Metered Internet Access Plans Coming?

Time Warner Cable CEO Glenn Britt says in a CNBC interview that the question of how consumers pay for their broadband is "an evolving thing." Britt still does not believe the existing flat rate for unlimited usage pricing plans are going to exist universally, indefinitely.

Verizon EVP Dick Lynch also has noted that Verizon would have to consider some form of tiered or metered bandwidth in the future.

One might argue that such plans will be available, with a premium price. But many, if not most other plans likely will move to some pricing format more nearly resembling the way people now buy buckets of wireless minutes or text messages. Consumers nearly universally dislike true metered usage plans, but have shown a level of comfort with "buckets." That suggests buckets will be the path forward for broadband services that must take some account of drastic bandwidth consumption patterns imposed by video content.

Some idea of the need for such plans, sure to be initially unpopular with some consumers, is the cost of continually providing more bandwidth, with modest increases in new revenue. At least some independent service providers have argued for years that fiber-to-home investments cannot be justified in tradtional "five year return on capital" criteria.

In that view, operators need to invest in FTTH "to keep their businesses," essentially. Yankee Group analyst Vince Vittore says that sort of refrain was current at the most recent Fiber to the Home conference.

Cable competition is a primary motivator in that regard. But experience so far continues to show that the financial return from an FTTH network is not assured nor easy. Nobody expects a return on invested capital in five years, as once was possible for many types of network investments.

Nor does anybody seem to believe it is possible to earn a return on FTTH networks based principally on incremental revenue from optical access, or even from providing video entertainment services. One need look no further than that to discern the industry emphasis on new applications, services and revenue.

Usage that is more closely tied to actual usage will happen. That doesn't mean it will be as strictly metered as electricity or water. But think about wireless buckets of use and one can conceive of metered service plans that consumers do not find inherently objectionable.