The Conversation on UBP Continues…

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When we hosted the first NCTA Connects event last month with Professors Steven Wildman and Daniel Lyons, our goal was to start a discussion about the consumer benefits of broadband usage based pricing. And just as we had hoped, that conversation has flourished.

Just yesterday Public Knowledge published an article called “The Question at the Core of the Data Caps Debate.” In the article, Michael Weinberg correctly points out that differential pricing practices (what economists call “price discrimination”) for broadband have been in use for some time. But rather than basing price differences on data consumption, ISPs often have based price differentials on speed.

As Weinberg acknowledges, this has worked well for allowing consumers to select broadband products that work for them rather than taking a one-size-fits-all approach.  But when it comes to basing price differentials on data consumption, Weinberg’s concern is that consumers will have a difficult time recognizing which consumption tier best suits their needs. Weinberg speculates that consumers might take a higher, more expensive tier simply to avoid thinking about accidentally going over.

At NCTA we’ve thought a lot about this point (and many of the other points Weinberg makes), but it seems Weinberg’s criticism is not aimed at usage-based models per se, but rather addresses the need for consumers to have access to information about their monthly broadband use. For that reason, our ISPs offer a variety of data usage tools to inform customers about their usage patterns. It might also be useful to discuss ways in which other consumer-facing service providers, such as web-based application services, might provide useful information to consumers regarding the bandwidth needs of particular content.

We want to be clear that usage-based pricing is not an effort to put heavy users on a “broadband diet” as some have suggested. We want broadband customers to access, download, and enjoy as much content as they want.

But by the same token, we should not be afraid to test a full range of pricing models that promote fairness, transparency, and provide consumers with more choices to better fit their bandwidth needs.

If you have any questions about broadband and usage based pricing, or want to talk about any of the other points Michael Weinberg or anyone else makes in the discussion over usage based pricing, please feel free to comment below or join the conversation on Twitter (@NCTACable #UBP) or Facebook (facebook.com/ncta).