Metered broadband: still messy

John C. Tanner
15 Apr 2011

It’s been understood for some time that all-you-can-eat broadband - fixed or wireless - is great for subscriber growth, but unsustainable in the long run. And broadband providers have been saying for a while now that they want to move away from unlimited plans in favor of the old-school model of usage-based billing in the form of data caps.

That’s happening now in North America, where usage-based billing is now being planned or implemented by various fixed-broadband players. In the US, AT&T announced last month it will start implementing data caps on its broadband subscribers (150GB for DSL and 250GB for its U-verse fiber offering) in May. Subscribers who go over the cap three times will be charged $10 for an additional 50GB.

In Canada, where major broadband players already implement data caps, new rules from the Canadian Radio-television and Telecommunications Commission (CRTC) will allow broadband players who lease their copper lines to smaller ISPs to bill them in a way that effectively forces them to implement data caps as well rather than compete with unlimited data plans.

Based on the reaction so far, here’s fair warning now to Asian broadband ISPs planning something similar: the consumer backlash may be substantial.

In Canada, for example, online activist group has gathered more than 400,000 signatures for a petition opposing usage-based billing. Here’s how they feel about it, according to the petition:

“If we allow this to happen Canadians will have no choice but to pay MUCH more for less Internet. Big phone and cable are obviously trying to gouge consumers, control the Internet market, and ensure that consumers continue to subscribe to their television services.”

Over-dramatic? Sure. But that’s what broadband providers are up against as they move from unlimited plans to data caps. It’s been said in this space before, but it’s worth repeating - the average broadband customer doesn’t understand megabytes or gigabytes as billing units, and they understand even less about the intricacies of data network opex and traffic management.

Interestingly, AT&T has tried to mitigate the former by establishing its own metering tool for customers ahead of its data-cap launch, encouraging them to get a feel for it and work out for themselves how much data they actually consume a month. (AT&T adds that less than 2% of its broadband customers will be affected by the data cap - for example, the average AT&T DSL user racks up around 18GB a month.)

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