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Summary:

Bend Broadband, Comcast, Time Warner Cable — they’re all considering or going the route of the tiered (aka metered) broadband. Now add AT&T to that list, according to a report in CED magazine. “A form of usage-based pricing for those customers who have abnormally high usage […]

Bend Broadband, Comcast, Time Warner Cable — they’re all considering or going the route of the tiered (aka metered) broadband. Now add AT&T to that list, according to a report in CED magazine.

“A form of usage-based pricing for those customers who have abnormally high usage patterns is inevitable,” according to an AT&T spokesman, though the company does not yet have a specific plan or policy. AT&T said the Top 5 percent of its DSL customers use 46 percent of the total bandwidth, which is consistent with cable industry experience.

It isn’t surprising — the tiered model for AT&T would help prop up its IPTV effort, U-verse. What is surprising is that company officials, many of them at the senior levels, have made it a point to tell me that unlike cable they had no plans to do any such thing. This news report makes me highly suspect about their past assurances, and the comment to Stacey from AT&T’s spokesperson makes me think it’s just a matter of time before the phone company gets that meter ticking.

We’re always evaluating our broadband plans and services, but have nothing new to announce today regarding our pricing structure. That said, given the usage trends we’re seeing, a form of usage-based pricing for those customers who have abnormally high usage patterns is one of the many options we’ll explore. Usage-based pricing is one way to deal fairly with Internet usage, which is very uneven among broadband users.

  1. Hmmm, I’m not convinced they will get away with it. The last year has proven that the internet is a Money generating machine for the next wave of Politicians. I don’t think they will not give up on that.

    Btw, has anybody any stats on how much traffic is text(or no ads) and how much is ad traffic. Looking at this page it looks like 1/3 to 2/3 (glance), traffic not real estate on the screen. Or if we cut out 50% of the traffic (all ads) send to us, the small web sites like this one will die, or get aggregated into something bigger. I don’t think the next wave of Politicians will like that. Since it plays right into the hands of the established ones, I mean in general not any particular site. Or what would the Democratic hopeful have done without the internet and it’s Money, in other words the Lobbies’t will have cut out their work for them. Real Money or some money from a sponsor who can give only so much. If People have to think about which web site they go to (real or sub Consciousness, you don’t think about having another 1G to go, you just limit yourself ) , my guess is the Politicians site fall out and therefor the Money stream.

    OTH, we could just stop spam and save some serious traffic, but I guess that is not a new Revenue stream just saves traffic.

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  2. Om

    Right on target. AT&T has said time and again in D.C. they would not do this, because their network can easily handle the load. This is at the highest levels, including Randall Stephenson (a while back) and their SVP in D.C., Jim Cicconi.

    Your conclusion this would “prop up its IPTV effort, U-verse” is also on target. If they adapt the 40 gig suggestion of Time Warner. that is about two movies a week in HD, preventing people from getting their TV over the Internet.

    The further take on this is that in countries with effective competition (France, Japan, Hong Kong) the major DSL providers do not have caps because they don’t need them. DSL, unlike cable, is non-blocking and shouldn’t have capacity problems. A mutual friend with millions of customers and three times the U.S. average Internet traffic tells me his total cost of bandwidth is 55 cents U.S. per month per customer, less than 2% of the 30 Euro fee. Bandwidth costs are not a factor in prices at any likely level of use to a major carrier like AT&T.

    Time Warner is raising the prices with the bandwidth limit. The only competition is AT&T, so they figure they can raise the prices as well. Ugly. (Although apparently Verizon has filed plans to fill in a Texas area with FIOS.)

    I’m trying to decide whether I will write this directly. “If Kevin Martin has any _____, he will stop this before it goes any further.”

    Dave Burstein
    Dave Burstein

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  3. Om

    this is interesting. If they are going to do on Broadband how about metered TV. The more you use the more you pay. Atleast it will stop all the people who switch on TV for hours and save some energy. Further more the idiot box will be optimally used. Quite a possibility that with IPTV coming this sort of model someone may be thinking of. Just my opinion. a step to some energy savings

    KrisP

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  4. once this goes in effect about tax more just to surf the net when your already paying the internet ISP is BULL**** !!!!!! im canceling service when this taxing goes into effect immediately.no need to pay for internet extra cost when gas is at $5.00 dollars a gallon. fuel is more inportant then surfing the stupid net . i save money for gas when this monopoly is in place. seee ya.

    what good is it to gain the whole world and lose your own soul you greedy bastards.

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  5. Although I’m always suspect of any ISP’s public comments I must say I am in favor of a usage based pricing structure. I think it is more fair and will lead to higher speeds and better pricing. http://is.gd/x7b

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  6. This is a sign of LACK of COMPETITION in the US broadband market. If you have only 2 players in a market, collusion is sure to happen.

    If telcos in US go this path, and they set unreasonable caps just to increase price, they will be a heavy burden to innovation in US.

    Note that Moore’s law has also applied to broadband in recent years. e.g. Telefonica’s offering in Madrid was:
    2003: 256 Kbps
    2004: 512 Kbps
    2005: 1 Mbps

    2008: 10 Mbps
    Do the maths…
    In true competitive markets, expect the laws of accelerating returns to apply. In non competitive market, be at the will of the oligopoly…

    http://tech-talk.biz/2008/06/03/metered-broadband-pay-per-use-or-abuse/

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  7. i worry that this will result in the turning off of nearly all the small hotspots in coffee shops, etc. while starbuck use t-mobile; everyplace that i go for free WiFi is using a router on top of cable or DSL. i just do not see that continuing without unlimited plans. also this could mean the end to neighbors sharing connection with each other.

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  8. [...] AT&T Considering Metered Broadband – GigaOM Bend Broadband, Comcast, Time Warner Cable — they’re all considering or going the route of the tiered (aka metered) broadband. Now add AT&T to that list, according to a report in CED magazine. [...]

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  9. [...] clipped from gigaom.com [...]

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  10. Timothy Daniels Saturday, June 14, 2008

    The marketing model for years has been to tout the download speed of the Internet connection with the understanding that the service was unlimited.

    Now that consumers have found ways to actually use what was offered the providers are whining about it.

    What they did of course was assume that they could get away with building less infrastructure than was necessary to actually support the simultaneous use of the promised download speeds by any significant precentage of customers in a given area. Does anyone remember busy signals when trying to access the Internet by dial-up? This is the same scenario.

    It is time for the providers to stop deceiving the consumers. Rather than offer “unlimited” access at speeds they can’t actually support, I’d prefer that they provide guaranteed speeds that I can use 24×7 if I want. For example 512kbps, 1mbps, 2mbps etc. I’d know what I was getting and I wouldn’t have to worry about exceeding any quotas.

    I don’t have a problem paying my fair share as I use every available bit of my bandwidth on a 24×7 basis. Most internet users really don’t need much more than 512kbps-1mbps speed. Why should they pay the same as me?

    Set lower prices for lower speed accounts and higher prices for fatter pipes. This has been the business model for most commercial internet access for years.

    Metering usage and charging for overages will cause billing complexity and headaches for users who already have a hard time figuring out how many minutes they have left on their cell phones this billing cycle.

    Metering usage will also stifle innovation. People are just beginning to realize they can access home web cams from work to keep an eye on the kids, share their family photos with relatives from a home server or download rental movies rather than driving to the store.

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