Google wireless and the evolution of usage-based pricing

[Commentary] Perhaps the most interesting aspect of Google Fi, Google's wireless service, is its pricing structure. The company plans to charge $20/month for connectivity, plus $10/GB of data consumed. But Google Fi differs from traditional plans in two respects: (1) customers who exceed their plans will simply pay the same $10/GB rate for any additional data consumed (rather than a higher per-unit overage charge), and (2) Google will refund the customer at the end of the month for any data purchased but not used. So if a customer purchases a 3GB plan for $30 but only uses 2.4GB, he or she will receive a $6 credit.

It is somewhat strange that Google’s announcement has been met with silence from opponents of usage-based pricing. Over the past few years I have debated groups like Public Knowledge and Free Press at length on this issue, and while I respect their concerns, the arguments do not outweigh the potential benefits of usage-based pricing for consumers and the industry as a whole. There is nothing inherently anti-consumer or anticompetitive about usage-based pricing. It is simply one of many ways that a wireless provider may allocate its costs across its customer base. As the Internet matures, different consumers are using and will continue to use broadband in different ways. This growing heterogeneity among consumers demands a greater diversity of pricing plans and access models. The “best” plan may vary by consumer and by network. Google Fi represents a positive step toward offering more, and more innovative, options to consumers. But Google should not be the only company allowed to innovate in this space. Society benefits when all broadband providers have the freedom to experiment with new and potentially more efficient ways of delivering Internet content and applications to consumers.

[Daniel Lyons is an associate professor at Boston College Law School]