Economics rules: Network is not an infinite resource

Posted on June 28, 2012  /  0 Comments

We’ve been taking the position that flat-rate pricing (all you can eat) is not what will work in the context of the Budget Telecom Network. Some of our past comments are were in the Indian media and simply blogposts. But now it looks like the big boys in the US are moving away from flat rate.

Usage-based billing is seen by some as a fairer alternative to broadband caps, a term most closely associated with Comcast, which had been enforcing a limit of 250 gigabytes per Internet customer per month. Although only a small minority of customers ever exceeded the cap, it became a lightning rod for competitors like Netflix, which accused Comcast of unfairly favoring its own services.

Comcast said this spring that it would start to test usage-based billing. “Our network is not an infinite resource, and it is expensive to expand it,” David L. Cohen, a Comcast executive, said at the time.

Along with news and entertainment, the futures of entire industries — commerce, health care and transportation — are being built atop a broadband foundation. Companies big and small are coming up with ways to get faster broadband to more people; many people believe that broadband speeds will inevitably improve as time goes on, just as computer chip speeds have.

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