Is Usage-Based Billing Inevitable in the U.S.?

December 1, 2011 -

Are usage based billing and data caps going to become the standard for cable and broadband operators in the United States as a way to combat services such as Netflix, Hulu and Roku? One analyst familiar with the sector says that it is inevitable, though who is going to jump in first remains a mystery. Craig Moffett, an analyst with Sanford C. Bernstein & Co. in New York predicts that at least one service provider will make a move towards this in 2012.

"As more video shifts to the Web, the cable operators will inevitably align their pricing models," Moffett said. "With the right usage-based pricing plan, they can embrace the transition instead of resisting it."

This is certainly not the first time that cable operators have thought about usage-based billing but it's a very unpopular thing amongst customers and reaction to a move towards it has always been fiery. Moffett adds that the best option for ISP's is to find ways to squeeze profit from that online shift. That way, if revenues decline from a loss of TV subscription revenues, it would be offset by the caps and usage fees. Generally if a subscriber goes over a certain cap they have to pay an extra fee. The problem for cable operators is defining what is a reasonable cap level and a reasonable fee. Many subscribers feel that any kind of extra fee is unreasonable.

"In the end, it will be the best thing that ever happened to the cable industry," Moffett said.

Netflix is certainly not happy with the prospect of usage-based billing fees, nor is Dish Network, who runs the Blockbuster movie-rental business..

"That Netflix subscription of $7.99 could go to an extra $20 a month for bit streaming," Ergen said, making a total monthly subscription "the equivalent of $27.99."

Netflix General Counsel David Hyman said in a Wall street Journal editorial back in July that usage-based pricing is anti-competitive if it diminishes the value of rival services, wrote Netflix General Counsel David Hyman in a July Wall Street Journal editorial.

Steve Swasey, a Netflix spokesman, said that usage-based billing "is not in the consumer's best interest as consumers deserve unfettered access to a robust Internet at reasonable rates."

Groups that supported net neutrality saw this one coming when Federal Communications Commission Chairman Julius Genachowski gave cable operators concessions such as the ability to use usage-based billing. Clearly cable operators will use it and data caps as a way to recoup money lost from declining TV subscriptions and to make consumers think more about the total cost of using a streaming service. While we've talked a lot about Netflix, usage-based billing affects everything - from the files you download to the games and YouTube videos you consume every day.

This is why the FCC's net neutrality rules are being challenged in court by at least one net neutrality advocacy group: they didn't go far enough to protect consumers.

Source: SFGate

 


Comments

Re: Is Usage-Based Billing Inevitable in the U.S.?

Monthly caps should be increasing at least 50% every six months if they're going to play it this way. (Okay.. maybe not 50%.) The intent being that ISPs have GOT to re-invest in their networks rather than let it stagnate.

For the record, my household, which has three people, uses on average 200GB a month. That's video, audio, games, and text. All of this is legitimately purchased content. All of this is on a "business" connection so we avoid the 250GB limitation that residential customers have. When games themselves are pushing the boundaries of 30GB to download, and legitimate high-quality media is coming down the pipe, ISPs must improve.

Even then, I'd still argue simply that the bandwidth for any traffic coming into my home or business is still paid for by BOTH sides.

Re: Is Usage-Based Billing Inevitable in the U.S.?

Thing is that there are still parts of this country that run on dial up.

Re: Is Usage-Based Billing Inevitable in the U.S.?

Most people forget this is how it was in the 90s or rather you payed per hour until that evil big corporation *join in hands Liberals!* Microsoft joined in on the dial up market and offered a flat monthly fee.

If all the cable companies choose to go down the path of tiering their service and putting caps it won't be long until a company comes out with a better or faster service with a monthly tier everyone will flock too.

Also Netflix cannot afford to raise their price up anymore since their stock is plummeting after they decided to go into the cable business which led to studios wanting more money and thus Netflix raising their price to appease Stock holders but then lost stock holders with the customer defection.

Netflix stock is currently 67.17 per share. It was 298.73 before the customer defections. Thats a page change from the summer to December. Also their stock almost went down to 50 this week alone.

At this point Netflix if it goes down lower I see a hostile take over of Netflix. Either way Reed Hastings needs to be replaced as CEO and they need to get out of the cable business and realize they are a streaming and rental service. When they bought out the rights to Arrest Development that sent the stock down anymore since the whole problem with Netflix was that they wanted an exclusive TV series by Kevin Spacey which pissed all the studios off royally.

http://www.google.com/finance?client=ob&q=NASDAQ:NFLX

Re: Is Usage-Based Billing Inevitable in the U.S.?

Dial-up is always what I think of when the topic of usage-based billing comes up. In all my dial-up subscription options, it was either time-based usage or unlimited. That time-based usage was measured in hours per month, so a little different from this. When I first got broadband, every offering was unlimited.

Looking back on it now, I think of it sort of like a precident issue in the world of law, which I know admittedly little about. Broadband seemed to initially be offered in unvarying flavors of unlimited usage to compete with the much larger dial-up market.

Yes, we know now that broadband is better and more desirable than dial-up, but at the time, dial-up seemed to be all a lot of consumers needed. As business teaches us, when something new comes along--a change to a system, a new product, etc.--it must be significantly better to succeed, so broadband companies had to make their offerings that much better than the established order.

Now, I look to law for a specific example. It came up in the California case, if I remember right, but one of the SCOTUS justices said that in America, we have a legal precident for censoring sexual content, but not violent content. Personally, I think both forms of censorship are equally harmful, but that's another matter. The example comes to mind because, as young as the broadband market is, it has historically offered unlimited bandwidth to its customers or, in the least, advertised as much (Comcast's monthly data limits come to mind here).

Taken another way, it sort of feels like changing the rules of the game halfway in.

Re: Is Usage-Based Billing Inevitable in the U.S.?

I think any company switching now would likely see a large backlash of people switching service.  Unfortunately probably not enough to kill them, but hopefully enough to keep others from trying it.


Re: Is Usage-Based Billing Inevitable in the U.S.?

The US is one of the few countries with unlimited bandwidth I believe. I pay $59 a month for ADSL2 (bring on the NBN!) and that gets me $150G a month. Unless I go seriously overboard on downloading every show I can think of I rarely cap it.

 

It's not the death of the internet.

Re: Is Usage-Based Billing Inevitable in the U.S.?

I take it you've never been to mainland Europe? Or are you a shrill?

Re: Is Usage-Based Billing Inevitable in the U.S.?

They think that since they made such and such amount of profit in the legacy technologies, that they are entitled to have it with new technology replacing it. That's not how it works. If the fundamental rules change, you can't disregard it and try to change the game in your favor.

 

-Greevar

"Paste superficially profound, but utterly meaningless quotation here."

Re: Is Usage-Based Billing Inevitable in the U.S.?

God I hope not.

If the likes of big corps & the government don't kill the internet, the ISPs just might with this.

 
Forgot your password?
Username :
Password :

Shout box

You're not permitted to post shouts.
Goth_SkunkAnd just to be clear, that remark is firmly tongue-in-cheek, while also echoing statements made by those critical of GamerGate.06/30/2015 - 4:43pm
Goth_SkunkA fair point Andrew, and you are a very reasonable feminist. Though I would suggest that if you don't wish to be associated with the toxic elements present in feminism, I recommend disassociating yourself from them. Maybe call yourself something else? :^)06/30/2015 - 4:42pm
Andrew EisenGoth - By the by, you know how GamerGate doesn't like being painted with a broad brush? Well, I hate to speak for anyone but myself but I'm pretty confident in saying we feminists don't care for it much either.06/30/2015 - 4:10pm
Andrew EisenWell of course. Being a feminist doesn't mean rape can never be depicted in fiction.06/30/2015 - 4:03pm
InfophileIn fiction, it depends on the context. It's very easy to get "wrong," but there are cases where feminists have approved of how it's been shown (eg. the scene with Honor Harrington in the new compilation comic)06/30/2015 - 4:02pm
Andrew EisenThat would be an interesting alternate film though. Ray became a Ghostbuster to get rid of the spooks that had been sexually assaulting him.06/30/2015 - 4:00pm
Andrew EisenHe's not powerless against ghosts. That's very firmly established by that point in the movie.06/30/2015 - 3:57pm
Andrew EisenSo, if in the new movie, McCarthy or one of the other Ghostbusters has a dream where a pretty ghost goes down on her, I don't predict outrage (other than from those silly random no-name numbnuts on Twitter).06/30/2015 - 3:56pm
Goth_SkunkDream or not, it's still a scene that depicts a victim powerless to stop his attacker from engaging in an act of sex upon him. Even if he enjoys himself, it's technically rape. Hypothetically, he could feel traumatized afterwards.06/30/2015 - 3:55pm
Andrew EisenWell, he could always, you know, grab a proton pack and bust that rapey ghost! But again, it's still pretty clearly a dream.06/30/2015 - 3:53pm
ZippyDSMleeSo what dose GG stand for if its not been taken over my bigots??06/30/2015 - 3:52pm
Goth_SkunkI am assuming he's powerless to stop it, yes. I have no reason to believe a ghost would find itself in any way obligated to obey laws of corporeal beings. And it's not just about consent, but also about the means to stop the person engaging the sex.06/30/2015 - 3:51pm
Andrew EisenRape in real life? Absolutely (though "tizzy" isn't the right word). In fiction? Depends on how it's used.06/30/2015 - 3:50pm
Infophile"...it's rape. And that tends to send feminists into a tizzy." You say that as if rape isn't something to get into a tizzy about.06/30/2015 - 3:48pm
Andrew EisenBesides, it's pretty clearly a dream. Ray and the ghost are in some unknown bedroom. Then it cuts to Ray and the other guys in the firehouse beds with Ray rolling over in his sleep and falling off the bed. Looks like Egon is having a weird dream too.06/30/2015 - 3:46pm
Andrew EisenYou're assuming he's powerless to stop it. Maybe saying "no" or something would have stopped the ghost. Anyway, so, in your opinion, sex (oral or otherwise) is rape unless there's explicit consent?06/30/2015 - 3:44pm
Goth_SkunkBut, to be completely fair, that fact never dawned on me until 15 minutes ago.06/30/2015 - 3:43pm
Goth_SkunkAbsolutely. He doesn't consent, and is powerless to stop it because his attacker isn't corporeal. The fact that he's enjoying himself does not change the fact that it's technically rape.06/30/2015 - 3:42pm
Andrew EisenAlways came off as a dream to me.06/30/2015 - 3:40pm
Andrew EisenThat scene really reads to you like Stantz was being raped?06/30/2015 - 3:39pm
 

Be Heard - Contact Your Politician