To be painstakingly clear – I do not advocate a socialist view of broadband. We do not need centrally controlled broadband designed to be equal benefit to all (I assume that is the version of socialism you are referencing). What we need is metered bandwidth offerings that are run by organizations focused on capitalism and efficient operations.

This is basically the metered bandwidth argument from the service providers:
1) p2p and video are crushing our networks
2) we need to buildout our networks to handle the crush
3) to fund this buildout we are going to metered bandwidth to extract more money from p2p and video users

The problem is that they have set the meter far too low to extract a disproportional amount of money from consumers (we’ll all end up paying about 20X per byte delivered based on today’s prices). 5GB is a ridiculously low number and it is around for one specific purpose – to generate revenues to support their over-inflated organizations.

From my point of view, this is not a TCP vs UDP vs RTSP protocol problem, not a conservation vs usage problem, but an problem in the operational efficiencies of the large service providers. They absolutely need to normalize their operations staffs (spend one day inside a large operator and ask operations folks what they do) and work on faster processes to deploy new technologies.

I predict that if the large service providers do implement metered bandwidth you will see CLECs will make a dramatic comeback offering better services to consumers based on newer technologies and more streamlined operations.

That should cause a market dynamic that is very capitalistic in nature – those with low margins and high operating costs will be pushed out of the market. Nothing socialistic about that at all.

And what’s up with this bogus 0.03% number? Don’t you know that 42.42% of all statistics are made up?

And as far as airbags go, the people who have been killed by them would disagree with Victor.

Not surprisngly most customers do not ask for the changes they need to benefit them. I don’t recall a big lobby of customers asking for anti-lock brakes or air-bags. Nonetheless they were added to vehicles, customers paid more to get them, and I think we can say — that is a good thing. I don’t think it’s necessary to ask customers if they want better performance of the broadband service. I’m sure that if polled, they will all say “yes.”

Obviously you’ve never visited Missouri ;-)

The point the report makes is that caps may make people question the need for broadband, or the higher speed tiers. For instance, I have the highest broadband tier for ATT DSL. I subscribed to the higher tier specifically to watch video. In fact, ATT sells this tier and the one lower specifically for watching video.

If ATT caps, which I agree with the report, really is unlikely, I would immediately a) look for a competitor; failing finding such, b) change my subscription to the lowest broadband speed.

Caps are counter-intuitive when the company already has tiered service, specifically in order to make it easier to use the service.

Like all MBA student, you must not have paid close attention in microecon class.

In industries with extremely high fixed cost and extremely low marginal costs (such as telecom), providers have large incentives towards encouraging higher levels of consumption.

For detailed explanation of this, see the infamous paper “Too Expensive to Meter” by U Minn’s Andrew Odlyzko: http://www.dtc.umn.edu/~odlyzko/doc/metering-expensive.pdf

It is not true that all suppliers of flat-rate services benefit when users minimize consumption — it depends on the underlying cost structure. Of course all you can eat buffets don’t want you to eat in large quantities, but the food service industry has substantial marginal costs, the exact opposite of the telecom and most other network markets.

Using throttling during peak times is covered, in addition to other alternatives (including some already practiced). The report also goes into great detail about why capping isn’t going to solve the problem. Think on it: this means that the beginning of every month, we’ll all have a wide open pipe all the time. Now if congestion is really a problem, does this make sense? Seriously?

Kevin Walsh, the report does cover the issue of expense, by explicitly stating that it’s in the ISPs best interest to encourage use, and increase number of customers–not engage in practices that will only chase us away.

This is a thoughtful, detailed report that considers all these issues, including the possible need to put in some form of control, but control that actually focus on fixing so-called congestion problems, not just arbitrarily generating income. Or arbitrarily inhibiting perceived competitors.

Thanks for posting a link to the report, Stacey.

I am not sure about US but in UK Service Providers have this approach. Although It didn’t happen at my home but it happened at my office and I completely agree with Service Provider’s argument. We had a server that used to synchronize with US server and downloads several GB of data over weekend. This was causing caps overshoot and we were having very slow network speed in our daily work. When we discussed with operator he told us that you already exceeding the cap for this month, so we downgraded your connection and your normal speed would be resumed in next month.

An inconvenient economic reality is that without the means to generate returns on capital investment, i.e., increased subscriber revenue, those investments will simply not be made. And anyone watching the rush among digital content owners and storefronts to deliver (increasingly long-form, high-def) content to consumers over broadband connections knows that this will not happen without additional investment.

It is, though, incorrect to state that blocking (Comcast-style) or capping and metering are presented by broadband operators as the only options. Comcast, in an admittedly ham-fisted way, was trying to ameliorate real bandwidth allocation problems. Providers looking at cap-and-meter schemes, on the other hand, are trying to find better ways to monetize their network assets. The two subjects are unrelated.

The Free Press report also ignores the economic realities involved in building and operating massively expensive network infrastructure. I suppose this should be expected; a scan of the ten-member board of directors shows none have any experience running capital-intensive businesses, or any businesses for that matter. Most are academics.

An inconvenient economic reality is that without the means to generate returns on capital investment, i.e., increased subscriber revenue, those investments will simply not be made. And anyone watching the rush among digital content owners and storefronts to deliver (increasingly long-form, high-def) content to consumers over broadband