This week, TekSavvy (a communications service provider in Canada) announced a pricing update.  TekSavvy operates primarily as a CLEC (Competitive Local Exchange Carrier), and has differentiated itself from Canada’s larger infrastructure providers by offering unlimited bandwidth plans and other features.

This announcement continues the trend of plan-based differentiation, and I’ll reproduce some relevant portions of TekSavvy’s announcement, with emphasis added:

“As of February 2, we will be introducing new high-speed cable and DSL packages that will offer our customers all the speed options they need. At that time…we will also be changing the pricing of all our high and unlimited usage packages.

• 300GB Packages. The cost of most of our 300GB packages will increase. However, for DSL customers, the 300GB meter will not run between the hours of 2 am and 8 am, effectively allowing unlimited services for all downloading in that off-peak period. We are pleased to be the first in the industry to offer unlimited off-peak bandwidth.
• Unlimited Packages. We will continue to offer unlimited packages for our more avid Internet users, with increased pricing that will reflect the greater demands that significant usage makes on our capacity requirements.”

In other words, the monthly usage quota only applies when the network is heavily utilized and subscribers can enjoy unlimited off-peak usage.

In TekSavvy’s case, this update was prompted by changes announced on November 15, 2011 by the Canadian Radio-television and Telecommunications Commission (CRTC) that introduced a new wholesale Internet pricing model, in which pricing is based on two factors: a fixed cost per subscriber and a variable cost based on capacity utilization.

Generally, however, a model in which quotas only apply during periods of peak utilization can apply to any service provider.  In fact, we wrote about the potential of such plans in our Global Internet Phenomena Report: Fall 2011 (page 5, with emphasis added):

“To increase network efficiencies and decrease network capacity costs, many service providers are looking for ways to incent subscribers to move usage “off peak”. However, the percentage of traffic for which subscribers are willing to shift their usage is shrinking. Consider that you are not likely to plan your day around shifting your online video and social networking habits, but you probably wouldn’t mind setting your weekly online back-up to run at 3am.

Monthly usage quotas have only a limited impact, if any at all, on peak network demand; however, quotas that differentiate between peak and off-peak might have a larger impact. If users had 200 GB per month to use at peak, but unlimited usage at other times, then they would be more inclined to change their behaviors. As an added benefit, the user would perceive a higher value of service (again, if ‘value’ is directly associated with data consumption) due to increased overall usage, without the network operator incurring additional cost to deliver the off-peak bytes. Higher subscriber value and flat operator costs? Sounds like a classic win-win.”

So, while TekSavvy’s move was prompted by a shift in Canadian wholesale pricing, other Internet providers might consider adopting similar models as a way of better aligning service delivery costs with subscription revenue.

These models are easily implemented using products from Sandvine’s Service Creation suite.