The Trail of Tiers: The Price of Internet Usage

We live in a time of skyrocketing data consumption and record-high bandwidth use, but a recent session with the Parthenon crystal ball indicates that how we pay for this privilege is likely to change in the near future.

Both of the two largest cable companies in the U.S. (Comcast and Time-Warner) have been dabbling with tiered Internet usage plans similar to the type most smart phone users are already accustomed to. These plans charge for access based on the amount of data consumed.

In the not so distant past, Internet service providers (ISPs) began implementing data usage caps. The concept of caps was justified to the public as a way of reigning-in a small minority of heavy (ab)users. The caps were touted as a means of managing network congestion for the public good; claims which have been since been exposed as never having been true.

Although met with some public outcry, the caps seemed reasonably generous and sufficient for most households. Since then it has become only more apparent that usage trends will continue to grow and households with multiple users and data-heavy content will find living with such limits increasingly challenging.

Cable companies are now promoting tiered pricing as a fairer alternative which is likely equally untrue. I say this because it would be very surprising to see any pricing actually decrease in this fair new world. Truly fair pricing would include very low cost access to light users who only occasionally access the Internet (think Grandpa Joe).

Market testing for tiered usage pricing is already in place, but I have to believe that limiting access to bandwidth through pricing is inherently bad for users as it restricts both competition and innovation.

I’ll keep my eye on the Parthenon crystal ball and report back. Hopefully I’ll see some free national WiFi coverage in our future…