Originally published: April 30, 2012
Last updated: April 30, 2012 - 3:45pm
Since the first dot-com boom, unmetered Internet access has been the industry standard. But recently, usage-based billing has been staging a comeback.
Comcast instituted a bandwidth cap in 2008, and some other wired ISPs, including AT&T, have followed suit. In 2010, three of the four national wireless carriers—Sprint is the only holdout—switched from unlimited data plans to plans featuring bandwidth caps. To many people, the argument for metered bandwidth seems intuitive and obvious. Bandwidth is a scarce resource, and advocates argue that usage-based pricing encourages efficient network use and ensures that heavy users pay their "fair share." Yet the economics of metering aren't as simple as they might appear. Companies are often surprised by how well flat-rate billing schemes work. Customers love them, and flat-rate billing encourages more intensive use of networks that sit idle most of the time. Network providers insist that they are simply trying to cope with rapidly rising demand for bandwidth. But critics charge that the trend toward bandwidth caps is driven by more sinister motives, especially in the residential broadband market.
In this story we'll examine the economics of metering and try to explain why it has suddenly come back into vogue.
- Setting the record straight on usage-based pricing
- Usage-Based Pricing Plans Are Essential to Bridging the Digital Divide
- Yeah, I'd Like Metered Broadband, Too — If It Were Actually Metered
- Do Neutral Wireless Networks Require an End to the Flat-rate Plan?
- Canadians continue to rage against metered billing
- The end of all-you-can-eat pricing
- Verizon: Still No Plans For Wired Broadband Usage-Based Plans
- Internet Data Caps Cometh
- Is broadband metering really so bad?
- Rep Eshoo Seeks GAO Study of Usage-Based Pricing
- Why metered broadband won't last
- Verizon: metered billing much fairer than all-you-can-eat
- Comcast Turns the Broadband Meter On, and Moves to Usage-Based Billing
- Analyst: Carriers set to introduce usage-based mobile data pricing
- CenturyLink DSL usage caps cause subscriber confusion