Usage based billing, the common sense approach

Usage based billing, quite a hot topic in Canada, in fact, it was one of the election items that parties had to look at (if not act on).

I'll take the unpopular route for a techie and say usage based billing should be here, but the caps that the bigger ISP's are providing are nothing short of ridiculous.  If you've found this page through a search, I'd imagine you're already familiar with the issues around user based billing.

To start off with, yes, bandwidth isn't a natural resource that's mined or an item built in a factory somewhere.  But on the end of the ISP's you do have to pay for backbone access, enterprise level switches and routers, and enough redundancy to ensure that heavy usage by a person or group of people doesn't bog down the whole network.  To add to that housing the newer (and usually more) equipment drives up electricity costs.  Add to that more employees that are required to install and maintain that system translates into more cost, and then it's understandable that companies want to charge more.

The downside of usage based billing are companies that start charging you after 25 gigs of data.  That seems ludicrous as in today's digital world that could be a day in a draftperson's office, a half a day in an advertising company.  Or a few movie nights with the family plus a couple of teenagers using youtube in a month.

So while a cap does make sense to some extent, I do not see the need for the caps to be as low as they are.  Another thought I have is that most of the ISP's that are pro-cap tend to be the ones that are already providing television services, and this in effect hampers tv efforts by companies such as netflix, and pay per view youtube (it's in the works) who want a slice of that market.  It would be extremely unlikely that an exec hasn't done a cost/benefit analysis on the cost of eroding tv services and wanted to add a cap given that reason, IPTV a new and credible threat and they'd be foolish to ignore it.

In this whole scenario there are people who want everything for the cost of nothing vs ISP's that want to nickle and dime everyone and choke off all competition for newcomers.  Both of the parties are heavily motivated by greed, and in my opinion neither side will ever get what they're looking for.  As far as middle of the road companies go, I imagine that they'll see some short term losses but flourish in the long run, and isn't that what we all want?  Some sort of fairness.

The future of tv

Well, I think the way we traditionally see cable companies and satellite tv providers days are ending.  Cable companies have already made a majority of the switch from analog to digital which not only heralds better quality for the end user, but also opens up the competition for any company that can send 1's and 0's down the pipeline.  And some very big players are very, very interested.

The biggest game changer is that companies such as netflix, google, Microsoft, Nintendo, and various others I'm sure I'm forgetting no longer have to have their own connections out to your house, and they already have their set top boxes in your home in the form of a pc, gaming console or a tablet/smartphone. 

The challenges that stand in the way are licencing for content, where the isp gets a cut of the money, the actual capabilities of the pipeline and lastly, getting users used to the idea of what you want, when you want tv.  

As far as the licencing goes, it's a cumbersome, restrictive process that has the hand of private corporations and governments in it.  I do think it's a system that requires significant upgrading before we can even think of tackling the other three issues.  The only thing I can think that may work for the broadcaster is that it'd be based per show and different cost levels for how many users you want to so to rebroadcast a popular show to 0-1000 people, you pay $2 per subscriber, 1001-5000 $1.90  a subscriber and so on, also with a ratings system, sort if like the iTunes store but for broadcasters.

In this model ISP's would have significant more bandwith to churn out.  I'm guessing that user based billing will become more common if/when the content is available just from the middleware provider.  That's already happening for a lot of ISP's in Canada and America, I'm assuming the trend will continue.

As far as the capabilities of the pipeline go it's very dependent on the ISP, there are large swaths of rural populations still out there that'll have to rely on satellite, but I'm guessing the cost of running new cable wouldn't make it very feasible or easy.  Outside of that another issue is that analog cable is quite a simple beast, digital services, while very flexible, require a concert of devices all communicating harmoniously to make the whole thing run.  As more companies get involved though it's as good as the traditional tv services in some serving territories and will probably also continue to expand.

As far as the last issue of getting users switched over, well, Hulu has shown us the way and youtube is slated to have pay per view services in the near future.  No matter what companies fight it out, or who are the winners and losers, in the end, the customer would benefit greatly since flexibility is the name of the game and if you just want to watch one tv show a month, that's what you'll pay for.. maybe, in another 5-15 years.