US going to pay-for-usage model for wireline broadband.(BROADBAND BEAT)

Most Americans pay for electricity, gas and water by the amount they use each month. Wireline broadband can now be added to that list.

On May 2, AT&T implemented a basic monthly usage level and charges for using more than what's allocated.

More than 42 million US broadband subscribers are now subject to pre-set usage levels on the amount of bandwidth they get for a flat rate each month.

That's about 56% of the country's 75 million broadband subscribers, according to Leichtman Research's subscriber count for the fourth quarter of 2010.

Comcast, Cox and Charter warn subscribers when they exceed a limit but do not, perhaps yet, charge them for going over. Time Warner Cable, Verizon and Cablevision do not have limits.

AT&T, which has 16.5 million broadband subscribers, sets the basic level for its U-verse broadband subscribers to 250GB of downloads and uploads and 150GBs for DSL subscribers. It charges them $10 for each 50GB of monthly usage above that.

For every 50GB beyond those, customers will be charged $10 (equivalent to 20 cents per GB).

AT&T has said less than 2% of its subscribers exceed its limits. That number will soon increase as consumers watch more online videos especially now that most new TV sets and all Blu-ray players come with Internet connectivity. Objections to usage fees come from consumers and those whose vested interests revolve around getting consumers to increase their Internet usage, such as online video services.

AT&T and the other broadband service providers cannot fairly charge the same rate to subscribers that mainly use e-mail and do some occasional browsing compared to households that watch lots of OTT video and on multiple smart TVs, smart TV adapters and PCs.

Broadband service providers have spent and are spending billions to bulk up their broadband infrastructure. The money for that can only come from their customers. As those consumers increasingly use the Internet as a source of entertainment, they will have to pay according to their usage. Pay-TV companies deliver for free, in effect, and charge for the content. There's no such mechanism for OTT television, so the money has to come from broadband usage.

Even if the broadband service providers are doomed to operate a "dumb pipe," they need the money to pay for the network they have built and are constantly upgrading.