Parks Associates Blog

Friday, January 18, 2008

Prisoner's Dilemma for Broadband Service Providers

Time Warner announced that it will start testing metered broadband service plans in order to curb the enthusiasm of heavy P2P users. Broadband users will have four choices: 5, 10, 20 or 40 Gigabytes. Such approach has been experimented in other countries such as China and South Korea, where P2P traffic accounts for a large percentage of broadband traffic. Metered plans are considered by most industry pundits as fair game: you pay for what you get, just like water and electricity. However, the question is whether consumers, who are used to unmetered bandwidth, will be happy and whether other service providers will embrace the model. It's an obvious prisoner's dilemma. If other broadband service providers decide to not follow, then BSPs who adopt such an approach might risk losing customer (maybe that's part of the intention-sending those bandwidth suckers to their competitors). The bigger fear is that if mass market consumers don't like this approach, they may flee to competitors in droves. Service providers also will need to deploy new technologies and billing systems.

One interesting thing is that although not publicized, some service providers have already been metering bandwidth usage. I cannot name the service providers but I understand if you use too many GBs per month, you might get a friendly letter from them, asking you to ungrade to a higher price tier or else.

At least Time Warner's approach hasn't generated the type of bad rap surrounding Comcast's bandwidth throttling approach, which has led to consumer lawsuits and bad publicity. Stay tuned for more information once Time Warner actually starts its experiment.

P2P is here to play. If you cannot beat them, why not join them. Collaboration between P2P technology companies such and BitTorrent and large service providers is much needed.

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