CenturyLink to Test Metered Internet Access Plans

As do some leading cable TV operators, CenturyLink will test metered data plans in the second half of 2016. Such moves are contentious in some quarters, though an argument can be made that metered usage actually is a useful practice.

Few “for fee” products actually are sold on an “unlimited use” basis, with a flat fee, although usage of most Internet apps tends to occur on an “unlimited usage, no fee” basis.

For-fee products typically sold on an unlimited use, flat-fee basis typically are those for which incrementally-higher usage does not incur direct additional costs. Linear TV subscriptions provide one obvious example.

In other instances, even where historical practice has featured "unlimited" usage, such as mobile Internet access, there are quantifiable costs to supply incrementally-higher consumption, at peak hours. 

Though it often is missed, all communication networks are sized for peak usage, even if most networks are "underused" most of the time. So it is true that most networks have spare capacity most hours of the day.

None of that is relevant for network sizing. All networks are sized to handle the expected peak load, on any given day.

But most for-fee products do have substantial incremental costs for higher consumption, ranging from retail consumer products to taxi cab rides to electricity, natural gas, drinking water or bridge or expressway tolls.

Consumer Internet access is harder to classify, as it is harder to understand direct incremental costs for higher consumption created by unlimited usage policies. Nor is retail price directly proportional to wholesale cost.

But indirect costs (capital investments, energy consumption, interconnection costs) to support rapidly-growing consumption are substantial, at a time when revenue is flat or declining, overall.

CenturyLink anticipates slightly-lower operating revenues and core revenues in full-year 2016 compared to full-year 2015, for example. Operating cash flow also is expected to decline from full-year 2015, primarily driven by the continued decline in legacy and low-bandwidth data services revenues.

Beyond all that, unlimited consumption often has undesirable social impact. The whole point of carbon reduction is to “use less.” When consumers pay no extra costs to consume more, they tend to consume more.

source: CenturyLink