There are some providers who are a little different. Some charge per extra GB, rather than restricting speeds. Another gives you daily caps, rather than monthly, meaning you have a shorter wait if you’re speed-restricted. There are also a number of “unlimited” plans that have fair use restrictions.

All of this creates a flexible market, and people are happy to shop around for what suits them best. New users tend to go with providers that give good customer service. Low-end users might go with a low speed, cheap offering. High-bandwidth users pay more for higher speeds and bandwidth caps.

Now we just have to wait for our main lines company to unbundle the local loop (plans currently in progress), and we’ll have a really competitive broadband industry.

- Tim’s point about ISPs needing to manage network segments differently is a good one, but I don’t see that it’d be too much of a problem. ISPs already offer different terms in different areas in the form of varying prices and promotional offers. Users might be a little irked to find out that users elsewhere have higher caps, but in most cases they wouldn’t know or care. I certainly don’t know how my DSL bill would be different if I lived elsewhere (but I’m sure it would be).

- Consumers will need to be made aware of how much bandwidth they’re using, but it’s not a very hard problem, I don’t think. Sending daily emails once users have hit a usage threshold (prior to the limit at which prices increase) would suffice — it’s what my web host does, and it works fine. And it’d be trivial for router manufacturers to stick a little LED bar graph on routers to provide even more immediate feedback — it’s easy to imagine all sorts of alert services that could spring up. Consumers can deal with metered electricity, water and gas. I think they’d be able to get used to metered bandwidth pretty quickly.

- There’s no reason it has to be either/or. ISPs can simply offer both payment options, then slowly adjust the flat fee upward over the course of a few years to shift customers over to metered pricing. The limited broadband choices in most areas make me think that this wouldn’t send customers fleeing — they’re already used to prices gradually going up.

I saw this thread through Google alerts and this is my first time on your blog.

I work for a UK ISP - PlusNet (www.plus.net) - that has been ‘metering’ broadband for a number of years now.

Tim Lee makes an excellent point that most people don’t know how much their usage is, so any number that is presented, be it 1GB or 1000GB will seem too low.

PlusNet’s tackled the problem through open communication and education.

Take a look at these links:

* Our view that “unlimited” broadband is a myth - http://www.plus.net/unlimited_broadband/

* …and on that all-you-can-eat attitude and why sharing is necessary - http://www.plus.net/support/broadband/quality_broadband/sharing_broadband.shtml

* ‘View my usage’ - an online display of everything you could want to know about your behaviour - http://www.plus.net/support/broadband/usage/vmbu.shtml

Thanks for the post

Tim Lee: It’s only during periods of peak usage that the customer’s bandwidth uses has any marginal effect.

Every cell phone plan which offers unlimited nights and weekends already engages in this kind of time-based calculation.

I don’t think this sort of change would actually be much of a novelty for people who are used to buying telecommunications services.

The same principle applies to different networks. The amount of congestion experienced by any one user is a complex function of the kinds of connections employed upstream from him and how many users he’s sharing that link with. On a part of the network that’s been recently upgraded, or that has relatively few users, there may simply be no congestion problems. Other parts of the network might have lower-quality links or more users competing for the same bandwidth.

So the ideal metering policy will be different from network to network and from one time of day to another. Telcos can either adopt a one-size-fits-all policy that will be too restrictive in some areas and not restrictive enough in others, or they can adopt a more complicated metering policy that’s expensive to implement and prone irritate and confuse their customers.

On the other hand, with their current policy, they can give the vast majority of users an all-you-can-eat plan. And when there are congestion problems, they can look at their logs and pinpoint the specific users who are using the most bandwidth in the particular time and on the particular network that’s having problems.

I think it’s important not to underestimate the value consumers place on “all-you-can-eat” promises, especially for a commodity like bandwidth that doesn’t make intuitive sense to most people. If telcos start quoting a bandwidth cap, even a very high one, a lot of consumers are going to fret about exceeding it, even if they’re nowhere close to the limit. They may feel a lot more comfortable just paying a flat monthly fee and not worrying about how much bandwidth they’re using.

That’s how cable and dsl internet was priced in Québec in 1999. I haven’t had an account there since 2005, but I believe it’s still priced the same way.

I don’t know where the demarcation should be in terms of where the flat rate ends and the metering begins; that’s for market experimentation to sort out.

How about the point where telcos decide to cut-off customers? Up to that point they seem pretty happy with your usage, at least in as much as they’ll let you continue. That would logically be their break-even point or at least the point where their return goes below a magic treshold.

Regarding net neutrality, though, while this solves or at least alleviates the bandwidth problem (and I agree with you that metered pricing is a large part of the solution to the current “situation”), it doesn’t address anti-competitive practices. If my ISP decides to block or degrade any packet that has to do with my vonage service, I’d be pissed. I know the standard answer to this is to say that “customers have a large array of providers to choose from”, but that simply isn’t true everywhere. I live in northern new mexico. I have 2 choices, comcast or qwest, with one or the other still not accessible in certain arease. So the choice is really more like 1.5, depending on which appartment I rent. I find it unfortunately foreseable that they would both decide to throttle down any packet that has to do with vonage and then just say that their service is so much better. They both have a huge incentive to do this, after all, they both offer voip service that they try to market bundled with their isp services.

In any case, though, I agree with you that metered pricing is definitely a large part of the equation. Anti-competitive practices still have to be adressed though, and in a way that gives the consumer a direct voice and confidence in the market. It doesn’t appear enough for me to say that it suffices for vonage to be able to file against an isp that would decide to put forward such practices. At least, from a consumer point of view.

No, there’s no technical obstacle - the SPs have the necessary technology (how else could they decide whom to police down, heh?), and metering is common for enterprise transit (big pipes for companies/orgs). The obstacle is a Mexican standoff - nobody wants to do it because the first one to go metered will be savaged by the competition.

A two-tier metered sytem is the solution to the broadband downloading capacity issue as well as the ‘network neutrality’ issue. But it seems that no broadband SP is willing to stick its neck out for fear of having its head chopped off.