The User-Managed, Usage-Based Future of Broadband
By: Stephen Collins
Over the past decade, the focus of broadband providers has been bringing more subscribers online and increasing the speed of their connections. Today, broadband is widely deployed, with more than
600 million subscribers worldwide. In the United States, approximately 68 percent of U.S. homes have active broadband connections, while 95 percent of U.S. homes have access to
broadband, according to reports from the U.S. Department of Commerce.
As broadband penetration has increased, so has the capacity required by subscribers. The sharp rise in broadband consumption is being driven by new applications and services such as over-the-top
(OTT) streaming video, cloud-based storage, online backup services, and consumer video conferencing, all of which are placing greater demands on network capacity.
With subscriber growth slowing at the same time broadband usage is exploding, providers face a new set of challenges, the most pressing of which is sustainability. The industry's traditional
flat-fee pricing model, which was intended to encourage adoption, is no longer viable. Broadband internet revenues are not keeping pace with the increased capital and operational costs of
relentless growth in network traffic, so providers must find a way to close the gap.
The solution is to transition to a usage-based pricing model. This requires technologies for accurately measuring broadband usage, providing clear visibility into subscriber consumption, and the
ability to apply that information to more efficiently manage the delivery of broadband services.
Moving To Usage-Based Pricing
Operators have recognized their predicament and are signaling their readiness to move away from "all-you-can-eat" pricing and begin charging consumers on the basis of the amount of data they
consume. This movement has gathered steam in the first half of 2012. Comcast announced that it will replace usage caps with improved data usage management approaches, while Time Warner has been
piloting usage-based pricing in select markets. The government has also weighed in--FCC Chairman Julius Genachowski voiced his support for usage-based pricing in remarks at the Cable Show in May.
In Canada, broadband providers including Rogers and Bell are already offering tiered, usage-based pricing.
