Simple Billing Plans Fall Short in a Complex World

Carl Weinschenk
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Two recent moves - both analyzed by CNET's Marquerite Reardon - rest on the reality that the explosion of traffic and the greater variety of services are driving innovations in the way carriers and service providers bill for network usage.

 

The moves come from the cable and wireless sectors. Comcast has extended the upper limit of the per-month data allowance for its subscribers from 250 Gigabits to 300 GB. Instead of cutting off those who surpass the limit, it is adding a surcharge. Verizon, she said, is eliminating unlimited data plans. In the future, subscribers will need to sign up for tiers of service.

 

The Comcast move is particularly interesting and comes as the industry faces great threats and great opportunity. The threats are from "over-the-top" content providers - those without infrastructure - such as YouTube and Hulu. The opportunities focus on providing their own content to PCs, smartphones and tablets and providing home automation services.

 

A quote in the story by Comcast Executive Vice President David Cohen suggests that Comcast willingly is accepting the existence of the OTT players. That's smart, and simply suggests that flexibility in how it bills its customers will be a key element going forward. The implication is that Comcast will see the OTT providers as another source of revenue - they will use Comcast's "pipes," after all - not as full competitors. In a fully competitive environment, it could use the ownership of the network to try to squash the upstarts.


 

It remains to be seen how this will play out. Forbes' Tim Lee , for instance, sees things a bit cynically. American telecommunications history - at least the past 30 years or so - has featured the battle between the companies that build and own the infrastructure (and have been enabled by the government to do so) and those that demand access to it. That scenario played out in the voice sector a decade ago and is doing so now in the video realm.

 

It is playing out again. Lee suggests that Comcasts' increased data allowance is a political ploy designed to convince the government it is doing enough to ensure bandwidth is available for the OTT companies. He suggests, however, that it may not be enough to convince those companies to invest aggressively. The intricacy of the issue of how a network owner manages bandwidth and divvies it up in regards to its tenants is illustrated by Stacey Higginbotham at GigaOm. The story describes the uncertainty over whether Comcast is taking unfair advantage of the service it uses to stream Xfinity content to its subscribers with Xbox.

 

The takeaway from all this is that the world of telecommunications is exploding in both volume and complexity. In such a world, the key link between subscriber and service provider - how much he or she pays, and the way in which that figure is arrived at - will be a sensitive issue and, perhaps, a weapon for the incumbent.



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