There’s no reason for ISPs to price as if they were actually competing. They don’t, thanks to spectrum allocations, lock-in contracts, etc. The worst thing for them — the reported reason why Verizon told Apple to take a hike — is for them to be turned into “dumb pipes” where they’re selling you what you call for — megabytes that don’t have “Verizon ®” stamped on them.

In my humble view, there might be price differentiation by time-of-day or latency of data (lags between when you talk and your recipient hears you) or other variables that actually reflect costs. The current, all-you-can-eat plans are optimal if most of the cost are fixed, e.g. for connection, administration, whatever, but if there are significant per-bit costs, the networks are not actually pricing as if they were competitive. And that is part of what we are hearing: that Android users are “data hogs” or that Comcast is capacity constrained due to Netflix during evening hours, etc. Naturally, however, having achieved the scale necessary to make new competition unprofitable, the ISPs are trying to shift towards Intel or Apple or Google-level profit margins, and that will require installing “value-based” pricing in place of flat rate.

However, I believe these ideas will come back to bite carriers in the bum. There’s a reason the cable TV model is failing. There’s a reason PPV isn’t as popular as netflix or rentals or RedBox. This will happen, and whomever offers the best deals will get the most customers, whomever offers unlimited will be bombarded with customers.

I would be okay with paying per gigabyte, if all I had to pay was a per GB fee. If it’s gonna be $10/GB, and I use .1GB, charge me $1. If I use 10GB, charge me $100. Don’t charge me $70 for a connection, then extra for the data, then extra-extra for certain specific data. Then don’t try to turn around and charge the data providers for providing me with that data as well. As they may well know, profit talks, and as they try to pry profit out of others, we will seek alternatives. :)