By announcing that it would cap residential broadband users to 250 GB in downloads per month, Comcast last week made a tacit admission that it can charge users $0.17 per gigabyte ($43/month for the service), cover its operating costs, and still make a profit. If Comcast is happy to charge these rates to its heaviest users, the people who put the biggest strain on its residential broadband infrastructure, why shouldn’t the regular users enjoy the same benefit?
The answer is that US broadband service is akin to a Chinese Buffet – the heavier users, who scarf down everything they can, are subsidized by lighter users, who pay more in exchange for consuming orders of magnitude less. The restaurant owners (and broadband providers), who scream “you eat like killer whale!” while a miniscule percentage of their users exceed some arbitrary limit, continue to pull in the same amount from everyone, making a killing on those who don’t eat very much, or only use their broadband to email, surf the web, watch a couple of YouTube videos every day, and download a few big files every month.
For a buffet, which is generally an infrequent indulgence, the system works. But for a recurring service like broadband, there’s no sense in charging customers a fixed rate when there is such a large disparity in consumption.
So here’s my modest proposal for Comcast, and other broadband providers: make broadband equal for all users. Set a monthly account maintenance/access fee (tier it to overall connection speed, if that’s your thing), and then charge everyone for the bits they actually use. The benefit to consumers is clear: if you’re paying for what you use, most users will pay less. The benefits for providers? With the battle for broadband users heating up, and 40% of the country still using dial-up services, the cable companies and telcos have a huge opportunity to attract vast swaths of new customers to not only their broadband services, but also their TV and phone services. Played right, the revenue increase from new sign-ups (if you were a new broadband customer, what kind of pricing would you choose?) could easily offset the initial decrease in broadband income.
There’s no reason for arbitrary caps if you charge for every bit. There’s no need to drive the people who use your service more than anyone else into the arms of a competitor (if, of course, there is one). Charge people for what they use, and customers will flock. Or, keep playing these ridiculous cat and mouse games that only upset your top users, and cause you reams of bad press with all the others. It’s not that hard a choice, broadband providers. Do the right thing.