The starting cost of the iPhone service dropped...as long as basically you did not use the service.  Which raises the cost of the service.  Which is my point.  The iPhone became a hit with an all you can eat plan.

All of this is what you say in your last paragraph.  The reality is they want consumers to pay more for Internet Access.

seven

Perhaps if the telcos offered the information to have more educated consumers? If they came to me and said "on average you use 100 Mb/wk; would you be interested in a lower price with a 100 Mb/wk soft cap, with a additional per-bit pricing over and above that?" I'd be able to respond one way or the other. But without the critical information of how much I'm using currently, I don't see how I'd be able to respond correctly.

I agree that in a stable market where churn is low, like wired internet access, there is little motivation for carriers to reduce prices.  But AT&T did offer lower priced data plans for the iphone when they dropped their unlimited data plans.  

Internet access providers face capital investment challenges as customer adopt over the top video.  Funding for that investment will have to come from somewhere.  It could come from raising prices for subscribers, or from charging content providers for access to subscribers.   Of course if you charge the content providers, they will need to extract that revenue from the subscribers themselves or from advertisers.

This is driving the net neutrality argument.  It appears the FCC is going to forbid charging content providers for access to customers, so from my perspective, usage based access plans are inevitable.   

exaero,

Why would a company implement a more complicated billing mechanism to lower the price?  The only sensible reason to implement this is that people then end up either reducing their service usage (which means that existing infrastructure lasts longer) for the same price OR the average consumer pays more.

seven

The respondents all seem to assume their bills will go up with usage based billing.  If the question was rephased:  "would you be interesed in a lower cost internet access package with usage limits?"  You may get different answers.    I suspect when the average user says "I use my internet connection all the time", they are referring to how much time they spend in front of a computer or smart phone, not how many HD movies they are downloading per week.   The issue for access providers is really the investment needed to support over the top video services, not telecommuting or web browsing. 

If the service providers want to start charging for service based on usage I would not have a problem with that. However, I woulod also expect that when they quote a speed to me I would hold them to a service level agreement that specifies a speed and not a "best effort" where nothng is guarenteed.