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Why your Internet service provider wants to nix all-you-can-eat data buffets

Robert Strohmeyer | Oct. 18, 2013
As the industry moves toward 'metered' broadband plans, hardcore users will feel the hurt.

Besides, says Bode, the heavier users already pay more than light users, because they typically pay for faster tiers of service. "It's effectively a rate hike wearing lipstick," he quips.

A metered' future
But the data hogs may not be the real reason ISPs are warming us up to their metered billing approach. They may be slowly getting into position to reap maximum profits in a future in which home broadband service is way faster, and in which we're using way more of it.

The average consumer today uses about 16GB of data per month, but that number has risen sharply over recent years. In 2009, the average consumer used just 9.7GB, according to estimates from the networking equipment provider Cisco.

And a growing segment of the population is streaming Netflix to their living rooms while surfing the Web, streaming music to their tablets, and playing online games such as World of Warcraft. According to Netflix's published bandwidth estimates, streaming HD consumes up to 2.8GB per hour. By those numbers, a single tech-savvy person could easily consume 150GB of data just by watching the national average of 50 hours of TV per month via their Netflix account instead of traditional cable.

Lest you think this type of user is a small minority, consider that 55 percent of households in the United States now subscribe to some kind of streaming video service. And 88 percent of Netflix users and 70 percent of Hulu users say they have watched three or more TV-show episodes in one day (a practice known as "binging").

The new metered pricing structures seem set up for households with big streaming habits. In Comcast's Nashville, Tennessee, market trial, for instance, the highest performance tier comes with speeds up to 105 megabits per second and a 600GB data cap. According to Comcast spokesperson Charlie Douglas, this arrangement is designed to account for the fact that customers with faster connections tend to use more data. The cost for that service? $115 per month, with the option to buy additional bandwidth at a rate of $10 per 50GB increment.

There's a kind of logic behind the premium pricing for streaming-heavy households. After all, Internet-savvy users tend to be more affluent, and have shown a willingness to pay for faster connection speeds. But as streaming services grow in popularity, that premium could hit lower-income families hard as they follow mainstream adoption trends and begin viewing more of their news and entertainment over streaming connections rather than conventional TV broadcasts.

The sound of inevitability
The experts we've talked to express little doubt that metered broadband, data caps, and premium bandwidth tiers are the future for U.S. Internet subscribers. Nearly every major ISP has adopted some form of cap or metering, though their explanations and policies vary.

 

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