Sooner or later, bandwidth gluttons are going to have to spend more money for Internet service than the rest of us. The only questions are “when?” and “how much?”
The latest: An AT&T (T) rep tells TheStreet.com that broadband service priced by how much bandwidth you use is “inevitable.” This follows Time Warner Cable (TWC), which is testing a consumption-based broadband service in Texas, and Comcast (CMCSA), which is reportedly considering a similar plan. Until now, most U.S. residential broadband subscriptions have been offered as “unlimited,” with only the worst offenders getting slapped for using too much bandwidth.
The key: Finding a price structure that makes sense. For example, we think Time Warner Cable’s caps — 5 gigabytes per month on a cheap plan, or 40 gigabytes a month for a more expensive plan — are laughably small. And their overage charge — $1 per gigabyte — is unreasonably high. (If an ISP does pay for bandwidth, it’s probably less than a nickel per gigabyte.) Comcast’s supposedly planned cap — 250 gigabytes per month — makes more sense.
Last we checked, U.S. Internet providers are for-profit corporations, and can’t exist without subscribers, so they’re not going to set prices at levels that most people won’t pay. But they’re also often duopolies: Besides your phone and cable company, you probably don’t have many options for fast Internet access, even if prices get jacked.
So what’s a fair price? Hard to say, because we’re so used to paying around $40 a month for all-you-can-eat cable modem service. We could see ourselves spending another $10 or so, because we probably use more bandwidth than our neighbours. But anything more than that would send us looking for a new ISP.
What do you think is a fair price for decently fast broadband? Would you sign up for a consumption-based plan? Let us know in comments.