Wednesday, September 3, 2008

Metered or Bucketed Usage Plans? Only One is a Problem

Looking at moves to bandwidth caps by Comcast and other service providers, some observers are concerned about the possible impact of what is termed "metered" usage on user behavior. It's a reasonable concern. Back in the old days of dial-up access, metered usage clearly depressed usage, which exploded in the U.S. market when AOL moved to "unlimited" packaging. 

So observers are right to worry about potential depressing effects on new user behaviors and applications. The concern probably is misplaced, however. There is a difference between "buckets," which feature a usage cap, and "metered" usage. The customer reaction also is quite different. 

Metered usage isn't welcomed by users, primarily because it introduces uncertainty. Users do not like to wonder what their bills will look like, so there is a clear preference for predictability.

But if the buckets are sized appropriately, and when users have some experience to gauge the appropriate buckets, usage does not seem to suffer. Strict metering undoubtedly would depress usage. Buckets will not, if constructed with reasonable parameters and when users have some way to predict and adjust their plans if needed.

The other issue is that lots of other services are offered on a strictly metered basis, and that can be good for light users. Light text message users benefit from a la carte, metered usage charges. Moderate usage quickly allows users to figure out that a bucket is a better deal.

And even metered usage is tolerated, if the prices are reasonable enough. Most users pay for water, natural gas or electricity on a simple metered basis. As long as users know roughly what to expect, and the rates are not outrageous, it does not seem to be a problem. 

Buckets of wireless minutes, buckets of usage that blur the distinction between "long distance" and "local" consumption clearly have encouraged usage. 

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