The Metering Debate

With Libya in turmoil and Japan facing massive devastation, it’s hard to look at the business challenges facing cable in the U.S. and inject any measure of real drama. There are obviously more important issues in the world. But when it comes to broadband, it’s perhaps fitting to note that Japan has one of the best infrastructures on the planet. Time will tell whether that infrastructure will survive somewhat intact after enduring an earthquake, tsunami and potential nuclear meltdown.

 

In the U.S., broadband has evolved. It isn’t just about availability and speed anymore. Netflix and its ilk started what seems an irreversible expectation among subscribers that they can stream HD-quality video from pretty much anywhere on any robust device. And that has created some tension between those who built and now pay to maintain those networks, and those whose service use that infrastructure to reach consumers. Meanwhile, consumers don’t care about any of these fights. They just want to access content easily, and they don’t really understand why—despite authentication and all the other strides that media distributors and content owners have made—it all still seems so darned complicated. And why some of the most recent and best content still gets held back.

 

But with AT&T’s announcement this week that it will institute its own broadband usage caps, the broadband metering debate has started up again. And it appears that Time Warner Cable is (just barely) poking its head back into the arena as well, with pres/CEO Glenn Britt indicating that it’s still on the table. In 2009, the MSO abandoned metering not because execs had a change of heart, but because they had been bludgened by the blogosphere. The public relations cost was starting to outweigh the benefits of holding its ground. The rest of the industry drove by, shaking their heads, as if mesmerized by a car accident but too busy to stop and help. Has AT&T provided cable cover? Who knows, but here’s the truth: Metering isn’t some diabolical plot to oppress the masses. It’s actually a benevolent plot to oppress the masses.

 

The only way that the infrastructure owners are going to keep upgrading their networks to handle all those streams (and bandwidth-sucking 3D is on the way, folks) is if someone pays for it. Some seem to think that distributors and content companies should just eat the costs for the societal good until some magic advertising formula pays the way. That sounds great, but these are for-profit businesses. They will invest where they can make the most money, and for the sake of that same societal good and U.S. global competitiveness, it’s important they can make gobs of money off of broadband. That promise of current (and continued) profit means they’ll keep building it out, making it faster and more reliable, and spurring even more innovation from the next Google, Facebook or Netflix.

 

To be sure, unlimited access to bandwidth certainly has spurred big benefits for consumers and for thousands of software, content and Web-based service companies that rely on a wide-open bandwidth spicket. It seems likely that consumers will continue to demand an “unlimited bandwidth” option, and that either a wired or wireless competitor will meet that demand. But why not give consumers as many choices as possible? Why can’t the marketplace decide? If consumers reject metered pricing and caps, history suggests companies will abandon them. But Britt made a good point this week when he noted that metered rates could actually save some families money. Eventually, those who aren’t heavy users could see their bills go down while those who want to stream HD movies all day and night might have to pay more.

 

This doesn’t seem a patently unfair system, nor is it the death knell for Internet innovation. Is metering a magic bullet for the industry? Does it ensure continued broadband investment for decades? Absolutely not. In fact, low-bandwidth plans may end up canceling out much of the extra money brought in from the high-bandwidth ones (Wouldn’t that be ironic?). And the trepidation of content owners to make more content available faster online will continue no matter how the content owners charge consumers for bandwidth. But before the blogosphere and other pundits reject bandwidth metering outright, isn’t it worth trying it out on a mass scale and seeing what happens? Consumers might surprise everyone.