Speaking at the FTTH Conference and Expo in Houston Tuesday, Verizon Communications CTO Richard Lynch said the broadband industry is headed toward a pricing paradigm shift that will see it embrace the usage-based pricing common to the wireless broadband industry.

Internet service providers “cannot continue to grow the Internet without passing the cost on to someone,” Lynch said in remarks reported by Telephony Online. “At the end of the day the concept of a flat-rate infinitely expandable service is unachievable. We are going to reach a point where we will sell packages of bytes. Now I’m not announcing a new pricing plan. But we have already gone this way in wireless because that is where the resource is most constrained.”

So while Lynch may not have announced a new pricing plan, he’s clearly got one in mind. And these, the first public comments from Verizon (VZ) on a transition to metered bandwidth, likely mean the all-you-can-eat days are soon to end and the “will this streaming video put me over my monthly usage cap” days about to begin.

Which, as consumer advocates will tell you, is bad news because charging Internet customers based on how much Web data they consume is likely to stifle innovation by undermining demand for high-bandwidth services such as online video and whatnot.

“…We believe Apple will focus on the new version of Mac OS X, Snow Leopard at WWDC,” Munster writes. “While some investors may be expecting Apple to launch redesigned iPhones at WWDC, we do not anticipate the launch in early June. Rather, we expect Apple to host a special event in late June or early July to launch a family of iPhones. We continue to expect multiple models, possibly a high-end iPhone with improved specs from the current version and a low-end version with lower capacity and fewer features along with a reduced pricing plan. Such a model could also be used in Apple’s launch of the iPhone into China as soon as the end of summer ’09.”

Munster’s is an … ahem … interesting theory. But remember, now that it has withdrawn from Macworld, WWDC is Apple’s biggest event of the year. Surely it wouldn’t pass up the opportunity to debut the latest iPhone there–especially when Palm (PALM) is expected to announce its new Pre handset on June 5, just three days before the WWDC keynote. And if the latest update of the device is as modest as some reports claim, there’s no need for Jobs to be on hand to announce it. It’s not a milestone product, and Schiller could easily handle it. Then the company could plan the late June/early July event to which Munster refers around that media tablet Apple’s rumored to be developing–with Jobs presiding, of course.

UPDATE: Over at Daring Fireball, John Gruber notes that if the next generation iPhone includes updated hardware, Apple will almost certainly announce it at WWDC. Why? Says Gruber, “…If there are any new hardware features — like say a video camera or magnetometer — that means new APIs, and if Apple wants to have WWDC sessions for the new hardware-specific APIs, they have to announce the hardware first.”

The cable giant had planned on charging customers in four locations on a “consumption” plan in which they’d pay between $15 to $150 a month based on the amount of data they hoovered via the Web. But noisy opposition to the plan surfaced immediately and has been getting louder over the past few weeks.

Instead, the company says, it will spend time on “customer education” to clear up “misunderstandings” about the plan, which it still believes “may be the best pricing plan for consumers,” etc. Translation: We need more time to figure out how to do this without getting our heads ripped off. Or handing over customers to the competition.

That’s what was already happening in Rochester, where Time Warner’s plans were supposedly driving customers to Frontier Communications Co., which offered a (presumably slower) DSL service. From the Associated Press:

“‘We have gotten hundreds of calls from Time Warner customers into our call centers,’ said Ann Burr, the head of Frontier’s Rochester unit, in an interview with The Associated Press. ‘I guess it’s been a public relations crisis for Time Warner.’”

This doesn’t affect other pipe guys’ plans to institute similar caps or consumption-based pricing plans: Comcast (CMCSA), for instance, has a monthly cap on its broadband plans, and threatens to cut off customers who exceed it (thanks to Business Insider’s Dan Frommer for the fact-check).

And as of yesterday, at least, the cable guys’ trade group was pooh-poohing people who complained about the idea. Here’s Kyle McSlarrow, CEO of the National Cable & Telecommunications Association, on his group’s blog:

“Hundreds of billions of dollars have been and continue to be invested by our industry in the deployment of broadband and now the deployment of next generation broadband; speeds have doubled or tripled in just the last few years; new and spectacular applications keep getting launched; no anti-competitive conduct has remotely occurred; and, in fact, compared to many other industries, the Internet ecosystem seems to be one of the few really healthy, growing, and creative parts of our economy with continued investment and innovation taking place every day. At a time of economic and financial challenges for our country, I for one would rather Congress spend its time on real problems, not fictional ones.”

[UPDATE: McSlarrow just put out a new post discussing Time Warner's move.]

By the way: McSlarrow, Time Warner Cable, Comcast other pipe guys with similar plans, like AT&T (T), may not have a terrible idea. But they’re going to undergo a lot of public whippings before they get this one through.

NEW YORK–Time Warner Cable today announced it would alter plans to test Consumption Based Billing, shelving the trials while the customer education process continues.

Time Warner Cable Chief Executive Officer Glenn Britt said, “It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption based billing. As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met. While we continue to believe that consumption based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process.”

Time Warner Cable also announced that it is working to make measurement tools available as quickly as possible. These tools will help customers understand how much bandwidth they consume and aid in the dialog going forward.

Britt added, “We look forward to continuing to work with Senator Schumer, our customers and all of the other interested parties as the process moves forward, to ensure that informed decisions are made about the best way to continue to provide our customers with the level of service that they expect and deserve from Time Warner Cable.”

In the past, Apple (AAPL) has said that many more songs will be priced at 69 cents than at $1.29. But that 69-cent bargain bin is viewed as little consolation to some who question the wisdom of introducing what amounts to a 30 percent price increase with the economy in recession and online piracy an easy option.

Said Nine Inch Nails manager Jim Guerinot, “Wouldn’t it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?”

Perhaps. But when has the recording industry ever done anything that made sense?