The WSJ reports today that “Large phone companies and telecom-equipment makers are developing plans that would blow up the flat-fee structure for high-speed Internet access and instead charge customers different rates based on how much bandwidth, or Internet capacity, they use.” This makes eminent sense to me and seems to address ISPs’ concerns about who is paying for their networks. That is, instead of charging content providers such as Google or Yahoo!–with whom they have no relationship–for access to their networks, they can charge their customers, with whom they do have a relationship.
Theoretically, Google may not have a choice but to pay up if it wants users of a certain ISP to be able to connect to its site. (Actually, that’s debatable, because I doubt consumers would stand for an ISP that didn’t allow them access to Google.) However, under this new scheme, customers are the ones footing the bill and they in turn do have a choice of ISPs.
Some, including Techdirt, are already arguing that this is a nefarious plan. They argue that content providers could still be extorted: “Google, if you pony up, our users will surf for free–if not, it’s gonna be $50 per megabyte.” Once more I’ll ask: What customer will stand for $50 per MB to access Google?
It has been pointed out that there may not be sufficient competition to give consumers real choice. First, I genuinely curious to know how much competition will be enough? Where I live I have a choice of broadband from two cable companies, the phone company, and possibly pay wi-fi. If the FCC can manage to get its act together, we can expect Wi-Max and other wireless broadband systems. Second, it seems that the alternative to working to foster competition is government regulation. What’s after net neutrality regs? Price regulation for ISPs?
I do agree with Techdirt on one thing. Pay-as-you-go pricing for network access has never worked well. For whatever reason, American consumers hate it. I think they don’t like the uncertainty of it. (Maybe if I click this link or stay on too long I’ll get a huge bill.) So it will be interesting to see how this pans out.