Level 3 Wants Broadband ISP Subscribers to Pay More for Internet Access

Global Tier 1 network supplier Level 3 Communications has suggested that broadband subscribers in the UK should, if they want to help ISPs invest in and develop better superfast broadband infrastructure, be prepared to pay more for their internet usage. But ISPs must first be willing to make that change.

According to Level 3’s Content Service Product Manager for Europe, James Taylor, the current model of fixed package pricing is broken because it doesn’t have enough flexibility to be sustainable. Consumers are eating more and more data while prices stay the same, he claims.

James Taylor told Computing:

“Look at their business model. As a broadband subscriber, you can pay them the same amount every month and that never changes, but you’re going to consume more and more bandwidth. So that basically means that they have a fixed income and a variable cost, so that business model at some point doesn’t work.”

Instead Taylor, whom makes no bones about the fact that he wants to see the older BT style copper telephone lines replaced with faster fibre optic ones in order to help reduce costs, suggests that we should return to a model of paying for what we use (usage based charging).

In fairness many UK internet providers still have usage capped packages that charge extra when you go over the limit; only a few can viably claim to offer “truly unlimited” services (e.g. Sky Broadband). Similarly the vast majority of big ISPs, except for BT and Virgin Media, do not build or manage the underlying telecoms infrastructure themselves (not to be confused with unbundling) and thus have limited direct incentive to change their models.

Taylor’s comments also overlook two other important aspects of service pricing. The overall price that consumers pay for access, with few exceptions, has not stayed the same. Many ISPs, excluding VAT changes, have actually been putting their prices up by around £1-£2 per year. Often these increases are done in a stealthy way, such as through in-direct line rental, calls or TV price hikes, and other times they’re applied to the broadband package itself.

Meanwhile the raw cost of data capacity / bandwidth seems to have come down, which in many cases has been able to help counter the rising demand. Even ISPs that charge for extra data, such as Zen Internet, have been able to raise their usage allowances and in some cases cut prices, all seemingly without hurting their bottom line. Suffice to say that the picture is usually more complicated than might first appear and that’s before we even get into the murky issues of Net Neutrality and telecoms regulation.