Sometime in the mid-nineties, my dad got an AOL account. Roughly two seconds after that, I fell down the rabbit hole of anonymous chat rooms and never quite got out–that is when I wasn’t getting the deadly, dreaded dial-up busy signal. AOL charged by the hour back then. Until the service switched to a flat monthly rate in October, 1996, the clock was always ticking, forcing you to make the Sophie’s Choice of where to spend your time online.
Now it seems the industry is heading back in that direction. Not by-the-hour, mind you, but a usage-based pricing model that would prompt viewers to consider whether, say, spending the weekend watching Friday Night Lights on Netflix is really worth it. (Answer: Clear eyes, full hearts, can’t lose.)
Last week, Comcast (CMCSA) began testing a usage-based pricing model and at the cable industry trade show in Boston yesterday, Julius Genachowski, chairman of Federal Communications Commission expressed support for the notion.
Mr. Genachowski said tiered pricing, will “increase consumer choice and competition” and yield in “lower prices for people who consume less broadband.” Although, as Electronista notes, “he did not clarify what mechanism would drive prices down.”
Public interest groups have decried the potential impact broadband data caps will have on the market and innovation, not to mention the biases baked in the plans. Comcast, for example, counts Netflix video into its data plan, but lets its own XFinity service stream away.
As the Washington Post reports, Mr. Genachowski “didn’t appear to feel the same outrage,” as Netflix CEO Reed Hastings over it.
“Business model innovation is very important,” Genachowski said. “There was a point of view a couple years ago that there was only one permissible pricing model for broadband. I didn’t agree.”
For our feature in this week’s paper about Aereo, the startup that lets you live-stream broadcast TV, Betabeat discussed broadband data caps with IAC chairman and Aereo investor Barry Diller. (Mr. Genachowski served in senior executive positions at IAC for eight years under Mr. Diller.)
Mr. Diller, who recently testified before Congress in favor of net neutrality, reiterated his support for usage-based pricing.
“I’m a big proselytizer for net neutrality,” Mr. Diller told Betabeat earlier this week. “We have the miracle of the Internet where you can press a button to send and essentially publish to the world, without anybody between you sending that publishing and anyone who receives it. That really is a miracle of communications and it’s worth protecting.”
However, he clarified, “That should not be confused with my belief that anyone who sells bandwidth should be able to sell it on a usage basis, just like electricity and I think that is absolutely appropriate and I’ve advocated that for a long time.”
