June 14th, 2008
AT&T Considers Tiered Broadband Pricing
By Michael Santo
Editor-in-Chief, RealTechNews
As Time-Warner Cable begins its metered-use trial in Beaumont, TX, word comes that another broadband company is considering a similar plan: AT&T.
While DSL pricing has always been lower than cable broadband services, and while AT&T has said it will not block or throttle P2P services, two different AT&T officials indicated this week that tiered pricing was coming.
AT&T’s new chief technical officer, John Donovan told Wired that AT&T will begin testing usage-based pricing this fall. Donovan said:
“It’s almost a taxation issue. Traffic on our backbone is growing 60 percent per year, but our revenue is not.”
Meanwhile, AT&T spokesman Michael Coe told TheStreet a form of usage-based pricing for those customers who have abnormally high usage patterns is “inevitable.”
“Usage-based pricing is one way to deal fairly with Internet usage, which is very uneven among broadband users. Broadband use is surging. Based on current trends, total bandwidth in the AT&T network will increase by four times over the next three years.”
As well, both of them a small percentage of users hog most of the bandwidth: the top 5% of consumer DSL subscribers use 46% of the total bandwidth, while the top 1% of subscribers are using 21% of bandwidth.
However, what do the broadband companies expect? With companies like HBO and Netflix pushing streaming movies and video on us, broadband use is bound to increase, even without P2P to throttle.
So as these companies work to get us to use more bandwidth, ISPs tell us we are using too much. Heavy sigh.
Shelley says:
It’s not surprising that the one DSL company also runs its own entertainment subscription service (UVerse). I don’t think this has to do with usage. I think this has to do with slow UVerse adoption and competition coming from the Net.
Eventually, this will end up in court as an anti-trust issue.
What I can’t figure out, though, is why ATT would remove the one competitive advantage it has over cable.
June 14th, 2008 at 12:43 pm
Get your K-Y Jelly out! says:
Bend over, here it comes!!!!!
June 15th, 2008 at 8:14 am
John Corliss says:
AT&T sucks. They only seem interested in screwing the consumer for as much as they can get out of them. They will probably ultimately be responsible for the end of the internet as we know it.
June 16th, 2008 at 5:11 am
Jim Frost says:
Well, one thing AT&T doesn’t say is what the scale of their costs is. Ok, broadband use is up 60% per year, but bandwidth costs are dropping at similar rates.
It’s a little disingenuous to say that tiered pricing is “inevitable” when most (maybe all) broadband providers already sell tiered access. Comcast sells at least three tiers: Consumer, Business, and a higher-bandwidth Business. The latter two come with both higher upload speeds and much (much!) better customer support, along with a lot fewer restrictions on what you can do with the service (eg run your own servers). Verizon FIOS offers similar service gradations.
I know there are going to be some people crying over having to pay more for heavy bandwidth usage, but competition will keep the pricing reasonably close to reality, at least in markets where there is competition. If you’re in rural America, well, sucks to be you until the phone company gets around to putting fiber into your house. It’ll happen eventually.
jim frost
jimf@frostbytes.com
June 16th, 2008 at 3:58 pm
Wyn says:
It’s nearly impossible to find an isp now that doesn’t either throttle or have tiered bandwidth use pricing. As for ‘rural’ America, if you base your definition of rural on how much fiber is available in an area, most of America is rural. Companies are putting in fiber in new neighborhoods, but most of them aren’t screwing with preexisting neighborhoods. I live in a relatively average city, pop. 200,000+ and only one neighborhood in town has fiber.
June 18th, 2008 at 9:06 am