Watch out! With video-driven demand for bandwidth exploding on both the wired and wireless Internet, expect service providers to drop standard all-you-can-watch pricing in favor of tiered rates. Higher monthly bills are sure to follow.
Well, probably not. According to a survey by Scott Wallsten and James Riso of the Technology Policy Institute, it hasn’t worked that way with landline Internet service in 30 OECD countries, where some 170 companies offer broadband. In fact, plans that charge according to usage are about 15-25 percent cheaper than salad-bar-style plans.
That’s great news – and when you think about it, the most likely outcome in a competitive market. For not only is tiered pricing fairer (use more, pay more), it is more efficient (service prices are more closely linked to costs). Let’s hope Washington doesn’t get in the way of the transition.