Posted 31 January, 2011 in:

Is Metered Internet Inherently Bad?

Metering works well enough for some services, notably electricity, water, and sewer. So long as the services are managed reasonably, and the rates are fair, I expect to pay more if I use more. Is the Internet different?

The Canadian counterpart to the FCC made some regulatory changes that will mean many customers will switch to “Usage-based billing” or metered billing for consumer internet services. For details you can look at Ars Technica: 200GB to 25GB: Canada gets first, bitter dose of metered Internet. The gist is a cap of 25 GB, down from 200 GB or unlimited, and a surcharge of $CAD 1.90 for every GB over the cap. There are some ways to plan for higher use, but they don’t really help that much. This change is not voluntary to the providers. It was imposed by the regulators in Canada, including the rates being charged. The rates are too high, and the caps are too low. So this is a bad move, an unfortunate change that had no real need behind it. What I’m interested, though, is whether metered internet is inherently a bad thing. Metering works well enough for some services, notably electricity, water, and sewer. So long as the services are managed reasonably, and the rates are fair, I expect to pay more if I use more. Is the Internet different? I actually think metered Internet could be a good thing if the prices are set correctly. In the 1990s many European users had metering, and it was poorly executed then as well. But here are some of the benefits to metered service, if the price is fair:

Fix it fast: the power company keeps the juice flowing, as do the water and phone companies. If the service is down, it’s not used, and they don’t get paid.
Build it better: it also gives them a reason to make sure the installation is of higher quality to begin with. So they can lower their repair costs, and ensure you will use as much as you can in a billing period.
Upgrade it: for the Internet, growth is constant. Historically, the USA has lagged in upgrading its lines (along with everything else), but metering gives some incentive to do that, too. If they get paid by the GB, they want you to be able to suck them down that much faster.

So there are some of the upsides, but where’s the downside? There is only one real downside, and that’s when the price is too high. And there’s the rub. If the price is too high, each advertisement is a slap in the face. Every wasted byte seems like a website is against you. You’ve got a budget (both in bytes and dollars), and they are screwing you. That’s how it was back in the 1990s, where European users would often flame people with long signatures on mailing lists. And the price will be too high unless there is competition (or regulation). Edit: As Canada has nixed the plan, I’ll simply note that there were some quite apropos posts around the internet comparing the cost per GB to other forms of sending data, such as via the postal service, which made it utterly clear how poorly the actual metering rate was thought out.

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