Internet metering is a service model in which an Internet service provider (ISP) tracks bandwidth use and charges high traffic customers accordingly. Typically, a customer will select a service package with a flat rate up to a specified limit and will then pay additional fees beyond that limit, probably per gigabyte of data downloaded.
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Internet metering is one approach to the problem of ever-increasing demand for a finite supply of bandwidth. Another approach to the problem is traffic shaping, also known as bandwidth throttling, in which the service provider deliberately slows the connection for some users or applications.
Service providers claim that charging per unit for heavier Internet users will make service fairer for everyone. The argument is that "casual Internet users" should not have to pay as much as those who engage in bandwidth-heavy activities. Heavy Internet users are typically those who engage in P2P file-sharing, online gaming and watching video from IPTV websites like Hulu.com, YouTube or Joost. ISPs have often targeted BitTorrent users in particular. According to Time Warner Cable, the top five percent of users (in terms of demand) consume 50% of their entire network capacity.
There are, however, concerns within the burgeoning online video industry that plans to limit usage will also limit innovation. As Jim Louderback (CEO of Revision3, a Web-based content provider) explains: "If all of a sudden our viewers are worried about some sort of a broadband cap, they may think twice about downloading or watching our shows." If demand decreases, it follows that fewer online content developers will be motivated to create new applications.
In the United States, the three largest ISPs have announced that they will control customer usage. In June 2008, Time Warner Cable began testing Internet metering in Beaumont, Texas. The capped plans offered in Time Warner's test ranged from five to 40 gigabytes for $30-50, with faster service for the more expensive plans. For any additional usage, the charge is a dollar per gigabyte. Comcast intends to expand its current use of bandwidth throttling. Although AT&T hasn't announced immediate plans, the company has indicated that limiting heavy users, through one method or another, is inevitable.