Several large Internet service providers (ISPs) are looking to introduce usage-based broadband Internet plans to the consumer market. Just like mobile data plans, usage based broadband pricing would vary based on either the amount of time a consumer is online or the amount of data they download.

Is this a good idea? Well, it depends on how you look at it.

Affordability? Maybe

It is possible that by charging based on Internet usage, broadband Internet connections will become more affordable.

Families who do not use the Internet often may be able to find great value in a smaller broadband plan. Why should someone who only uses the Internet sparingly, pay the same amount as someone who is on the Internet 24/7?

If this is how ISP’s determine their new pricing, it makes sense.

However, no one knows what will be defined as light usage or heavy usage. If companies consider charging current rates for light usage, then there would be no cost savings.

One ISP is already testing usage based broadband packages in the Midwest. Initial results show little, if any cost savings for consumers.

Another potential problem is the difficulty customers may have with keeping track of their usage. How do people, especially those who aren’t tech savvy, find out how much they use and how much they need?

Many mobile phone customers are paying for much more cell phone data than they need because they are afraid of high overage pricing. It is likely that this same problem could arise if broadband limits are put in place. At this point, no one knows how high overage penalties might be.

So while broadband usage plans can possibly be more affordable, ISP’s will need to be transparent about how they work, and show that their pricing structures will be fair. That way, consumers will know they are getting the best value for their money.

Virtual Restrictions May Lead to Reality Restrictions

Today, people use the Internet for countless reasons.

Skype, FaceTime, Xbox Live, PlayStation Network, Wi-Fi, Smart TVs, Netflix, Pandora, Hulu, etc. See where I’m going with this?

How will anyone be able to keep track of how much broadband he or she is using?
How much broadband will streaming a movie use? What about an hour of online gameplay on Xbox Live? What if I want to Skype my family across the country? How often will people be able to do that?

If broadband usage plans are put into place, people may have to adjust how they live their everyday lives. They might feel like they can only stream two movies instead of five. They may only be able to Skype their mom twice a month.

Yes, these may be exaggerations, but there’s no way to really know. And that is where the problem lies. New broadband plans will create unnecessary hassles that may create more problems than solutions.

Bottom Line

It is still unclear if usage-based broadband plans will ultimately benefit the customer. But, if ISPs keep their current pricing for 5GB plans, higher plans are going to be much more expensive. When watching one high quality movie off Netflix will bring you to that 5GB limit and usage likely continuing to rise, it’s hard to imagine how limiting usage could be a good thing.


Photo by Dan Taylor