More Broadband Metering Seen as Likely in U.S.
More U.S. ISPs likely will begin metered bandwidth consumption pricing -- though a large cable operator recently stepped back from such testing -- said executives of a large vendor of network management equipment and a Canadian cable operator. The executives and a lawyer for a group opposed to some bandwidth charges floated in the U.S. agreed that the pricing steps alone won’t relieve network congestion. Skype doesn’t mind metered broadband plans run on a “neutral basis,” an executive of the company said. The companies expanded in interviews on comments they had made at a Toronto conference this week (CD June 18 p13).
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Metered pricing seems “a natural evolution of the access business, of the ISP business,” said Michael Lee, chief strategy officer of Canadian cable operator Rogers Communications. “A business that has fixed revenue and growing costs is not a long-term sustainable business, so you have to put some structure into being able to continue to ensure … growing investment in the infrastructure.” In Canada, metered broadband “is pretty broadly adopted,” added Lee, who said he “can’t think of an ISP that doesn’t have it in some form or another.”
Key to a successful rollout of metered billing is educating customers about it long before they face charges for exceeding limits in their plans, said Lee. “What happens sometimes is communications sometimes get out ahead of going to your customer and talking to them.” Before starting the plan in July, Rogers “spent a fair amount of time making sure we educated customers about the change” by mailing them three months’ of past usage information, Lee said. It then had a grace period of another 90 days, he said. “Most of them don’t come close to their monthly allocations.”
Time Warner Cable in April scuttled its plans to test metering after prompting consumer and congressional complaints. Representatives of the company and of AT&T, which has also run tests, didn’t reply to messages seeking comment. An NCTA spokesman declined to comment on cable operators’ plans for bandwidth metering.
Metering is “becoming an established part of the infrastructure” among wireline ISPs, and wireless companies already use a type of metering by not charging subscribers for calls made during off-peak times, said CEO Dave Caputo of Sandvine, a major vendor of network management gear. “Anyone who is contemplating metering is still having to deploy bandwidth management, and sometimes it is deployed because of the metering, because they need a point of truth on their network to count traffic and deliver the trends and usage patterns of the people who are being metered.”
Lee, Caputo and Free Press Counsel Marvin Ammori agreed that metering doesn’t solve network congestion, because current limits cover a month, not peak times such as the evening. “Network congestion is a peak-hour phenomenon” between 5 p.m. and midnight daily, said Caputo. “During that time, no matter whether you're metering the traffic or have bandwidth caps. … We see congestion in 100 percent” of those hours. Metering doesn’t dictate how usage is distributed during the day, Lee said, because “congestion is a specific point-in-time issue while metering is an aggregate consumption issue.”
ISPs would have to charge broadband subscribers by time of day to deal with congestion, said Ammori. He said the Time Warner Cable and AT&T efforts show that the broadband market isn’t competitive: The companies aren’t cutting prices for subscribers who use little capacity. Skype, a unit of eBay, thinks network application makers, like ISPs, are “entitled to some certainty” about how network management will be run, said Christopher Libertelli, a senior director of government and regulatory affairs. Network management that’s “reasonable” shouldn’t single out peer-to-peer usage, he said. “Both sides of the investment question should be “respected,” Libertelli said. “Somewhere the dialogue seems to only be about investment expenses for network providers.”