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Summary:

Our parent blog GigaOM is doing good work covering the coming rise of metered internet plans for consumers. If you haven’t followed the story, it’s worth catching up on: depending on how this shakes out over the next few years, many web workers could find their […]

Our parent blog GigaOM is doing good work covering the coming rise of metered internet plans for consumers. If you haven’t followed the story, it’s worth catching up on: depending on how this shakes out over the next few years, many web workers could find their careers pinched or shut down entirely by rising costs.

The basic news is simple: large carriers like AT&T and Time Warner want to shut down the “all you can eat” monthly internet pricing for your DSL or other high-speed connection, and change over to tiered usage-based pricing. Under a tiered model, you pay a fixed monthly cost for a fixed amount of bandwidth, and then overage charges based on the amount of data you consume above that level. One recent Time Warner promotion, for example, socks you with $1 per gigabyte if you go over a 20GB/month cap.

The wedge that the telecommunications companies are using to move to this model is that video bandwidth is clogging the internet – though that hardly explains why they need 1500% markups over cost for the overages. It seems likely that if this model moves forward, the providers will be making more money – and that money will come out of our pockets.

What does this mean for telecommuters and other web workers? If the model spreads, nothing good. Some people in traditional telecommuting jobs will have the extra costs picked up by their employers, which will inevitably impact salary and benefits. Those of us who are independent will be faced with rising costs for telecommunications. 20GB may sounds like a lot to the average person, but if you’re heavily involved in videoconferencing, for example, it’s not going to stretch very far.

The ultimate effect of these moves may be to make telecommuting a less attractive option from an economic point of view. In a world where gas prices are rising and the economy is suffering, that’s just plain bad news.

Are you taking any steps to keep your connectivity costs under control?

  1. Hmm… I hope it would come to that. I would hope and expect that the market demand would bring a new supply of ISP’s without such caps. I don’t have any idea how much I use so I don’t have any idea how this would affect me personally. I’m not doing telework right now but aim to get back there in the next couple years.

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  2. I don’t think web working would die, per se. In some EU countries, they pay by the kilobyte and they’re able to telecommute. I just think we’d have to be more selective on the type of work we do and would have to conserve bandwidth. OMG that sounds weird to say.

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  3. Big Deal.

    They’ve done this in the UK. What happened was a huge amount of non capped ISPs flooded the market and brought prices way down. Economics 101.

    Case in point. When I first moved to the UK I was paying 60 GBP a month for capped internet (I forget where it was capped, but it was enough to stop me using bitorrent for awhile).

    Two years later when I moved back to the US I had uncapped 7mbps internet, digital cable television, and a phone package for 50 GBP/month.

    I hope this happens. Prices will fall. And more Americans will make the switch over to broadband.

    Keonne

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  4. $1 per Gb over the limit? And that’s going to kill you? How many Gb can you possibly use? I can only assume you mean Mb.

    I don’t get it. I am in Australia and we don’t really have unlimited plans, I currently pay $70 a month for a 30gb business account. Expensive but I don’t think it’s going to bring the industry down.

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  5. At what level are they talking about? If AT&T, Quest, and the other backbone providers charge for bandwidth amounts, well, that is just going to be handed off to end-users – and new companies will not be able to afford to offer uncapped usage.

    The backbone is the issue here. It is getting clogged because we are not investing in infrastructure in the USA. Nope, too busy lining the pockets of criminal CEOs. (Think Enron and the former Global Crossing.)

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  6. This is a very big deal. A pay-per-use model would punish the big-bandwidth players like YouTube. Are you going to post pictures of your kid’s birthday party on Facebook if you have to pay extra for it? The socialization of the web would take a giant step backwards if bandwidth became an issue.

    The ISPs are working towards a greedy cell phone-esque model. For the best article ever breaking down “freecomnomics” – the idea that bandwidth is very nearly free – check out this story from Wired. Once you grasp that, you see it’s all greed.

    This affects far more than telecommuting. It would throw the web back to the stone age of low-graphic websites and hamstring the burgeoning video-based iteration of the web we’re all waiting for.

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  7. It’s funny (and sad) that the broadband carriers are moving to cell phone type plans and the cell phone carriers are moving to “all you can eat” plans.

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  8. Here in Canada, the only decent internet provider allready has this plan, 30 bucks for 2GB bandwith. It’s the price I pay for a stable connection, but no youtube for me!

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  9. Odd that we’re treating this like new, when there were plenty of ISPs with this model in the past. Granted, time-based connection fees were more popular, but it was certainly a pay-per-use scenario.

    That model died out partly due to cable modems, but mostly due to the market.

    Unfortunately, unlike dial-up ISPs, there are very few broadband providers in areas (if there’s a selection at all) and if competitors collude like this, consumers are left taking it or disconnecting.

    If Verizon doesn’t hop on board, this pricing model will die when a very large chunk of users change providers.

    I realize most consumers won’t know much about the limits, but if a competitor keeps an unlimited model, they’ll definitely advertise the hell out of it.

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  10. Keonne is exactly right. If ATT goes forward with this all they’re going to do is piss of their customers and make them switch to something else. You can just see Verizon FIOS marketing folks with $$ in their heads.

    I’m always amazed by folks like Dangerfield. Some of us a lot of bandwidth for routine reasons. My web browsing *alone* is easily >1gb per day of bandwidth. Everyday I download and additional 10-15gb of data related to personal websites I maintain.

    I currently pay about $70/month for a 10mbs/2mbs plan and typically download around a terabyte a month. I can’t imagine paying $70/month for 30gb total bandwidth.

    BTW, I’m always amazed that my cable company might get annoyed that I downloaded, say 1TB a month, but my hosted webserver is serving out about that much a month and I never come close to my bandwidth limit there even though the bandwidth portion of my bill is roughly equivalent to what my cable internet bill is.

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  11. Wow, they would stand to make quite a bit of money, right? I thought online services were already well overpriced ($50 a month, generally), but I guess they want to jack them up even more. Whatever happened to the concept of having “Free Wifi” cities? Did the internet companies hose this plan down? The city I lived in, Fort Wayne, was supposedly working something out to have that within the next few years.

    Jake
    NoteScribe: Premier Note Software

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  12. Ahh…reminds me of the 1980’s when I used to pay CompuServe $12.50 PER HOUR via a 1200 baud connection.

    Those were the days.

    I guess it is true what they say – what’s old is new again.

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  13. Here on the southern tip of Africa, we’re paying around US$10 per gigabyte… and still South Africa is one of the largest communities on Facebook worldwide…

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  14. I think you will see people have to watch what they do. 5 or 10 gigs doesn’t sound like much, but it is, unless you spends lots of time downloading large files (P2P, videos, etc.).

    We also might look at changing how we work to be more efficient. Instead of working with a browser based tool, we might use one that lets us work offline, then update at the end of the day, so less data is sent, etc.

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  15. That would be … brutal! I know some inet companies in Australia does this and it’s totally ridiculous. Why don’t they just stick to offering premium services for a fee and leave regular services as it is.

    Best.
    alain
    Mor.ph

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  16. The people who left the last comments “big deal” are definitely part of the conspiracy. Does anyone know how much money gets sucked from all of us penny by penny, dollar by dollar? Does anyone remember what happens when you go over your cellphone minutes? I had a family medical emergency that ended up costing my family an extra $1000 in cell phone overage charges!!! Don’t think that we all won’t rely on the internet just as much in a few years!!!

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  17. In fact the bandwidth for my servers in datacentres is cheaper than what was being charged here by ISPs a few years ago, or even today in specific plans. Metered services can kill a technology, but not unmetering also has advantages: when ISPs advertise “unlimited” connections in fact what they mean is “you use it as long as we allow”, and when you go past an undefined limit you are considered a cost rather than a revenue. With metering you know, at least, that when you buy some GBs of usage you can use them all without any surprises. But when metering is used, the caps are usually so absurdedly low that everyone would prefer the “unlimited” connection even with the risk of surprises. Of course the perfect solution would be a truly unlimited connection without any surprises. But this cannot happen if one telco has a monopoly. The problem is one of free markets and competition: if we have lots of competing ISPs with no monopolies then the only limit will be technology and infrastructure itself. But if the market is dominated by a monopolist or if there is an oligopoly which colludes then there is little hope for the clients to get better service.

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