Pay-as-you-go Internet service isn’t a new idea; versions have been available for years. One of the attractions of the method is that there are no contracts necessary, another is that the consumer doesn’t pay for unused service. Pre-paid service, like telephone calling cards, may also work well for people who travel a lot. There are a number of concerns about pay-as-you-go, however, and some of those are presented here.
- Cost – In general terms the average home-user will find that pay-as-you-go plans are much more expensive than other plans, though people who don’t use the computer much may actually benefit from pre-paid plans.
- Hostage Situation – There are legitimate concerns about ISP’s virtually forcing a more expensive service down the throats of unwilling customers by cutting back on unlimited service offerings.
- Price Hikes – Some of the plans now offered by ISP’s have pricing structured so that any over-usage results in dramatic price increases, and customers may not be aware of extra charges until it is too late.
- Tracking Usage – Keeping up with cell phone use is difficult enough, but trying to track how many gigabytes a customer is using is nearly impossible for the average user.
- Netflix – Publicly, Netflix says it has no problem with caps on use plans, but they do say the rates in Canada, where Netflix hopes to be a major player, are often prohibitively high.
- Politics – Consumer advocates point out that ISP’s stand to profit handsomely at the expense of consumers, while ISP’s defend their right to turn a profit, and claim that consumers are actually being given more options than ever before.
- Conflicts of Interest – As with Comcast ownership of NBC Universal, service providers and content providers may exist under a single umbrella, which could lead to serious inequities in what the customer is paying for.
- Constraining Trade – Broadband providers may use capped services as a way to cripple competitors; Netflix, for example, will have to go up against ISP’s that provide similar services.
- Heavy Users – The people who benefit the most from unlimited plans are those who download a lot of music, movies and videos, or people who use the net for hours every day, and these same people are the ones who will most feel the crunch of capped plans.
- Shooting oneself in the Foot – The very people who stand to gain the most from charging by the gigabyte could suffer, too. It may not be long before pirating bandwidth becomes as much of a problem as pirating copyrighted materials.
Taken From Internet Service Providers