Wireline and Wireless Broadband Pricing ModelsWireline and Wireless Broadband Pricing Models

Maybe carriers should move to peak-hour pricing models--if the only alternative is capacity-based pricing.

This post on GigaOm sent me back to re-read this item that I posted from the CTIA Wireless show last week. The issue is broadband pricing models in the era of streaming video and other high-bandwidth applications. Specifically, the GigaOm post raises the issue of peak-hour pricing, which is something that came up in a CTIA session I attended, and it's an idea I dismissed as being outdated. But after reading the GigaOm post and thinking about it some more, it seems to me like there's a potential way forward.

It seems like maybe peak-hour pricing could offer a way for the home user and the broadband provider to actually work together to meet both of their objectives when it comes to streaming content.

Suppose the broadband provider does jack up the rates for streaming between 9 p.m. and 1 a.m., but offers low rates off-peak. If you know what content you want to watch tonight, you could stream and store it off-hours: The customer gets a better rate, and the broadband provider optimizes network utilization off-peak by encouraging this behavior with better pricing. For the customer, it wouldn't be any different from DVR-ing, except that you're accessing stored content, not time-shifting scheduled content.

Meanwhile, if you don't plan ahead, or if you find yourself unexpectedly idle of an evening, you pay extra for "instant" streaming.

In an ideal world, what we're supposed to demand from the broadband providers is that they give us everything for free or at a low all-you-can-eat price point. I just don't know if that's going to be sustainable in an environment where, let's face it, massive companies like AT&T and Comcast have, shall we say...friends...in Washington.

In contrast to this wireline broadband model, I still don't think peak-hour pricing would work with mobility, since the whole point of mobility is its sponteneity and convenience.

The GigaOm post that I started out with actually seems to advocate for peak-hour pricing as an alternative to capacity-based pricing. I agree that the carriers have been crying wolf on capacity constraints since the days of dial-up modems, when they tried to claim that all that dial-up traffic was tying up their central office switches and blocking voice calls. It was never true then, and I still don't buy it. And the profit margin numbers in the GigaOm post back this up.

On the enterprise side, the idea of off-peak pricing also preserves the culture of telework that I believe would be seriously threatened if the broadband carriers imposed onerous capacity charges. Right now most teleworks use their consumer broadband link that they pay for themselves; if you worked from home and had to worry about getting charged to transfer large files for work, it'd seriously affect the way you work, and it would also probably result in people wanting to be reimbursed for home broadband, like they are if they use "bring your own device" mobile for work.

But if the peak time for streamed entertainment content is the evening, then home-worker traffic would also be another way for the carrier to fill up its network outside of those hours.