Metered Billing to Become a Hot Topic in 2010

Carl Weinschenk

One of the drivers of the Internet explosion during the past few years is that it is cheap. "All you can eat" data plans encourage people to spend their time browsing, downloading and generally using their wired and wireless tools for an increasing number of tasks. Not only is the number of sessions increasing, but the average size of downloads is growing.

 

The bottom line is that people are using more capacity. Posting at GigaOm, Kevin Walsh, the Vice President of Marketing for Zeugma Systems, quotes IDC numbers that says the average person uses 7.27 Gigabytes (GB) per month now-and will use 12.5 GB monthly by 2013.

 

The common wisdom is that some sort of usage-based metered billing approach is inevitable. The good news, at least for users, is that it seems unlikely that the threshold beyond which people will be charged more than a base rate will be higher than the usage patterns of "normal" subscribers. That's not for certain, of course, but setting too low a threshold is fraught with challenges that make it unlikely that service providers will push too hard. The targets are "bandwidth hogs" who take advantage of the system.

 

Walsh sees some problems with metered plans. It seems, though, that the issues he raises focus more on how plans are presented to subscribers and the education that they are provided to better understand their usage. He writes that most people don't know what a gigabyte is, and that other industries solve that problem by translating that and other mathematical terms into understandable images. The bottom line, though, is that there is no reason that broadband service providers can't do the same thing.

 

Trials of meter services will be common in the year ahead. Indeed, Comcast launched a trial in Portland, Ore., at the beginning of this month, and Time Warner Cable planned testing last spring. The company shelved the project, which became a minor PR disaster. The company is savvy, though, and will learn from the incident.


 

Many things must be determined in these trials and tests. There are technical issues involving the how to accurately meter, financial and marketing issues concerning whether and/or where to set thresholds and whether all services-including IPTV-should be included in usage calculations.



Add Comment      Leave a comment on this blog post
Feb 26, 2010 3:17 AM cableguy cableguy  says:

It's too bad that the focus on the large Cable MSOs is skewing the conversation.  Smaller cable companies and internet service providers have been in production with this capability for several years already.  In some countries where broadband is still very expensive this is the preferred billing method over 95th percentile metering which is the common approach in the USA for business broadband.  Universities and large corporations that need to manage bandwidth and bill internal users are also driving demand for metered bandwidth billing.  The large Cable MSOs executed poorly, but will let time pass and will eventually find a way to implement metered broadband.  If for not other reason, video over the net will drive the need.

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