Should flat-rate Internet pricing continue

The history of communication technologies: snail mail, telegraph, and telephone, shows a consistent pattern. Quality rises, prices decrease, usage increases, total revenues go up, and pricing structures get simpler. So far, the Internet is following this pattern. It treats all packets equally, and pricing has been mostly through flat monthly or yearly rates that depend only on the size of access links. But there is strong momentum to base Internet pricing on usage and to introduce multiple service levels. The author argues that although flat rate continues to be the predominant form of selling Internet access, flat rate pricing encourages waste and requires the 20 percent of users who account for 80 percent of the traffic to be subsidized by other users and other forms of revenue. Furthermore, flat rate pricing is incompatible with quality-differentiated services.