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Summary:

The Free Press, a nonprofit dedicated to media reform, today sent a letter to members of Congress urging them to investigate the costs of providing broadband and the effect that metered broadband may have on the U.S. economy, in particular U.S. competitiveness. The letter points to […]

headerlogo_freepressThe Free Press, a nonprofit dedicated to media reform, today sent a letter to members of Congress urging them to investigate the costs of providing broadband and the effect that metered broadband may have on the U.S. economy, in particular U.S. competitiveness. The letter points to the recent metered broadband trials engaged in by Time Warner Cable and AT&T (although others are talking about them as well), arguing that the bandwidth caps are “arbitrarily low” while the cost of exceeding those caps is “arbitrarily high.”

The two justifications ISPs use for metered broadband are that bandwidth costs are rising so ISPs need to a way to recoup them, and that tiers are a way to control bandwidth hogs. Given that so far, providers have been tight-lipped about their bandwidth bills, and that most investigations reveal that the costs of providing service are trending down, the Free Press is also calling on Congress to ask ISPs how much bandwidth really costs them.

The need to get Congress involved in the debate may have come as somewhat of a surprise to the Free Press, since in August it issued a report claiming that metered broadband was unlikely and contrary to ISPs’ long-term interests. Derek Turner, research director at the Free Press, said in an interview with me that while he still believes metering not to be economically rational for these companies, the recession may be forcing them to take short-term gains against their long-term interests. He also said that since two New York Congressmen are paying attention to metered broadband and there’s a new administration to educate, it’s a good time to bring the issue up before Congress.

The letter is fairly bold, calling not only for a look at metered broadband, but the costs of wireless broadband and overage fees, too. Turner said including the wireless market is appropriate given that wireless providers are trying to offer up their service as an alternative to wired broadband in the National Broadband Plan without having to play by the same rules as wired broadband providers.

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  1. There is certainly an argument for having the government build out the next generation information highway. When DARPA blinked, and let the arpanet not become the internet, we were left with some very large companies having to invest a LOT of money to build out the cross country fibre infrastructure, as well as a lot of local infrastructure to hook up the last mile.

    Today, we have people whining that they can not have 200GB/mo free on their 6gb/sec home pipes in the dense city areas, while 98% of the US is rural, often with only dialup and poor satellite service, with maybe a poor mom and pop wireless ISP.

    The demand for unlimited bandwidth, if forced on rural ISP’s, means even the mom and pops are going to have to shut down, because nobody is going to buy dialup speed broadband saturated with P2P servers and movie downloads.

    See discussions here: http://gigaom.com/2009/04/16/time-warner-cable-backs-off-metered-broadband-trials-in-rochester/

  2. Stacy, your fanning the flames to burn all ISP’s that have some flavor of metered service is just poisoning the waters to prevent the competition that many are hoping for to keep prices reasonable.

    You Bill of Rights demands are just totally clueless in that regard.

    here http://gigaom.com/2009/04/16/time-warner-cable-backs-off-metered-broadband-trials-in-rochester/ I challenged another clueless flamer to show everyone how to do this right. It’s time to extend that challenge to you.

    You are well plugged in … go talk to your friends, your VC’s, and other business leaders, and develop a business plan and technical plan that can deliver unlimited internet at levels above 200GB/mo and 3mbps per drop, to your entire home town for $30/mo inside five years, and show the world that what you are demanding, and inciting every ISP’s customer in to revolt and dissatisfaction over, is even possible.

    Are you the business and technical genius here, or just another clueless child demanding that candy and money be free without limit?

    If you can not do at least that, you have no right to unjustifiably make customers upset with hard working engineers and business leaders trying to provide a high value, high risk service to their communities.

  3. Christina Viering Thursday, April 23, 2009

    It is interesting to speculate on the outcome.

  4. So, let me make sure I understand. Freepress, a non-profit run by academics who, by the looks of their web site bios, have run few businesses, is urging Congress, also a non-profit with precious little business acumen, on how for-profit businesses should price their products.

    Why is it that this makes me a little nervous?

  5. The net effect of Stacy’s “Bill of Rights” requiring unlimited flat rate broadband, is that it requires removing “over subscription” from both cost equations and network build out standards. Since nearly all major current infrastructure has over subscription as a fundamental design factor, to meet Stacy’s unlimited flat rate demand, would require rebuilding the entire nations broadband infrastructure from the ground up. The cost for doing this, include write-off’s for retiring the existing infrastructure which would be effectively obsoleted from demands to remove over subscription practices.

    The more interesting long term effect, is that a regulatory demand requiring unlimited flat rate broadband allows Microsoft to end-run the entire industry by including a P2P content delivery system into MS Windows as a .net upgrade. This would turn the Microsoft and NBC restructuring on it’s head … see http://www.msnbc.msn.com/id/10575252/

    Consider the effects of MS expanding media player into a full featured content on demand system, after the government gives it a green light to exploit every computer with a MS Windows operating system as a distributed content server. HD Movies on demand, MSNBC news footage on demand. Audio on demand. The complete media package, the ultimate delivery system, all provided by a bunch of MS controlled end-user computer systems (AKA bots).

    That would take high bandwidth P2P use from a few percent, to nearly 100% of households, and increase the demand on US broadband infrastructure to full saturation, where over subscription would not be possible.

    As noted elsewhere, the existing IP networks are not the cheapest way to deliver high bandwidth video content …. there will be a cost for universal media on demand systems, that the subscriber will end up paying for if unlimited flat rate bandwidth is mandated by our goverment because of activists like Stacy.

    That cost, will be failed rural ISP’s unable to deliver a cost effective flat rate unlimited use system.

    That cost will be ultimately, a nationalized broadband network in the major cities.

    I can not wait to see Stacy’s magic system that can handle the MS P2P media delivery system.

    1. @John

      I think you’re squealing pretty hard here. TWC has been messed up really bad lately, ever since it trying out the “cap” pricing method. The public are yelling, and, I don’t think, TWC is listening, IT’S AN UNJUSTIFIED PRICING SCHEME!

      Simply, TWC competitors are not doing it and still offer the same price and better services. As if not enough, your TWC planned to roll out DOCSIS 3.0, with hope for an equal footing with its competitiors, only to take it back and say that because nobody allowed to be “CAP-ed” . Many of us would love super-super high speed internet, but what’s good if you turn around and cap them. I thought sometime ago you said that TWC is trying to make sure that “poor rurals” need to have internet access. But again your competitors are doing that now without capping. To be fair TWC is not the only one. The other ISPs tried and they got the idea from the users’ reaction. Notice that your other successful competitors are offering what the market demands.

      In the process to compete, TWC is lossing the customes by not listening. That is really just “CAP- italizing” the users to pay for the unfit business model!

      As stated in TWC’s 10-K financial statement, “Risk factors”, TWC is underfire from all directions, especially its business model are failing to compete in the current technological demands and growth. Net neutrality are closing on your “CAP-italizing” method, although it’s not formally binding yet, your competitors are taking away your existing customers with better offers, and new subscribers are reluctance to take your low value offer…with going to be CAP. Is this the price that TWC is willing to pay???

      DOCSIS 3.0 is possibly the only hope for TWC, since its couldn’t come up with any better way to recover its expenses, as its competitors have done, without reaching into the customers’ pocket the SECOND TIME. In fact, Nate Anderson from Ars Technica wrote that he couldn’t find how would the math adds up with TWC’s DOCSIS 3.0 and CAP, especially with a relatively small contractual obligations for high speed data as compared to programming purchases.

      I could understand your justification about costs and your earnest attempt to explaining high-speed data costs related, since TWC’s original market’s niche was in cable TV. But your TWC will have to come up with better ways to survive or satisfy its weakness rather than come-up with this crappy “CAP” idea. This current technological demands are the test to see which ISP business models are to be on the chopping bloc, and it has more to do with who gonna alienate the customers the most and not competing well wiith other ISPs.

      And bashing the public and the common users? That gonna add more injuries to the already deteriorated public relations.

      1. Antony,

        The point is that it is not an unjustified pricing scheme, and that we have a bunch of users that do not have a clue about the actual real costs to abandon over subscription based pricing and engineering.

        We know that the hardware they use, has clear over subscription in the basic architecture, which is incompatible with any mandate for unlimited flat rate.

        I have yet to find any of the whiners, that have actual inside cost data for the entire operation of their network, to prove they are ripping off the customers. Frankly, their SEC filings suggest otherwise.

      2. and, as I notes in the previous thread, if any users are getting ripped off, it’s all the light users that are being forced to pay a high cost flat rate just because the whining bandwidth hogs want a free lunch.

  6. Jesse Kopelman Thursday, April 23, 2009

    @John

    Bandwidth Caps have nothing to do with maintaining Oversubscription. If a high bandwidth user did all his transfers during off-peak hours he could easily exceed some arbitrary cap and yet still have no impact on peak network utilization — the only thing that matters for oversubscription. If the big operators really cared about user experience, their metering plans would revolve around the concept of peak and off-peak — as we see in the voice world (where operators have always had hard standards for what they were trying to achieve in terms of QOS). The simple truth is that what TWC and AT&T want to achieve through Bandwidth Caps is greater profitability and protection of their lucrative dedicated TV service, not better QOS for data users. And yes, I am an engineer who has done network traffic engineering for 11 years.

    1. Jesse,

      Actually you are very wrong here, expecially when the most worrisome bandwidth consumer is high rate video for watching movies and TV during prime time, that is going to be upset when there are multiple pauses and drop outs in the play back. The P2P folks don’t care about quality, just quantity.

      So, to maintain quality, Bandwidth Caps and metered billing, is all about reducing the total number of hours of saturation of the network by controlling use, and making high use customers pay for the additional time they keep the network busy.

      Time of use, may be a valid argument for lower bandwidth costs in off hours … take that to your ISP and propose it. For our cooperative, it’s not a valid issues, since we have a number of people that use VoIP to europe at night and need stable VPN service to work online at night with co-workers located around the globe. So saturating the network with P2P servers, affects our members around the clock.

      Over subscription models say that if the over subscription ratio is 30:1 (common large ISP ratio), then your share of full bandwidth is 1/30th of the time … day or night. If you saturate the network over night with P2P, and several others do as well, then any other late night interactive folks will see the heavy load … and it will cause problems with VoIP and VPN users working at night.

      In some networks, the afternoon and evening quality is so poor, that it forces VPN users to work at night anyway.

      The truth is, that I know of Comcast cusomters having QoS issues … so I know that your statement about this is not QoS related, is short sighted, and lacks real internal data from the providers. If you have an online pointer to internal company data, please share it …. if you are just repeating other clueless assertions, please stick to the facts that you can document.

      And yes, I’m an engineer that has done network engineering since 1976, and have been the lead network engineer for a wireless internet cooperative for the last 10 years, and before that experience with ATM and T1 based networks for another 10 years.

      So, document facts, and lets continue the discussion based on that.

    2. BTW … google “comcast packet loss”, and you will find plenty of complaints about prime time specific packet loss and gaming lag. These mirror clients trying to do both IPSEC and ssl vpn’s over Comcast, where packet loss causes severe stability problems … packet loss is all about QoS and saturation problems..

      So, the bottom line is that is ALL about the impacts of trying to operate a network that has over subscription as a fundamental factor in the hardware engineering and build out … the only fix, is to decrease loading — either by lowering customer use (the 2-3% that are bandwidth hogs, or changing the engineering standards to lower the over subscription ratio and increase drop costs.

      for example:

      reply to n9yty
      I live in the Rockford area too, and have huge packet loss.

      I cant do any gaming from 9a.m-2p.m 7p.m-12a.m weekdays, and im lucky if i get a good 2 hrs on weekends(saturday/Sunday)…. The between times, my connection is perfect..

      This has been going on for a month now, and everytime i contact them they say that there is nothing wrong on there side ….
      2008-07-22 20:11:44 ·

  7. The point is that it is not an unjustified pricing scheme, and that we have a bunch of users that do not have a clue about the actual real costs to abandon over subscription based pricing and engineering.

    In response I think they do the same both ways….

  8. Optimum Lightpath’s Broadband Is Taking Care of Business Sunday, June 7, 2009

    [...] growth, the consumer broadband business is searching for new ways to boost its bottom line. Some Internet Service Providers are experimenting with tiered pricing, while others are trying to deliver advertising or new content. While it’s not yet clear if [...]

  9. The New FCC and a Small Reality Check – GigaOM Wednesday, January 6, 2010

    [...] can be partially blamed for higher broadband prices, slower speeds in some areas and even tiered pricing efforts with punitive tiers, this is a key challenge facing the [...]

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