[RTC List] Your Future Broadband Will Cost More, for Less

[Tina Nerat]

http://gigaom.com/2008/11/07/your-future-broadband-will-cost-more-for-less/

 

Stacey Higginbotham <http://gigaom.com/author/shigginbotham/>  | Friday,
November 7, 2008 | 2:13 PM PT

AT&T this week said it would join other
<http://gigaom.com/2008/07/30/frontier-sets-tiny-broadband-cap/>  broadband
providers in trialing
<http://gigaom.com/2008/11/03/att-trials-tiered-broadband-in-nevada/>
tiered broadband services. The trial packages
<http://www.dslreports.com/shownews/More-Specifics-On-ATTs-Cap-Plans-98907>
range from the ability to download between 20 and 150 Gigabytes of
information and are supposedly an effort to help AT&T manage the growth of
traffic on its network. But the move is more likely an attempt to capture
some of the value of the content moving through its pipes without getting in
trouble with regulators.

As broadband matures, carriers aren't merely
<http://gigaom.com/2008/04/29/as-broadband-growth-slows-expect-speed-boosts/
>  upgrading their networks, they're also upgrading their pricing plans, the
thought being that different service levels offer a more nuanced way to
manage traffic and increase sales. For an example of multiple plans in
action, check out PlusNet, a UK-based ISP that lists at least four different
service <http://www.plus.net/residential/?home=resindextop>  plans on its
web site. Kurt Dobbins, chief technology officer of IP services with Arbor
Networks <http://www.arbornetworks.com/> , a company that sells network
management equipment to both AT&T and PlusNet, says this is to be expected
in a mature market
<http://gigaom.com/2008/07/02/pews-state-of-us-broadband-200/> , especially
in light of the FCC's efforts to ensure transparency
<http://asert.arbornetworks.com/2008/05/a-case-study-in-transparency/>  when
it comes to delivering broadband services.

"Carriers are all seeing a fundamental growth in traffic, and very few of
them are seeing the equivalent growth in subscriber acquisition, so they're
spending billions more on bandwidth capacity but are seeing no new revenue,"
Dobbins says. "This is an answer to how they will grow revenue."

The end result will be bills that have different tiers of speeds and caps,
as well as different service levels for different applications. For example,
users would be able buy a voice and video service that would prioritize
those types of traffic as more important than gaming or a virtual private
network line. Dobbins also says the use of such tiers could help offload
traffic by allowing customers to, for example, shares files during off-peak
hours, and perhaps see that traffic not count against their cap. In a quote
that would make any telco marketing maven proud, he called that, "giving the
customers something for free."

"The service provider business models are trending to some form of
usage-based billing, but the end game is value-based pricing and subscriber
opt in," says Dobbins. "In the case of usage-based billing and caps, ISPs
see that as an interim step."

Because Dobbins works for a company whose sales would do very well under
such pricing schemes, he may be a bit biased, but the scenario is still a
likely one. Even today, AT
<http://www.dslreports.com/shownews/No-ATT-Is-Not-Throttling-UVerse-97676>
&T is making a distinction between levels of service for its U-verse
television offering as compared to video delivered via broadband.

Carriers, in creating these sorts of plans, relegate the Internet to
entertainment or a productivity tool, and encourage consumers to view it
that way as well. That's unfortunate because the Internet is far more than a
source of Tina Fey videos or a line back to the office; it's a direct
connection to people and information that can be harnessed in ways we are
only now discovering.

Such uses include medical monitoring via the Internet, or interactive
collaboration to make music or to design buildings. Carriers are refining
their offerings to price those services according to their value. I can't
argue with their right to do that (in a truly competitive market), even if
it means that I end up paying more. The downside is that it will put certain
valuable services out of reach for some. So instead of being a great
equalizer, the Internet ends up perpetrating the inequalities in education
and access to information that exist today.

 

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