Is our Internet future in danger?

Signs point to a bandwidth shortage, and avoiding that may mean you'll pay more for broadband usage

Broadband cable providers are also trying to open the pipe. A technology called wideband, whereby cable operators bond several channels together to increase Internet-access speeds, is gaining momentum. This technique can provide speeds of 150Mbps.

But such large investments have been slow in coming, mainly because Wall Street dislikes them. Every dollar on capital improvements reduces carriers' profits, and investors tend to punish capital investments by reducing carriers' stock prices, notes the Free Press's Turner. Because most broadband providers have little or no competition, he says, the Wall Street pressure usually prevails.

Here come usage caps, overage charges, and metered Internet

Despite the distaste for capital investment, carriers have begun investing in it. A big reason is that with the high availability of broadband in urban and suburban areas, there aren't enough profitable new customers left to reach.

Carriers can't raise prices for their current service levels -- current prices are already too high to attract the broadband holdouts. But the carriers also can't lower their prices to attract those customers, since that would reduce their income as existing customers trade down to lower-priced plans, says Gartner's Jopling. "For the foreseeable future, there is a limit on how pricing may increase or decrease. We will only get much lower prices if every home has fiber to it," because that would make capacity essentially unlimited.

That leaves two options: offering premium-priced high-capacity services (a form of tiered pricing) and charging based on usage. Carriers are experimenting with both to bring in more dollars.

Usage caps are the stealth form of usage-based pricing, though several lawsuits have forced US carriers to stop being secretive about them. For example, Comcast agreed this year to pay Florida US$150,000 in a settlement over Comcast's policy of prohibiting excessive use of bandwidth without informing customers of limits. Some customers had their service cut off. In October, Comcast started its new policy, which limits the amount of data a subscriber can send and receive every month at 250GB. Violators will have their service suspended for a year.

Now, Time Warner Cable is testing metered-usage pricing. New broadband subscribers in Beaumont, Texas, are the test case. Pricing starts at US$29.95 a month for a speed of 768Kbps and a 5GB usage cap, and it goes up to US$54.90 for 15Mbps speed and a 40GB cap. It costs US$1 for every gigabyte of usage over the cap. Subscribers can check their usage on Time Warner Cable's Web page. AT&T is testing a similar plan in Reno; the basic US$15 768Kbps plan has a 20GB-per-month usage cap, while the as-yet-unpriced 10Mbps plan has a 150GB-per-month usage cap. Users pay US$1 per extra gigabyte used, and can check their usage at AT&T's Web site.

Join the Good Gear Guide newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags managementinternet providersNetworking

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?