Editor’s Note:Looks like the metered bandwidth is back in the news. We first addressed this subject back in June 2008. Below you’ll find our original commentary followed by a few articles on the topic.
Here is our original commentary on the subject:
The recent announcement that Time Warner Cable Internet plans to experiment with a quota-based bandwidth system has sparked lively debates throughout cyberspace. Although the metering will only be done in a limited market for now, it stands as an indication of the direction ISPs may be heading in the future. Bell Canada is also doing a metered bandwidth approach, in Canada much of the last mile for Bell is handled by resellers and they are not happy with this approach.
Over the past several years, we have seen firsthand the pros and cons of bandwidth metering. Ultimately, invoking a quota-based system does achieve the desired effect of getting customers to back off on their usage — especially the aggressive Internet users who take up a large amount of the bandwidth on a network.
However, this outcome doesn’t always develop smoothly as downsides exist for both the ISP and the consumer. From the Internet provider perspective, a quota-based system can put an ISP at a competitive disadvantage when marketing against the competition. Consumers will obviously choose unlimited bandwidth if given a choice at the same price. As the Time Warner article states, most providers already monitor your bandwidth utilization and will secretly kick you offline when some magic level of bandwidth usage has been reached.
To date, it has not been a good idea to flaunt this policy and many ISPs do their best to keep it under the radar. In addition, enforcing and demonstrating a quota-based system to customers will add overhead costs and also create more customer calls and complaints. It will require more sophistication in billing and the ability for customers to view their accounts in real time. Some consumers will demand this, and rightly so.
Therefore, a quota-based system is not simply a quick fix in response to increased bandwidth usage. Considering these negative repercussions, you may wonder what motivates ISPs to put such a system in place. As you may have guessed, it ultimately comes down to the bottom line.
ISPs are often getting charged or incurring cost overruns on total amount of bytes transferred. They are many times resellers of bandwidth themselves and may be getting charged by the byte and, by metering and a quota-based system, are just passing this cost along to the customers. In this case, on face value, quotas allow a provider to adopt a model where they don’t have to worry about cost overruns based on their total usage. They essentially hand this problem to their subscribers.
A second common motivation is that ISPs are simply trying to keep their own peak utilization down and avoid purchasing extra bandwidth to meet the sporadic increases in demand. This is much like power companies that don’t want to incur the expense of new power plants to just meet the demands during peak usage times.
Quotas in this case do have the desired effect of lowering peak usage, but there are other ways to solve the problem without passing the burden of byte counting on to the consumer. For example, behavior-based and fairness reallocation has proven to solve this issue without the downsides of quotas.
A final motivation for the provider is that a quota system will take some of the heat off of their backs from the FCC. According to other articles we have seen, ISPs have discreetly, if not secretly, been toying with bandwidth, redirecting it based on type and such. So, now, just coming clean and charging for what consumers use may be a step in the right direction – at least where policy disclosure is concerned.
For the consumer, this increased candor from ISPs is the only real advantage of a quota-based system. Rather than being misled and having providers play all sorts of bandwidth tricks, quotas at least put customers in the know. Although, the complexity and hassle of monitoring one’s own bandwidth usage on a monthly basis, similar to cell phone minutes, is something most consumers most likely don’t want to deal with.
Personally, I’m on the fence in regard to this issue. Just like believing in Santa Claus, I liked the illusion of unlimited bandwidth, but now, as quota-based systems emerge, I may be faced with reality. It will be interesting to see how the Time Warner experiment pans out.
Related Resource: Blog dedicated to stamping out usage-based billing in Canada.
Additional Recent Articles
Time Bomb Ticking on Netflix Streaming Strategy (Wall Street Journal)
How much casual driving would the average American do if gasoline cost $6 a gallon? A similar question may confront Web companies pushing bandwidth-guzzling services one day.
Several Web companies, including Amazon.com, Google and Netflix, are promoting services like music and video streaming that encourage consumers to gobble up bandwidth. Indeed, Netflix’s new pricing plans, eliminating the combined DVD-streaming offering, may push more people into streaming. These efforts come as broadband providers are discussing, or actually implementing, pricing plans that eventually could make those services pricey to use.
Most obviously this is an issue for the mobile Web, still a small portion of consumer Internet traffic in North America. Verizon Communications‘ majority-owned wireless service last week introduced tiered data pricing, about a year after AT&T made a similar move. But potentially much more disruptive is consumption-based pricing for “fixed broadband,” landlines that provide Internet access for consumers in their homes, either via a cable or a home Wi-Fi network. Long offered on an effectively unlimited basis, American consumers aren’t used to thinking about the bytes they consume online at home.
The Party’s Over: The End of the Bandwidth Buffet (CedMagazine.com)
As the consumption of video on broadband accelerates, moving to consumption billing is the only option.
Arguments over consumption billing and network neutrality flared up again this summer. The associative connector of the two issues is their technical underpinning: Consumption billing is based on the ability to measure, meter and/or monitor bits as they flow by. The problem is that those abilities are what worry some advocates of one version of network neutrality.
The summer season began with AT&T stirring things up with an announcement that it was moving toward adopting consumption billing for wireless broadband.
Internet Providers Want to Meter Usage: Customers Who Like To Stream Movies, TV Shows May Get Hit With Extra Fees (MSNBC)
If Internet service providers’ current experiments succeed, subscribers may end up paying for high-speed Internet based on how much material they download. Trials with such metered access, rather than the traditional monthly flat fee for unlimited connection time, offer enough bandwidth that they won’t affect many consumers — yet…
Editor’s final note: We are also seeing renewed interest in quota-based systems. We completely revamped our NetEqualizer quota interface this spring to meet rising demand.
Created by APconnections, the NetEqualizer is a plug-and-play bandwidth control and WAN/Internet optimization appliance that is flexible and scalable. When the network is congested, NetEqualizer’s unique “behavior shaping” technology dynamically and automatically gives priority to latency sensitive applications, such as VoIP and email. Click here for a full price list.