The End of Cheap Broadband

Oregon ISP BendBroadband said recently that it will offer different tiers of service for its customers, ranging from 10 GB a month at speeds of up to 12 Mbps to a Gold package that allows people to use 50 GB a month at up to 16 Mbps. The more BendBroadband customers pay, the faster their service and the more they can consume. As for the 2 percent of residents the ISP estimates will use more than 50 GB, they can pay $1.50 extra per GB.

In this situation, residents are paying for speed and capacity. As broadband consumers we are conditioned to pay for speed (you could have dial-up for free or $10 a month); paying for capacity, on the other hand, is anathema to most netizens. But Time Warner is implementing the idea in Beaumont, Texas, with per-byte overage charges.

Those who build businesses on the Internet recognize that limiting access to broadband capacity limits the number of things people can dream up to do with that capacity. The average person is unlikely to care about metered broadband because it’s unlikely they’ll ever need (or want) to download more than 12,500 songs or 33 movies that BendBroadband estimates 50 GB a month can provide

But those dreaming of producing the next interactive reality TV show, which would require contestants to upload HD video over their cable modems, will obviously be bummed. Is it a viable business model for ISPs to charge for faster access and ignore the bytes? Unlimited capacity has certainly jumpstarted the Internet economy, but at some point, should people pay to keep it going? If so, which people?

Video Killed the Broadband Buffet

Time Warner Cable this week said it will move away from the “buffet” model of broadband and start experimenting with a “metered” model. The cable operator is rolling out a trial program in Beaumont, Texas, in which customers will be charged based on the amount of bandwidth they use. Given the rise in bandwidth-sucking content, such as high-definition movies streamed over the Internet, the move is hardly a surprise. Of course before HD movies, the culprit was peer-to-peer file sharing and before that, gamers.
But HD streaming appeals to the masses, and that could be a problem for the cable industry, which is reluctant to spend when it comes to expanding network capacity. Comcast has already tried controversial methods to reduce bandwidth-sucking activity on their network; other providers have undisclosed bandwidth caps and disconnect those who exceed them. Time Warner (TWC) claims that 5 percent of its users occupy 50 percent of its network — and as more people start downloading video, those numbers will rise.
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