Bandwidth caps and the broadband business model

Bandwidth caps may finally get the light of day from broadband providers. The way we sell broadband is upside down from every other business. If you are an Internet service provider, you make the most money if your customer never uses your service. You make the least money if the customer uses your service a lot. This is why most of us have mediocre access to Internet-based services--selling broadband by the bucket is a lousy way to try to make a living if your customers expect you to refill the bucket a lot (and many customers do).

Most service providers will tell you that a small fraction of their customers use a large percentage of their available broadband capacity--5% of customers using 50% of bandwidth is not unusual.

Some of the cable companies may finally start publishing their bandwidth caps and providing differential service packages--basically, if you want to download a lot of movies, you have to pay more--not an unreasonable approach. It is much better than what appear to be "secret" bandwidth caps, where some customers may have their service cut off for "using too much" even when their service contract does not explicitly define what "too much" is.

In a modern, multi-service network, this whole problem goes away. By selling services rather than buckets of bits, customers know what they are buying and prices are set to match the actual bandwidth demands of a service. On a multi-service open network, you would subscribe to a video on demand service, priced according to the actual service (e.g. $3 to watch a movie) rather than to some indirect cost like bandwidth. It's a bit like taking a cab and being told you will be charged not according the distance you want to travel but some percentage of the wear and tear on the tires.

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