In Australia we have been accustomed to data caps on our Internet service since about 1997 when the take up by the residetial market started to grow dramatically. Around the world however, many countries have always enjoyed unlimited or "all you can eat" Internet. The main excuse used by ISPs has been the costs of our International capacity to Australia; in my opinion it is more about the cost of local backhaul from the exchanges.

Earlier this week, Time Warner Cable Inc. announced plans to trial a new billing methodology, one based on usage rather than the current flat-rate pricing that is the norm throughout the United States.

The cable giant will roll out the new tiered pricing scheme in Beaumont, Texas (everything’s bigger in Texas) later this year and says the shift in tactics is designed to underpin a strategy to help reduce network congestion.

According to Time Warner Cable, the change will affect but a minority of its users — about 5% — who reportedly use about 50% of total network bandwidth. This is consistant with figures quoted here in Australia.

Time Warner is concerned that downloading of large files, including video is slowing the network, and they believe that with increasing video usage the problems will worsen.

The question is how will this impact the growth in FTTH. "Video is the driver" is the typical catch cry which justifies the economics of FTTH. If we have limited or capped capacity, the only advantage FTTH offers users is faster speeds. Or should be looking at providing more localised contents which is cheaper to reticulate.

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