Tuesday, September 11, 2007 - The Progress & Freedom Foundation Blog

More on Metering Broadband

Last week I posted another installment in my ongoing series about the possibility of metering bandwidth in the future ("Why Not Meter Broadband Pipes?") Make sure to read the comments to that post over on the TLF because the essay provoked an interesting discussion and some outstanding suggestions from readers.

On a related note, Mark Desautels, Vice President of Wireless Internet Development at the CTIA (the wireless industry's trade association) has an editorial in RCR Wireless News today entitled, "Paying for the Bandwidth We Consume." Mark poses a question that I have raised in some of my posts on this issue:

Much is made of the fact that consumers prefer flat-rate pricing because they know what it is going to cost each month, and that is understandable. But it also creates (potentially) huge subsidies between users. My question is: If consumers were aware of the amount of the subsidies they might be paying, would they be as opposed to paying for the bandwidth they actually use as is generally believed?

That really is an interesting question and the guys over as DSL Reports point out that there are tools that users can download to help us answer that question. They are also running a poll right now asking people how much bandwidth they use per month.

I would love to see some enterprising economists or industry consultants conduct some broad-based experiments to determine what the consumer's "willingness to pay" looks like across various categories of broadband users. I think that if some people realize how little bandwidth they were using, they might actually be more open to the idea of pure metering right from the first byte. Mark Desautels also makes that point in his essay today:

Flat-rate pricing for Internet access and bandwidth use might have had its place during the development of the Internet, but as we move into the phase of ubiquitous access, and wide disparities of usage and file size develop, particularly on the more scarce wireless bandwidth side, long-term economic network viability and fairness demand that people pay for the bandwidth they consume. Today, it is probably accurate to say that customers who pay a flat-rate fee for access and use the Internet mostly to check their e-mail and do some shopping and research are probably subsidizing—maybe to a significant extent—those who do those things plus spend lots of time downloading audio and video content, when measured by the bandwidth consumed.

But as DSL Reports asks:

The question becomes which U.S. ISP wants to be the first to try it? Which U.S. ISP wants to have competitors attack it for charging per gigabyte usage fees? Will users tolerate the migration to a bill-by-the-byte business model? That depends entirely on how much bandwidth they're eating each month.

All excellent questions. I hope we see some experimentation on this front--both in an academic setting and the actual marketplace.

posted by Adam Thierer @ 9:37 PM | Broadband , Communications , Economics , Internet