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Summary:

Verizon Chief Technology Officer Dick Lynch said today that in the coming years, wired broadband will likely be sold in packages based on the amount of data a person wants to consume, much like wireless broadband is sold today. In comments made to press at the […]

dicklynchsmallVerizon Chief Technology Officer Dick Lynch said today that in the coming years, wired broadband will likely be sold in packages based on the amount of data a person wants to consume, much like wireless broadband is sold today. In comments made to press at the 2009 Fiber to the Home Conference Expo in Houston, Lynch stressed that he wasn’t announcing a shift in pricing for Verizon, but that: “We’re going to have to consider pricing structures that allow us to sell packages of bytes, and at the end of the day the concept of a flat-rate infinitely expandable service is unachievable.”

He went on to explain that the pricing paradigm shift will mirror what already exists in the wireless world, rather than a per-GB pricing model. Verizon has been one of the last holdouts on the idea of metered broadband, in which an ISP charges users based on the amount of data they consume as opposed to charging a flat-rate fee for an always-on connection. The company has never said it would meter its broadband, but has defended the right of other carriers to do so.

Lynch’s comments came amid a broad discussion about net neutrality, notably how a carrier can manage its network and deliver quality applications without running afoul of the principles. Given the rise in high-bandwidth applications and services Lynch said, “We believe that you have to be allowed to have a level of service that is not on a public Internet. What you’re suggesting is different kind of IP service that’s not delivered over the public Internet and that needs to be part of the option set in the argument.”

While he admitted that there are legitimate fears around net neutrality that need to be addressed, he differentiated between the public Internet and the idea of services that will require more than a best effort attempt at delivery. However, he said, “There are services that will not be happy on the public Internet, and we don’t want to be in a place where we have to provide the public Internet as the only place to deliver those services.”

Below I’ve also include a video taken the evening before with Mark Wegleitner, senior VP of technology for Verizon. We talked about the history of Verizon’s FiOS push, a bit about what one might do with a symmetrical 100 Mbps connection (which Verizon doesn’t offer today, but could) and why wired will never be replaced by wireless broadband as the home connection to the web.

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  1. While I understand the argument that is supportive of the metered-broadband idea, it’s really not a good idea. The cell industry is proving that the whole metered aspect doesn’t work (every major carrier now has an “all-you-can-eat plan”) and that more people are looking for dumb pipes with access to anything they might want.

    If companies are going to insist on the metered approach they better have a nice “all-you-can-eat” plan at a reasonable cost if they want to stay competitive.

  2. Martin Bosworth (martinboz) ‘s status on Tuesday, 29-Sep-09 16:41:51 UTC – Identi.ca Tuesday, September 29, 2009
  3. If they charged per GB across the board, then either SMS would be essentially free or a movie download would be more than the cost of a house.

    It surely removes their ability to cream off fees for value add like MMS, unless its per GB per packet type and not simple metering.

    Are they a utility or a service provider?

  4. Justin Goldberg Tuesday, September 29, 2009

    If the speed is at fiber speeds, then this would be a good idea. Think of gamers who want hyper-low latency connections.

  5. Another exec who doenst get it. People HATE being nickel and dimed.

    These phone companies are the worst (well actually the banks are the worst). They are sooooo friggin clueless about how much their customers hate their phone companies.

    No one likes their phone company. Its like voting for congress, you have to pick the best of the worst.

  6. I think it will go the other way. I think that the metered broadband idea has already been lost on the consumer front. I think the metered wireless idea is already in the agony pains of defeat. Wired and wireless will be un-metered in the end. Sorry fellas.

  7. Didn’t explain it very well. Metered means the providers will have to always play the edge. Set the limits to low and consumers push back. To high and you don’t make money. Just right will only last for a small period of time because consumers will always require more over time and will push back again. Can providers be hugely profitable playing at the always adjusting edge? I find it highly unlikely.

    1. Stacey Higginbotham Doug K. Tuesday, September 29, 2009

      Doug, I think you are onto something with this. I took issue with one of Lynch’s comments about consumers’ devices in the future connecting to LTE networks even when their owners aren’t aware of it and I though, not with the current overage charges for going over a 5GB limit on the wireless network. Fear of excess fees will turn people back into broadband or minute hoarders.

      1. Doug is more right than he knows. Why do you think the Asian providers and service levels smoke us in nearly every way. They have already come to similar conclusions and fashioned networks that are nearly bullet proof and serve more than customers can ask for in order to be ahead of the game ALWAYS. When your customers are happy and getting what they want in a reasonable way for a reasonable price then the impetus to start looking … let alone make the move elsewhere is nearly Nil! The Verizon attitude is endemic of the diseased arrogance of corporate America and an indicator of just how broken doing business in the country is at the moment.

  8. How can they consider implementing “metered broadband” when they won’t even take the time to make a meter?

    Most people have no idea how much data they consume and won’t know which package to subscribe to. 50,000 photos? What does that mean when I have a home network? Where’s that meter Comcast promised over a year ago? If these companies insist on going in this direction they better start doing more to educate consumers now about their own usage or else the backlash will be severe when they try to ram this down their customer’s throats.

    1. John, they’re probably banking on that. If they aren’t, then they’d easy allow access to that data.

      1. This all makes me think of the studies that surfaced a couple of years back showing how much people were overspending on voice services. Unused minutes were the norm. Then, they moved to rollover minutes, more flexible pricing (free in-network calling), and eventually unlimited voice plans. I feel like with the operators, we always have to go through the pain before we get to a good place.

  9. There’s something fundamentally wrong with the whole setup here, the telcos are used to pay per use – they are like the railroad companies, which were good for point to point traffic rather like phone calls.

    The Internet, on the other hand looks a lot like car travel – you pay a fixed fee (tax) for all the roads you want to use and people make money building businesses along the roadside.

    The metered approach sounds like a road network with a bridge toll down every street. But you can understand why a company that has previously been charging a toll for low bandwidth voice traffic is not happy with having to remove it for higher bandwidth and the same infrastructure costs.

    Ultimately, if the Internet is like the freeway system, then its infrastructure is surely not the domain of free-enterprise capitalism.

    1. I think this is what he is alluding to in his public internet comments. He seems to be acknowledging that the public internet is likely to be viewed more like a basic infrastructure which isn’t a great place to make money. Then he is setting up the notion of a parallel environment with a different set of rules for more specialized services.

      Of course this is basically torpedoing net neutrality without appearing to do so. Neutrality is fine for the plebs on the basic public internet, but some services have to be treated specially (and paid for).

  10. martin chamberlain Tuesday, September 29, 2009

    “wired will never be replaced by wireless” – never is a bold statement in the world of technology, but I do agree that wired has major advantages over wireless for the foreseeable near future.

    Right now wireless just doesn’t cut it for stability and larger data transfer applications like HD video.

    But I welcome the day when we are using the internet from our cars.

    1. It does in Asia, where they are light years ahead of this backward country supplying cheap Internet access.

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