EMERGING PLATFORMS
Published: July 21, 2008
Will internet metering cost you audience share?
 

If ISPs do start to charge consumers by their bandwidth usage, your company could bear the burden in terms of lost users.

A couple of weeks back an article ran in The New York Times about internet metering packages currently being tested by a number of U.S. ISPs. Some are testing monthly download limits, while others are looking at throttling download speeds for bandwidth hogs at peak times.

The article presented views from both sides of the fence. On the one hand are those who believe that metered internet plans are essential for funding the continued development of our technology infrastructure; while on the other are those who argue that tiered broadband charges will hold back innovation in the online space.

Of course internet metering is nothing new. I'm from the UK where tiered internet packages are commonplace. I was also talking to an Australian friend who said the same is true Down Under. And if you think some of the tiered plans being tested out here sound restrictive, consider that one ISP in Oz is asking $32.50 AUD (around $31.00 USD) a month for a package with a 74MB peak-time download limit. 74MB!

In principal, I'm not opposed to tiered access. Indeed when my parents (who live in the UK) asked me to get them "hooked up to this internet thing," I signed them up to a package with a 1GB monthly limit on the assumption that they'd never get close to hitting it. Now, a year or so on, they're iTunes converts and have proved me wrong. And this is where the problem lies.

Rather than simply upgrading their plan or paying the penalty charge for going over their monthly limit, they've instead decided to reign in their iTunes downloads and revert to buying CDs (remember them?). I'm sure they're not alone.

If even a small percentage of internet users limit their time online as a result of metered access, then that spells potential trouble for content providers. The much trumpeted convergence of web and TV is arguably most at risk here. Already, millions are watching TV shows online and buying or renting movies through the likes of iTunes and Netflix. What impact will metered access have on the growth of these services and others like them?

The more cynical among us might contend that metered packages are a canny rearguard action from the cable companies who are looking to protect their subscription packages. After all, if TV is consumed over the web what's the point of having cable TV? There may be some truth in that argument, but to me it misses the main point. Internet use is getting more and more bandwidth hungry and someone will end up having to pay. But who?

In theory, it should be the content providers themselves. They stand to generate revenue through advertising or paid for downloads, so why should consumers shoulder the cost for the bandwidth while they happily fill their coffers? It's like being charged for going into a shop.

Of course, while the concept of content providers putting their hands in their pockets sounds good in principal, it's completely unworkable. How would they know who's on a metered package and who's not and, therefore, whom to compensate and whom not to?

So, with the content provider out, it'll come down to either the ISPs shouldering the cost of all the extra bandwidth themselves, or passing it onto consumers through metered packages. I know which direction I expect it to go in.

I think as we continue to march down the road of bandwidth sapping online innovation, metered internet packages look certain to become far more ubiquitous. But will these packages have a negative impact on consumer adoption of converged web/TV services? Yes, I think in the short term they probably will. The challenge for the content providers will be to ensure that the services they offer are compelling enough to have appeal beyond the ranks of just the early adopters.

Alex Vlasto is the marketing & communications director at MIVA, Inc.

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