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Industry Perspectives: Why Pay-As-You-Go Internet Pricing Calls for Careful Consideration
ISP's are considering a return to usage-based internet pricing. Here's a look at the pros and cons.

Internet service providers (ISPs) are taking a serious look at returning to usage-based internet pricing. This is due to the seemingly endless surge that carriers are seeing as internet users watch more video content, download more files, and share more data over the web. Let's face it; everyone is getting the most out of being online. From the always-connected executive to the perpetually curious teen to those individuals seeking online friendships and community, the internet has reached mass adoption, and it is not slowing down anytime soon.

And yet, carriers are threatening a return to simpler and cheaper times. Ten years ago, ISPs charged customers based on how much time they spent online. While there were far fewer internet subscribers back then, the reason for the potential switch this time around would be so telecommunications companies can charge more for the high-usage customers using more bandwidth and gaining more revenue. Initially, this might sound like a logical idea, but if you look closely and peel back the layers, there are several reasons why this would be a poor move for consumers, businesses, innovation, and the numerous industries built on, and because of, the web.

Stifled Innovation and Growth
Think about how far the internet and internet adoption has evolved in the past 10 years. Now imagine the limitless potential that remains and how much would be lost if internet usage was tracked and capped for consumers and businesses. Entire organizations are based on our ability to log online whenever and wherever we want. Think Twitter, Google, Yahoo!, AOL, Esurance, and the hundreds of thousands of profitable blogs and online publications that we rely on for news and information. And these are just the more-notable organizations-never mind the countless startups that are striving to become the next Google.

Another aspect of innovation and growth that would suffer is online advertising/marketing. As more consumers move online for information, advertisers are naturally drawn to get their products/services in front of them on the web. Online advertising contributes $300 billion to the U.S. economy according to a new study by the Interactive Advertising Bureau (IAB). The ad-supported internet accounts for 2.1% of the total U.S. gross domestic product. This revenue is crucial and contributes to the growth of the U.S. economy at a time when innovation and growth is more necessary than ever before.

Increasing Need for Track and Trace
If telecommunications and ISPs moved to pay-as-you-go internet pricing, the need for more refined tracking, billing, and ways to monitor usage would skyrocket. If you think we're tangled in red tape now, image what it would be like if you tried to track and dispute any discrepancies in your internet usage. Streamlined billing and automatic bill pays would grow increasingly complex as most users would likely strive to verify their hours of usage with the ISP before paying automatically each month. Businesses will also burden more costs as more employees use the internet to complete work; paying for the internet on a pay-as-you-go plan could result in one of the highest bills for a business. On the ISP side, it would require enhanced tracking and tracing of each customer's internet usage as well.

Transformation in Internet Usage Habits
Something that seems quite obvious and is easier said than done centers on being able to change internet and search habits should limiting time online become necessary. According to Nielsen, about 201.2 million Americans are considered active internet users. Of those users, the average person spends 54 hours, 16 minutes, and 37 seconds online each month. That doesn't seem like much for those of us who work behind a computer all day, especially because the number of adults who access the internet at home has also increased from 66% in 2005 to 76% in 2009. Ten years ago, only 56% of all adults accessed the internet from home. Now, in total, 98% of all computer users are online, according to Harris Interactive. Furthermore, 25% of 25- to 29-year-olds surf the web between 24 and 162 hours per week.

And despite increasing time spent logged on, a new Rasmussen Reports national telephone survey finds that only 23% of adults think they personally spend too much time using the internet, computers, and mobile communications devices. These proof points confirm that changing habits and personal web usage would be difficult, at best.

Restrictions on Time and Bandwidth
Perhaps more obvious than the arduous task of changing internet usage and habits would be the need for those sharing computers and internet-accessible devices to also share time on the internet. If households or businesses begin to, or already, share computers and the internet, how would billing break down? If it broke down per user, this would lead to tighter restrictions by the household head and/or business finance department that controls company expenses.

Although, some individuals might actually benefit from restricted internet usage, as approximately 84% of respondents in a survey of 1,000 people aged 19-29 said they would rather do without their current partner or an automobile than forego their connection to the web, according to German broadband association Bitkom.

What About Mobile?
How would internet access and usage on mobile devices fit into a new found pay-as-you-go internet pricing model? Perhaps, if subscribers have a carrier such as Verizon, which offers mobile, internet, and cable services, both mobile and PC web usage would be tracked simultaneously and lumped together in one internet bill.

Broadly, mobile is growing at lightning speed, and on-the-go internet access is no exception to that trend. Access to Facebook via a mobile browser grew 112% in the past year, while mobile Twitter access experienced a 347% jump, according to a new study from comScore. Being able to accurately, easily integrate and track mobile internet access into a subscribers account is yet another consideration that would need investigating and sorting out.

Of course, internet quality might improve if more users decreased their access to and usage of the internet. This could reduce download times, enhance bandwidth, and maybe even reduce poor internet connections. Consumers would also have the flexibility to change-in real time-how much of their budget they want to dedicate to accessing the online world. And those suffering from internet addiction might be compelled to spend less time online to avoid higher internet bills.

Overall, there are numerous aspects for both personal and business internet use that would need to change if carriers returned to usage-based internet pricing. Although carriers continue to experience a surge in traffic and eye usage-based pricing models, in the end, they would hurt themselves and stifle the growth of their industry. The potential negative effects certainly outweigh potential benefits and would limit the end user, whether it's a business, a consumer, an online publication, or some other web-related stakeholder. Perhaps the better question here is not if pay-as-you-go is a viable option, but rather how the industry should re-evaluate its pricing models to accommodate the ever-evolving and ever-growing internet adoption rate.