Telstra has continued to push its case for the possible introduction of new pricing structures for broadband users.
Kate McKenzie, group managing director, innovation, products and marketing at Telstra, told the Commsday Summit pricing is no longer an effective way of securing cost recovery.
She said pricing should only be an “instrument which should guide” joint decisions from network service providers and application and content providers to ensure consumers get the best value from network resources.
“[Pricing] must shape the demands on the network and help direct investment over time by working on the incentives both of end-users and of content and applications providers,” McKenzie said.
“[Pricing] must allow market participants to indicate the value they place on costly network resources; it must ensure providers benefit when they expand the pie available to and in the market as a whole; and most importantly, it must empower consumers, rather than network managers, to define and control the service they receive.”
Application and content providers could obtain a “value-added service” for their customers, McKenzie said. This could include discounted access, service quality guarantees or support from network service providers, such as revenue-sharing for the traffic generated.
She said this would encourage network service providers to expand their network to provide a higher quality service.
McKenzie said changes to pricing structures can depend on network technologies, with more pricing options to become available as technology evolves.
In February, Telstra was slammed for its move to undertake a trial to throttle speeds when customers use peer-to-peer networks.
Telstra said the trial would allow the telco to better manage its network performance due to congestion issues, but John Lindsay, CTO at iiNet, said it was purely a business decision to avoid upgrading its ADSL network.
Telstra also revealed it was considering introducing speed- or application-based ADSL plans.
The Australian Communications Consumer Action Network (ACCAN) has expressed concern about ADSL plans based on speed. This could result in prices being driven up and some consumers, particularly those on a low income, being priced out of plans, an ACCAN spokesperson said.
“You have the potential to have a second class Internet connection if they look at introducing this more broadly,” the spokesperson said.
McKenzie said high data users affecting network quality will become an increasing problem in the future.
“In itself, the fact that those pressures arise is not necessarily a problem. But it would be a problem if the users and applications generating those demands did not face prices that signal the costs they impose, including and especially on other users,” she said.
“Without such price signals, the obvious risk is that costs will be imposed even if they greatly exceed the benefits … we would face investment demands – and hence further increases in costs – that could and should be avoided by using pricing to at least partially smooth demand over the day.”
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