TV and the usage-based pricing evolution

Bandwidth caps and metered, usage-based pricing for broadband were among the most unpopular notions on the telecom scene during 2009. During the initial months of this year, there was so much bad press about these concepts that Time Warner Cable suspended a rollout of metered broadband, and other service providers appeared to shy away.

Yet, as the year closes, we see service providers only moving closer to implementing such concepts. Within the last month, Comcast has embarked on a test of a broadband metering scheme on Portland, Ore. Meanwhile, in the wireless world, AT&T recently hinted that it would explore the idea of bandwidth controls on mobile broadband to rein in its iPhone bandwidth gluttons.

Because caps and metered usage ultimately may mean more money and less stressful network management for broadband service providers, there is no question that some form of these strategies will define the future of broadband--at least short of any regulatory or legislative moves blocking them.

For now, it may appear that these strategies have little to do with the TV services that most of these providers, in particular the large cable TV and telco TV, also offer. Some observers even have argued that these providers are bent on pursuing these schemes to inhibit online TV and video viewing that could threaten the success of their more traditional TV services.

There could be a little bit of truth to that: Providers could discourage Internet TV and video via their broadband services by implementing caps or usage-based pricing, but with a mind toward forcing the affected Internet surfers to sign up for new TV Everywhere-style services that feature both traditional TV and additional online content in the same package. That's not a terribly compelling sales pitch and the direct cause-and-effect logic isn't quite there, but even if it didn't work, it still might slow the online TV/video viewing explosion enough to give service providers a more friendly environment in which to launch their TV Everywhere packages.

However, if caps and usage-based pricing represent the future of wireline broadband and the likely future of mobile broadband, there is a good chance such models will influence the future of TV services, too. A la carte channel offers could very well be to TV services what usage-based pricing is to broadband, something that actually makes a more direct connection between product and revenue, and could eventually help TV service providers to better manage their TV channel and application offerings.

Many end users and industry observers would deride such a notion as an unabashed play by service providers to simply grab more money for content that's essentially the same as what they offer now. It would be disingenuous to argue that they would be wrong. The best position for broadband providers with traditional TV services might be to prepare for an a la carte TV universe, and not make any promises to their TV customers that current pricing rules will continue to apply. -Dan

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