AT&T warns: usage based broadband charging "inevitable"

Stuart Corner
Monday, 16 June 2008 02:03

Opinion and Analysis

To get a sense of what handling all this traffic means to ISPs, you have only to look at statements from Cisco about sales of its high end core router that carries all this traffic in many carriers' networks. Cisco attributes burgeoning sales of the product to carriers having to cater for massive increases in video traffic on the Internet. In April it announced that it had sold 1800 units since launch of the product in mid 2004 and significantly that half this total had been sold in just the last nine months, to the end or March 2008.

Cisco quoted Michael Howard, principal analyst at Infonetics Research, saying: "Exponential traffic growth on the Internet - driven largely by increased deployment of video services - is causing more and more providers to rethink their core architectures...as business and residential consumers demand more video content in increasingly personalised bundles."

To pay for all this, and the rest of the gear required to carry all this traffic, telcos have two choices: simply charge for bits, or add lot of value and 'personalisation' so that customers end up paying more for those bits. But the latter approach demands further investment: in systems, services, content, marketing and customer acquisition and won't stem the tide of bits from other sources that carrier can never hope to add additional value to.

So, yes, "a form of usage-based pricing for those customers who have abnormally high usage patterns is inevitable." The only questions are: what usage will be considered 'abnormal' (even 'normal' users are going to start downloading more video as the popularity of services like Netflix's and Apple's iTunes video service grow) and when will it happen?