Metered Broadband Won’t Work, or Won’t Matter: Stop focusing on the heavy-tail customers

In a Telephony Online article, we’re told that Verizon (Landline) CTO thinks the end will come for flat-rate broadband. He means that you won’t be able to pay a flat rate and get unlimited access to the Internet. Apparently, AT&T and others have come out and said the same thing.

The problem is that CTOs are focusing on the heavy-tail customers; it works like this:
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  • Most of your users are clustered toward the bottom. They don’t use very much Internet access.
  • A few of your users are serious; they use twice or three times as much as most of your users.
  • A very few of the users never stop downloading. They use thousands or millions of times as much bandwidth as their friends.

Heavy-tailed distributions skew familiar values like averages and medians; so if you have users that follow a heavy-tailed distribution as described above, and you look at your “average” customer use, you’ll get something much larger than your “typical” customer’s use.

The simplest approach to avoid metering broadband use is to just fire the customers who are using way too much. If you drop the top 5% of users, you’ll regain tons of network capacity.

If you want to use versioning, then you can charge one price that covers nearly everybody, then a higher price for people who go over their limits. This is the standard US cell phone billing plan; you get N minutes, and if you use more than N minutes, then you get charged per minute. But people don’t want to have the meter running.