ISPs may set the meter running on applications

Watch out, corporate customer - your Internet service provider may soon start charging for applications that today are free. NetCentric and Compaq have announced a new protocol, Metered Services Information Exchange (MSIX), which will let ISPs charge customers extra for applications such as fax, video and voice - and also bill users when they access specific sites, such as an Internet mall or a daily newspaper site.

Watch out, corporate customer - your Internet service provider may soon start charging for applications that today are free.

NetCentric and Compaq have announced a new protocol, Metered Services Information Exchange (MSIX), which will let ISPs charge customers extra for applications such as fax, video and voice. Paul MacKay, president of NetCentric, says ISPs can also use the protocol to bill users when they access specific sites, such as an Internet mall or a daily newspaper site. Software is already being designed to support MSIX.

US ISPs, some of which are struggling, are intrigued by the new usage-based revenue possibilities.

But customers are less thrilled. "Users are not going to appreciate a la carte charges," says Dan Taylor, senior analyst at Aberdeen Group, a Boston-based consultancy. Those in the trenches agree.

"Many people here use the Internet as a business resource. [Usage-based pricing] could have a negative impact ontheir willingness to use the Internet,"says Bob Galovic, managing director of information resources at the American Automobile Association Inc. in Florida.

PSINet Inc. can envision scenarios for a usage-based charge, such as faxing, says Chuck Davin, the company's chief technology officer.

Packages may also be possible.In a way similar to that by which telephone companies offer call waiting, call return and caller ID for a bundled price, ISPs such as PSINet say a single billing platform and widely deployed protocol will let them offer comparable packages.

Such a package could include voice, videoconferencing and a subscription to a user's favorite online magazine or newspaper.

Netcom, a large US ISP, believes users will not have a problem paying for special services. "Users will come to understand that there is a cost of providing quality services that is tangible," says Mike Kallet, senior vice president of products and services at Netcom.

TCG CERFnet agrees. "CERFnet firmly believes the only way to support new applications is to charge based on usage," said Pushpendra Mohta, executive vice president at TCG CERFnet.

But analysts warned this thinking may lead the ISPs down the wrong path.

"They should offer users more value for their dollar rather than finding ways to bill them for what they are already doing," says Joel Maloff, president of The Maloff Co., a Michigan-based consulting firm.

The protocol has also sparked the interest of software application companies. Fifteen software vendors have already committed to using the protocol once it is completed in July. The protocol is expected to let ISPs use a single billing engine for all applications that are MSIX interoperable.

MSIX encapsulates data from specific application services. The protocol inputs key information in the header of each packet that tells the billing engine who is using the service, as well as the desired measurement information, such as length of time the user is connected, NetCentric's MacKay says.

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