Internet service providers (ISPs) must consider flexible pricing models for broadband if they hope to sustain the current rapid growth in the teleworking and consumer markets, according to telecoms researcher Analysys.
The current flat-rate charging model will only result in price wars that will damage the industry and ultimately do nothing to attract new customers.
Providers should introduce pricing strategies that take into account the huge variability in the usage patterns of existing and future broadband customers.
This will require careful marketing and consumer education, but volume-based charging is likely to deliver better results in terms of penetration and spend.
It will allow providers to address the untapped light-user market, such as teleworkers, who look to broadband for its responsiveness and flexibility rather than capacity, according to Rupert Wood, principal market analyst at Analysys.
The number of teleworkers accessing broadband, where ISPs have introduced a light volume charging system, is expected to grow from 465,000 in 2003 to 990,000 by 2008.
But where there is only a flat-rate charge the number will only grow from 422,000 to 765,000 over the same period.
Wood told vnunet.com that flat rate charging is a very short sighted strategy.
"Providers are currently not addressing the whole market and just have one way of looking at broadband," he said.
"Instead of concentrating on the high bandwidth applications, they should look at the low bandwidth applications such as email and the always-on facility, which are radically improved by broadband access."
Wood explained that the UK has one of the most advanced teleworking sectors in Europe and that broadband is critical to its growth.
"If you look at Europe, where there are a number of different pricing models including volume charging and time-based charging, it has encouraged rather than discouraged the take-up of broadband," he said.
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