ISPs Possibly Billing By Usage

Consumers increasingly rely on their Internet connection to stream television and movies while forgoing their traditional cable television service. Cable ISPs have seen profits fall in recent years as the trend has accelerated, and they're looking to do something about it. As such, it's almost inevitable that at least one of the major cable ISPs will roll out usage-based billing in the near future. There's a high likelihood of that happening in 2012, at least according to Bloomberg. Their analysts predict that either Cox, Time Warner, or Charter Communications, Inc. will move to charging customers based on their data consumption.

Such a move would be motivated in large part by media access migrating to the web. For instance, the streaming media company Netflix is responsible for 32.7% of peak web traffic in the United States. In addition, BitTorrent, iTunes, and Xbox Live traffic that's sent to set-top boxes and smart TVs make up a significant chunk of web traffic nationwide. All that bandwidth needs to come from somewhere, and the cable ISPs do have a point. Namely, that the number of people who use "excessive" amounts of bandwidth are a small minority and that usage-based billing would at least in theory be more fair. Since no plans have been announced as of yet, it's unclear how fair a usage-based billing system would really be.

Usage-based billing for cable ISPs is hardly a new idea. Canada's Rogers Communications has had metered residential Internet since 2008. The response from Canadians not been positive, to say the least. In fact, Canada's CRTC recently reversed their stance on metered billing after years of complaints. Cable companies have had far more success with residential bandwidth caps set at reasonable levels, such as Comcast's 250 GB per month limit. For the average household, 250 GB is generally plenty of bandwidth.

Cable companies hold near monopolies on high-speed Internet in some areas. But they're playing with fire by pushing for usage-based pricing structures. Municipalities like Tempe, Arizona, already offer free municipal Wi-Fi. In addition, cities across the country have threatened to put together their own high-speed networks to combat exorbitant cable ISP fees. For an instructive lesson on what happens when people push back against ISP monopolies, see the case of Monticello, Minnesota. As large, monolithic cable companies attempt to retain their relevance, market forces will push back. In the end, the biggest winner will as always be the end user.

Ariel blogs on a number of subjects ranging from cars, to technology. She works for a company that helps people sell autos, by paying cash for autos in San Diego.