We’ve been waiting for this to come to pass, and it looks like the days of tiered broadband pricing are finally upon us:
Here in South Texas, Time Warner Cable customers have been given the online equivalent of a scale in the bathroom, a “usage tracker” that adds up all the household’s Facebooking and YouTubing. Customers who sign up for a light plan of 5 gigabytes of broadband — that’s the equivalent of two high-definition movie downloads — are rewarded with a $5 discount each month if they don’t go over. If they do, they pay $1 for every additional gigabyte.
“We’re moving away from one-size-fits-all,” said Jon Gary Herrera, a Texas spokesman for the cable company, which now tends to call itself a broadband company instead.
Throughout the broadband era, the question has been whether the model should look like television, where you negotiate a flat rate and consumption doesn’t matter, or phone service, with its pay-as-you-go model. It looks like something closer to cell phone service, where you pay for a certain amount of coverage, and then must pay more if you go over it, will end up as the ultimate model.
A couple things on this. First, broadband service is quite terrible in the United States, especially when compared to other countries. Second, nobody particularly likes the pricing plans for wireless. And most important, this represents a direct transfer to the pockets of telecoms who control the “series of tubes” that make up the Internet, from the pockets of the content providers whose data takes up a lot of broadband space. Once you lock in usage-based billing, it’s a hop, skip and a jump to favoring native content from a Comcast over Netflix, for example. Or you don’t even have to get to that; customers who fear going over on their broadband bill will stream less Netflix and watch… well, more of their DVR offerings on Comcast Cable. New companies that offer streaming options will necessarily struggle to find critical mass in a world where customers can no longer afford unlimited servings of their products.
If broadband providers actually delivered a good product, which generated fast speeds on online media that did not buffer or struggle to play, that would be one thing. But this is a monopolized product with relatively poor service that is suddenly moving to another pricing model. And given that this product is already unaffordable for a large segment of the population, usage-based billing expands the digital divide as it favors specific content over others.