Thursday, May 7, 2009

Pay Per Byte for Internet

My grandmother was recently introduced to email. She uses a simple software on her desktop called Juno that doesn't even require her to get online. So, her monthly bandwidth consumption is probably less than the average mobile phone in 1995. And yet, she pays the same amount for internet as the neighbor across the street running her home based ebay business.

Now, I can certainly understand the economic reasons that this is so based on the cost to deliver service to each household. But, some people these days aren't so sure. And, it may surprise you that many discussions over this issue aren't geared towards saving money for the little-old-lady, it's about charging more for the internet moguls.

This fall, Time Warner is reportedly going to begin rolling out a metered pricing plan based on bandwidth consumption. This has obviously been met with mixed reviews. But, it's a pricing model not uncommon in the telecom industry. Mobile phones, for starters, began with pay per usage and only recently evolved into offering unlimited plans.

Which brings one important question to mind: if the companies on the GSM network billed per usage until their network grew to the capacity it is now, why would one of the largest providers on the age-old cable networks just now be switching to a per usage model? It seems counter-intuitive.

Labels: Broadband, Cost Reduction, Network Providers, Time Warner