Bigger broadband bucks require better broadband brains

There is tremendous Internet buzz right now about new ways to price broadband to include tiered services, metered rates or broadband caps.

Service providers say they are considering such actions for multiple reasons, the most prominent being the need to continually fund network upgrades to accommodate the increase in Internet traffic — more specifically, Internet video traffic. The triple-play services thought to drive more dollars to the bottom line have instead rapidly become virtual commodities and not cash cows. In many cases, the triple-play revenues aren't even replacing the revenue lost to diminished access lines. Service providers also point to the need to associate usage with price: Those who use more should pay more so that everyone else doesn't have to, or so the argument goes.

The problem is that these ISP arguments are not winning friends or influencing customers in any positive ways. There is general resistance to bandwidth caps among users, who are essentially clueless as to how much bandwidth their individual applications consume. Furthermore, there is organized resistance to service tiers from Net neutrality backers, who argue that any preferential treatment is automatically discriminatory.

For those reasons, many within the industry, including analysts and technology vendors, believe service providers must be more creative in developing smarter broadband offerings that layer on value for which consumers will pay more instead of being drawn into debates over the fairness of the various pricing schemes they might consider to boost revenues.

“Once consumers are used to all-you-can-eat pricing, it's hard to walk that back,” said David Vorhaus, analyst with Yankee Group. “Mobile users might be able to stick with a post-paid model — ‘You used this much, you owe us this’ — for their services, but in the broadband world, that horse is out of the barn.”

“Innovations are starting to appear that give people value on top of what they are already getting,” said Bill Scull, director of marketing for Cloudshield, which on Sept. 2 announced a partnership with IBM to put deep packet inspection (DPI) technology onto a blade in IBM's Blade Center and offer an application development environment that runs on top of the blade. “There are things now that can be pulled into the [network] cloud like parental controls, content cleaning and anti-spam services.”