Want to see broadband’s future? Check out the airline industry

13 Comments

A New Yorker explainer on why the airlines want to make you suffer has been making the social media rounds. It’s an excellent case study in how the airlines have created a miserable experience for passengers so they can build a profitable business based on charging fees for bags, early boarding and better seats. It’s also just like the playbook big broadband companies are using as they make efforts to charge both consumers and the content companies for access to their pipes.

The parallels between the airlines and the goals and arguments of the broadband industry are too similar. For example, from the New Yorker piece we have this section:

Meanwhile, if we go to the arguments made by AT&T back in 2011 when it first capped its DSL broadband service at 150 GB per month, you’ll see a similar argument of people paying for what they use in this article from CNN:


But as we have argued fairly consistently the danger is that when you start creating these sorts of incentives you also create a reason for the airline or the broadband provider to create a crappy experience so people pay to avoid it. Which is what the New Yorker points out and argues has happened in the airline industry:

Consumer Reports

The New Yorker noted that this behavior on the part of the airlines has led to a combined $31.5 billion in income from fees and ancillary payments, which is the fastest-growing source of income for primary airlines. A source of income that the article points out has grown by 1200 percent since 2007.

While the typical consumer might read this and experience rage, I read this and experienced a moment of hope. This article is a gift to anyone concerned about the potential merger between Comcast and Time Warner Cable — a merger that would decrease broadband competition and also eliminate the last big broadband provider that hasn’t implemented usage based broadband caps that essentially take us down the airline’s road of paying for a better broadband experience.

It is a likewise a gift to people concerned about the Open Internet rules that the Federal Communications Commission is considering — the so-called network neutrality rules — that could lead to content providers having to pay for faster access to the end consumer.

Under such deals, a concern is that sites that don’t pay get left behind and are less able to compete against larger sites who can afford to pay up for faster access, which is the equivalent of the poor traveler who is stuck checking a bag at the gate while all the passengers who booked economy plus seats board before her toting their luggage and take up the overhead bins.

Don’t want to check that bag or sit squished in the middle with nary a bag of peanuts on that four-hour flight? Pay up and just be grateful you get anywhere at all. Don’t want to suffer through 150 GB data caps, pay up for more and hope that whatever site you want to visit does the same to make sure its bits reach you at a decent rate. And yeah, just be grateful that you get to experience the convenience of streaming as opposed to driving to the Blockbuster Video to rent a movie on disc.

So read that article and rage about the airlines, and then turn that rage into something useful by using it to stop the same thing from happening to your broadband internet. Tell your Congressman how you feel about the Comcast and TWC merger and network neutrality.

13 Comments

Paul

Witness the cable companies degrading TV signals. Analog was turned off over 5 years ago. They take HD signals, chop the sides off and send them as 1) HD, 2) SD digital and 3) Analog. You get 2 and 3 with a basic package, but have to pay more for the unmolested #1. This is not to support people with legacy TVs (the last CRT TV was manufactured about 10 years ago) the poorest people I know have an old CRT TV with a converter box and an antenna, they are not getting low-cost cable and they are getting better content for free. Cable providers are absolutely degrading service and charging to get standard quality.

Chip

The editor (if there even is one) should be embarrassed for approving such half-witted nonsense that is well short of articulate, informed discourse and reeks heavily of class envy, collectivism, and populist hyperbole to push tired arguments that are indefensible with facts and logical reasoning.
How do you think the travel experience would work out if everyone but one person (your example not mine) bought economy plus? Why should someone be forced to pay more for services they don’t want? Your parallel of usage based pricing on broadband with value added features of an airline is illogical. You should be opposing airlines that charge based on distance, in addition to opposing different types of seating, if you want to remain consistent with your own logic.
Since you believe that startups will be left behind by other companies with more resources, should there be salary caps implements on developers, and should the price of computing be regulated? On the topic of caps on network usage, how do you defend the term “cap” when you can buy as much as you want? Does your grocery store cap you at a dozen eggs or can you buy more if you need? How about gasoline? Do they cap you at a gallon? Personally speaking, I don’t spend my leisure time binging on Netflix so am fully satisfied with a cheap connection and comfortable knowing higher performing ones are available if I want, and I have no interest in taking a price increase to subsidize your lifestyle. If you use more, then pay up.
Net Neutralityism is no different from any other religion in its need to promise an apocalyptic end of days prophecy that demands something from you to be saved from. That’s on full display here. In this case it is giving up your individual right to pay for what you want, and submit control of your broadband to an omnipotent god in the FCC, thou Creator of Broadband. Net Neutralityism features everything else that a religion offers, as well. Original sin (Comcast/BitTorrent, Vonage/Madison River), proselytizers (this blogger), apostates (anyone that disagrees with collectivism), a Garden of Eden paradise (unlimited network resources at zero cost with packets flowing freely to everyone), Immaculate conceptions (Netflix), a clear distinction of good and evil (Google and ISPs), and is intolerant to any level of disagreement.
If this blogger had her way there would be no first class seats on a plane, no middle seats, no windows, and everyone would somehow get to sit in the seat of their choice, and everyone pays the same no matter how far they travel or what services they want. Following that to network services, she wants a lowest common denominator level of service where it’s illegal to pay for better if you want, and those casual users will be forced to pay more to subsidize the heavy ones. Why stop at airlines and networks? Good luck selling this to the American public. I’m afraid there is more rage coming for you if you’re counting on arguments like these to win in the legislative and judicial processed.

John Willkie

Tim Wu is one problem, then you try to equate this to Comcast & TWC, both well-known for bad service. (I used TWC a decade ago and didn’t find their service to be bad.) But, you then try to equate airline competition with “broadband competition.”

This is absurd. Time Warner Cable and Comcast don’t have overlapping service areas — cable is franchised. TWC and Comcast compete the same way Southwest Airlines and Air Asia compete. (No competition at all; just in the same industry.)

Richard Bennett

It’s funny that the article fails to mention two key things:

1. The New Yorker article was written by Tim Wu, the daddy of net neutrality, and it recycles his old arguments about broadband.

2. The Tim Wu article has been debunked because it doesn’t get any of the important facts straight. See Dave’s comment.

Slow news day, Stacey?

Richard Bennett

Here’s another debunking, from Slate:
“Over the past five years, ultra-low-cost carriers like Spirit and Allegiant have consistently outperformed their peers in terms of operating profit, the best measure of comparison. During the same period, airlines that promise a nicer experience for a slightly higher price have lagged behind. Virgin America, which seems to have something of a monopoly on the best domestic airline title in multiple rankings, bled money from 2010 to 2012 and has only started to catch up to its competitors over the past 12 months. JetBlue’s operating profits have been steady but mediocre since 2010; the changes to its seating and pricing are designed to bolster annual revenues and margins. “JetBlue has tried all these years to believe that even the lowest-paying passenger can have lots of legroom, a free checked bag, and everything else, but it just hasn’t worked,” says Seth Kaplan, an industry analyst and managing partner at Airline Weekly. “People will tell you, ‘I don’t like being nickeled and dimed, just give me a price—I’m willing to pay more just to not have to deal with all of that.’ But the data suggest that they’re not really willing to do that. Because if they were, JetBlue would be the most profitable airline in America, and not Spirit.””

http://www.slate.com/articles/business/moneybox/2014/12/cheap_airlines_why_americans_will_suffer_worse_service_on_flights_in_order.html

Net neut relies on arguments that seem like they should make sense on first impression, but which don’t hold up to empirical scrutiny. Hence, the reluctance of NN supporters to look at the data.

ktetch

Yes, isn’t it amazing that the airlines with a low ‘headline fare’ but which make up the difference in extra fees do well than those that charge the fees up-front (and may even be cheaper overall)

Kinda shooting yourself in the foot there, because there’s the same problems in the broadband sphere, with ‘headline speeds’ which are generally ‘up to’, rather than actual, and data caps hidden in the small print.

And while you’ve taken great pains to note Tim Wu is a ‘major net neutrality’ person, you’ve not noted your own position for many years has come via working for thinktanks that stand opposed to NetNeut, and rely on cherry-picking data to support a position that deliberately misrepresenting what the whole Net Neutrality argument is about.

To go to the (cliched) car comparison, We can say that the net is like roads, and we’re opposed to manufacturers paying to have a higher speed limit for their cars (or company vehicles paying to allow their vehicles to go 20-over). Your argument invariably boils down to ‘if everyone has to obey the same speed limit, what about emergencies! if police, ambulances and fire trucks have to obey the speed limit, it’s going to lead to deaths, and that’s why it’s stupid’; ignoring the fact that no-one is actually proposing what you’re talking about, unless you deliberately misconstrue the proposals and ignore the details.

Of course, we should all listen to you when it comes to network traffic and it’s future, beceause you’ve been so accurate in the past, like when you boldly predicted the internet ending thanks to uTP what, 6 years ago? (http://www.theregister.co.uk/2008/12/01/richard_bennett_utorrent_udp) Even the millennium bug was more of an issue, which is probably why you and I are likely the only people on here who knew about your dire predictions before today.

And if anything, your attempts to try and reframe the debate, and redirect it into absurdities tells us one thing – we’re on the right track.

RFO Jefferson

Oh, snap. And this public depantsing of RB will live on forever.

lovan

I think that the one thing that no one is trying to put any data against is the balance between operating profit and customer satisfaction. Currently I will pay extra for a JetBlue ticket as it is one of the few domestic airlines who treat passengers as the reason they exist as a company, paying customers.

The other airlines treat passengers as a “necessary evil”. If only we did not have those pesky passengers we would be a great operation.

If JetBlue joins the mediocre club then they are no longer going to stand out. If they look at the end to end experience through the passengers eyes then they are going to be like all the other airlines. I’ll no longer seek them out.

The interesting question is will the loss of business from people like me be compensated by the extra seats that will be on the plane?

Are you really going to increase operating profit if you now have to spend more money to attract customers since you no longer have a natural differentiation?

exhibit44

Content providers can weasel around this limit. When the backbone was built, they didn’t forsee the importance of micro-blogging and social networking feeds, which can be tweaked to limit their size.

vasilenko93

The “backbone” is more than capable of handling the new type of traffic. They are called Transit ISPs, and its an industry that actually has competition and is always getting better. Its your local last-mile ISPs like Comcast, Time Warner, Charter, Cox, etc that have no competition and charging your fees.

Transit ISPs are always upgrading to the latest fiber optics technology, lowering the costs for Local ISPs and large companies…but you stick with your cable provider paying $100 a month for a service Europe and japan will laugh at.

jonsmirl

They have convert me from a million mile frequent flier into someone who avoids flying and only does two or three trips a year. Flying in coach is totally miserable. United is the worst.

ktetch

That’s not ‘debunking’ (lots of people use that term incorrectly, so don’t feel ashamed). Like the bit where they supposedly ‘debunk’ seat size.
“Sitting in extra legroom economy seats didn’t exist in the mid-90s. United drove economy plus as a key product differentiator. American introduced extra legroom throughout the cabin but people didn’t care enough about this and choose it over other airlines even when price was the same, so American abandoned the effort.”
That’s not debunking. That’s assuming that everything else was equal, and that the only difference was the legroom. I’ve flown American once, never again, short of a free first class upgrade – a few extra inches wouldn’t make me pick American over another airline, but if I was already going to fly American, I might pony up for the extra legroom.

That’s the problem with these kinds of things, they are really convoluted and tend to ignore reality, to try and spin things.

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