Europe’s Example: Metered Access and Video Don’t Mix


Time Warner recently said it plans to test metered Internet access in Beaumont, Texas, and is looking at Bell Canada’s DSL plans as inspiration for pricing. Over at the New York Times, blogger Saul Hansell calculated that, under those plans, downloading a HD movie might cost up to $30.

You think that’s a lot? Well, how about $220 for a single movie download? That’s how much some ISPs in Europe used to charge their metered broadband subscribers. No wonder ISPs with unlimited plans beat out the competition once people fell in love with online video. Note to Time Warner: This could happen to you as well.

Europe has a long history of metered Internet access. State-owned telecoms and fees for local calls meant that you had to pay by the minute for dial-up access in most countries. These billing structures initially slowed down the growth of the online population, but eventually actually helped to boost broadband adoption, since if you spent hours and hours online each day, even a premium DSL subscription was cheaper than paying two or so cents per minute.

ISPs, however, didn’t want to give up their favorite cash cow, and so they came up with metered DSL access. Subscribers were lured with cheap — and sometimes even free — access plans, but their bandwidth was limited to as little as one gigabyte a month. Each additional megabyte costs as much as three cents, which means an extra gigabyte could cost you more than 30 euros ($44). A single HD movie download over your monthly limit would amount to a whopping surcharge of 150 euros, or some $220, under such a plan.

Other plans featured bigger bandwidth packages and smaller surcharges for each additional megabyte, but web forums were still filled with complaints about unreasonable bills, and online magazines started to feature odd calculators that were supposed to tell you in advance how many megabytes it would take to watch on-demand video streams.

All of this couldn’t stop the online video from conquering Europe, however, and local YouTube competitors have popped up all over the map in the last two years. A recent Internet usage study by the German public broadcasters ARD and ZDF shows that the number of regular users of online video in Germany doubled from 2006 to 2007; 34 percent of all Internet users visit online video platforms like YouTube at least occasionally.

And guess what? The online video boom has taken its toll on the ISP market as well, with customers voting with their feet for better plans. And as for all the metered packages that were all the rage just two or three years ago, none of the big German ISPs are even advertising them anymore. Instead, they’re trying to sell premium packages bundled with fast, unmetered broadband access.

Take 1&1 for example, one of Germany’s biggest ISPs: The company is now offering its customers a DSL package with 16MBit, unlimited bandwidth and 100 movies on demand, streamed to your PC, for just 40 euros per month. Beats paying $30 per movie download, doesn’t it?


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