power company in many states is regulated this way. A slight wrinkle in this is the power company IS allowed to charge people who consume too much power a penalty fee but this is because generating excess power causes pollution and thus it's in the public's best interest for private individuals to make their homes as efficient as possible. Extra internet traffic only costs a small amount more energy.