The Future of Flat-Rate Internet Access

To follow up on Tuesday’s Netflix post, many people concur that at some point in the future we will receive all our television and movie transmissions over the Internet.  This is often called convergence.  Personally, I am ready and anxious for that to happen.

However, there is a stirring afoot that could dampen my enthusiasm — the elimination of flat rate Internet access in favor of usage sensitive charges.  In other words, if you use the Internet a lot — such as to watch TV and movies — you will pay more.

Time Warner Cable is conducting a test in Beaumont, Texas with new subscribers.  They will have a monthly allowance of sending and receiving 5 gigabytes of data each month.  After that they will be charged $1 per gigabyte.  A standard movie is about 1.5 gigabytes and a high-def movie is about 6 to 8 gigabytes.  Therefore watching a “free” movie could cost between $1.50 and $8.00.  It seems a lot like paying for shipping and handling on a free product.

Interestingly, they claim that 5% of their customers use 50% of the bandwidth.  I suspect that these folks must be watching movies.  Given this stat, I suspect their real goal is to effectively eliminate high-usage customers.

Although there are a few other instances of cable companies toying with usage charges and usage caps, they are less likely to do so if there is competition in that market.  It is noteworthy, that the network topology of most cable systems is not conducive to high volume Internet traffic, unlike DSL service.

Although this is a threat to watch, there is considerable historic evidence against such a move succeeding, as evidenced by the demise of usage-sensitive dial-up service — in favor of flat-rate service — in the late 90s.

So, until we need to pay to watch our free movies, let’s continue enjoying our movies online.

What do you think? Please leave a comment!