Such charges are already in force overseas, and Singapore ISPs are studying volume-based plans

The Straits Times
Monday, August 4, 2008

By Chua Hian Hou

They are called bandwidth hogs and they have had pretty much a free ride here when it comes to using the Internet for anything from downloading films to running home security systems.

Their monthly fees are no different from many average users who use the same connection to check their e-mail and surf the Web.

But while the hogs are using ever more bandwidth as more complex functions go online, Internet service providers (ISPs) are struggling with growing bandwidth costs because of their insatiable appetites.

It has raised the prospect of charging these 'power users' more. Such metered charging is already in force overseas and ISPs here, including SingNet, StarHub, and Pacific Internet, say they are also looking at this, though there are no plans yet to implement this here.

StarHub spokesman Cassie Fong said it is 'closely tracking the development in this area as well as monitoring the interest level in metered charging from local users'.

The ISPs declined to give details but The Straits Times understands that, like their overseas counterparts, a tiny percentage of customers use huge chunks of bandwidth.

A Singapore ISP executive who declined to be named said the problem is that no amount of bandwidth will satisfy these increasingly unprofitable power users.

'Even buying more bandwidth will not work since stuff like BitTorrent is designed to gobble whatever extra bandwidth we buy,' he said. BitTorrent is a file-sharing software.

He acknowledged that metered charging would spark a backlash from power users and casual ones but there may be little choice for the ISPs.

The new approach to charging has come about because of a change in the way the Internet is used.

Think of bandwidth as water flowing in a pipe. Initially, users tapped into only a small amount of water as they accessed e-mail or surfed the Web.

ISPs charge them a fee for connecting to the pipe but did not worry about how much water was being used as that fee covered the cost.

But new forms of Internet use are fast changing the equation. Popular services like streaming site Last.FM and even online home and car surveillance systems eat up bandwidth.

Yet users do not pay extra for this. It is akin to home users keeping the taps on round the clock as they don't have to pay for water used.

So, ISPs around the world are trying to curb the insatiable appetite for bandwidth by charging users for the data consumed.

Research director David Kennedy of international technology consultants Ovum told The Straits Times that 'some form of usage charging will become the global norm'.

'As long as heavy users pay no more for their usage, there is no reason why they would not use up every bit of capacity they can get. So, unless some usage charge is introduced, demand will grow without limit.'

Singapore providers may be holding back for now but other ISPs are taking steps.

In the past three months, American firms Comcast, AT&T and Time Warner Cable, Canada's Rogers Communications and Bell as well as NTT in Japan have either announced or rolled out volume-based plans.

These are likely to involve 'metered' subscription plans like those for mobile phones where users get a preset 'free' limit and pay extra for exceeding it. Broadband subscriptions here are based primarily on download speeds, not bandwidth volume used.

While metered charging is the obvious option, Mr Kennedy said operators could 'avoid the worst' of the backlash by setting the 'free' allocation at a level high enough not to trouble average users but low enough to affect the heavy users.

Singapore, he added, 'has a competitive ISP market that will prevent significant exploitation' of consumers. He also dismissed the possibility of collusion.

'Once the first ISP introduces usage-based pricing, heavy users will quickly migrate to the other operators... [but] these will be forced to introduce their own usage-based pricing to protect their profitability'.

Date Posted: 8/4/2008

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