With the rise of online video, broadband providers are starting to feel a strain on their networks. In order to combat network congestion, Time Warner has a solution: charge for Internet access based on usage. But if the growing popularity of online video is the reason for shifting to a per usage billing scheme, it is also precisely the reason why this won't fly with consumers.
According to Time Warner, just 5 percent of their customers account for more than half of the total network usage, reports Reuters. It is this minority of users who will most distinctly feel a billing policy change. "Largely, people won't notice the difference," said Alex Dudley, spokesman for Time Warner Cable, the second largest cable provider in the US.
The company is expected to roll out a test of the pricing scheme sometime next quarter for new customers in Beaumont, Texas.
Even if just 5% of users are currently considered high bandwidth consumers, as Time Warner is quick to point out, activities like streaming video are growing in popularity. Charging per usage -- and effectively penalizing high bandwidth users -- may only serve to stifle the growth of rich media on the web, even as things like the new Apple TV and the unlimited Netflix streaming plan seek to push these activities into the main stream.
We expect that most users won't be happy with the idea of being charged based on usage. Even those who might actually save money may initially respond negatively -- psychologically, unlimited use sounds like a better deal than being charged by usage.
Outside of the US, in Europe and in Australia, I have many friends whose broadband plans have usage caps of a few GB of data transfer each month. They often complain to me about the inconvenience of having to plan and monitor their Internet usage to make sure they have enough data transfer left to do the activities they want to do. It is unlikely that consumers in the US, who have so long enjoyed unlimited data usage, will be open to a change to per usage billing.
But which is a better option, per usage billing where the more you use, the more you pay, or data throttling, where certain activities are just made automatically slower at the ISP level? Are there any other solutions that ISPs should be considering to keep network congestion in check and costs down? Let us know your thoughts on the subject in the comments below.