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Is the UK exporting PAYG broadband to the US?
Friday 03 March 2006 14:56:00 by Andrew Ferguson

While the UK is far from being a totally Pay As You Go market, it has moved on a long way from the time when Metronet was breaking new ground with its low monthly fees and PAYG pricing structure. The UK is very close to approaching a market where the vast majority of consumer oriented broadband products are PAYG, capped or subject to some form of traffic control.

Looking at the broadband news in the United States, it is looking like phone companies such as BellSouth Corp may be considering similar pricing plans to what have proved popular in the UK. To read more on this visit SouthCoastToday.com which has a piece written by Dionne Searcey of The Wall Street Journal.

Several factors will be driving providers towards a more PAYG model, and this will include demand from consumers who do not feel the need for full-fat broadband services, but still want the short time they spend online to be running at high speeds. Perhaps the most compelling factor for providers is summed up in the following extract:

"The new ideas such as pay-as-you-go are being fueled by operators looking to make up revenue after spending billions of dollars to upgrade their networks to boost capacity and by equipment makers that create the gear needed to technically implement the changes. "

Extract from SouthCoastToday.com

This suggests that providers are hitting a point at which they are seeing network usage grow rapidly, but this is not reflected by a similar growth in the number of customers or revenue per customer. Also it is possible that the sales pitches from companies like Ellacoya Networks Inc., Cisco Systems Inc. and Lucent Technologies Inc are very compulsive. If the figure of 1% of customers driving around 40% of Internet traffic is true for BellSouth, then the attraction of PAYG and traffic control systems are that they offer a way to kerb some peoples habits, potentially reducing costs to the provider, while not affecting the majority of customers.

The arguments for and against would seem to be very much the same as in the UK, whether the outcome in the US will be similar is hard to know. One big difference is that in the US people generally only have a choice of a couple of providers, but in the UK the majority now have a choice of hundreds of providers with varying service plans. The UK is still developing its broadband market, and there are still many possible uses that are to gain massed appeal, lets hope that providers and wholesalers charging models do not hold back the development of innovative and exciting uses for broadband.

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