Even Light Users Would Look For Alternatives If Their ISP Uses Broadband Caps
from the would-certainly-help-if-there-was-competition dept
Longtime readers know that I'm no fan of metered broadband or it's half-sibling "broadband caps." They're not the worst thing in the world, but they set in place the wrong incentives, making an internet connection a lot less valuable. There are certainly those who disagree, but we've lived in worlds with metered internet access and phone systems before, and it leads to decreased overall usage -- and that's not a good thing. It acts as disincentive to creating the next great internet service that could be a boon to the economy.Customers recognize this implicitly. They hate the idea of any sort of mental transaction cost associated with "watching" their bandwidth usage -- especially since they have no clue how much bandwidth they really use. A recent study highlights this pretty clearly. 83% had no idea how much bandwidth they use -- with many not even having an idea of how much data one gigabyte represented. 81% of those surveyed stated they were against the caps, and 51% said they'd look for alternative providers if their ISPs implemented such a cap. Interestingly, even light users were against such plans. That seems to go against what ISPs tell everyone, claiming that light users would be able to get cheaper access. Yet, those light users recognize that it would more likely end up with them keeping the same price, but with more limits.
Now, some will be quick to respond that of course people surveyed will hate broadband caps. It's like asking people if they want to get less for the same price. But the key point here is how many people would look for alternative providers, combined with the fact that, for most users, there really aren't many choices. Once again, this highlights the key problem with US broadband: there's almost no real competition. You have the duopoly of the telcos and cablecos, and not much else that represents real competition. Most of the biggest providers (Comcast, AT&T, Time Warner Cable) have made it clear that they intend to cap broadband. The only really big holdout is Verizon, who is betting that its FiOS offering won't require similar caps. But FiOS is still limited in its footprint, and it will be worth watching what happens over time. So while there are plenty of skirmishes about things like net neutrality and broadband caps, don't lose site of the real issue: the lack of significant competition for broadband in most markets.
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Filed Under: broadband, broadband caps, competition
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It's all about last mile cost
What it comes down to is picking between:
1) Allow people to use up as much as they want, and then listen to everyone complain about network congestion.
or
2) Limit access a bit such that the limits will cover the majority of subscribers, and listen to the 20% of users that consume 80% of the resources complain.
or
3) Build out the network to meet the demands of a minority of users. Increase prices for all users to pay for it, then listen to everyone complain.
From a business perspective, pick one... I'd pick #2 - fewest complaints and highest number of satisfied customers.
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Re: It's all about last mile cost
Because they want more than anything else to protect the totally awe inspiring profit margins they make off of cable tv services. Same is true for those cablecos that also deal in voice services. If they can convince people to maintain 2 or 3 services on their bill, they are happy.
But as people realize they can simulate "good enough" video and voice service over the internet, they have a tendency to cancel video and voice. That leaves the cablecos with nothing but the lower profit margin service, and a dire need to actually build out the infrastructure to support the demands of their customers (that they already sold to the customer).
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Re: Re: It's all about last mile cost
Price some gear. See what the support contracts cost, and what it takes to maintaining, and you'll understand that it's not so much profit!
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Re: It's all about last mile cost
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Re: Re: It's all about last mile cost
Bandwidth costs those ISP's real money. It's not infinite and free. A DS3 would cost an ISP in a place like, say, Wichita or Topeka about $5,000/mo (more in smaller towns).
So you're saying I would need to double that? triple that? Keeping the same number of customers.... and not increasing my price?
Horse (*#$.
Take some econ and business classes, come run an ISP (like I do). THEN you can argue with what I have to say.
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Re: Re: Re: It's all about last mile cost
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Re: Re: Re: It's all about last mile cost
Maybe you need to take an econ and business class and learn how to budget a business. Don't take on a million customers if you can only support a 1000. You will not get my sympathy because you put more on your plate than you could eat.
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Re: Re: Re: Re: It's all about last mile cost
Equipment is not free. Salaries for thousands of employees are not free. Truck rolls are not free. Splicing fiber at 2am in a blizzard to restore an outage is not free. DSLAM's are not free. CMTS' are not free.
It costs *MASSIVE* amounts of money to run businesses like that.
Are you so blind as to not see that, to think that your $40 a month is "greed" and "pure profit"!?
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Re: Re: Re: Re: Re: It's all about last mile cost
That's the problem here. Nobody's trying to say you as an ISP can't make a profit (and if they are, they're a clown). They're saying you shouldn't be able to take the piss, which means there needs to be competition so that users have a choice if you do.
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Re: Re: Re: Re: Re: It's all about last mile cost
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Re: It's all about last mile cost
That would make sense if there really were network congestion that wouldn't be solved by perfectly ordinary upgrades. It's like saying that people who drive more should be charged more for using roads, as a way to keep them off the roads, so you can stop doing road maintenance...
Try reading the info in the links below...
http://techdirt.com/articles/20080903/2020352161.shtml
http://techdirt.com/articles/2 0060629/2236200.shtml
http://techdirt.com/articles/20080703/1325301592.shtml
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Re: Re: It's all about last mile cost
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A meter, please.
It doesn't look like they are going to slow our data rate as we approach our cap, but they could, at least, have designed a meter for us to watch. Even the electric company let's us see how much we are using as we go along.
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Re: A meter, please.
Set NoScript to block all 3rd party scripts and allow all 1st party and that will catch 99% of all bandwidth eating ads out there. AdBlock+ will catch the other 1%.
You'd be amazed at just how much bandwidth you save that way. Also, since your browser will never be waiting on some crappy ads script, pages will all load significantly faster.
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Re: A meter, please.
Basically, I didn't do anything differently this month than I normally do and I'm OK with regards to the 250GB cap. We'll see what happens when I _really_ start doing network heavy stuff.
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They do not understand the market
In addition, the ISP is shooting themselves in the foot by putting caps/metering in place. The user will be more aware of the cost associated with all the ads being downloaded and consuming their BW. The result, over time, would be more people using ad block and similar products. This would not go unnoticed, and would result in a reduction of the fees the websites could charge the advertisers. And since the ISPs are getting into the ad business, Phorm & NebuAd, they would be subject to this revenue reduction also.
Would they then put a no block paragraph in their EULA ? How would they verify it ?
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Besides, it won't easy to implement caps and such. What about IT companies in the USA and how they'll be affected, like Google, Microsoft, Facebook? Think about an entire sector.
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Pipe Myths
Sprint culls my EVDO to 5G/month. Still says 'unlimited' in my contract. I must choose no audio, no video, tiny pdf, no flash, no data sets, no book preview, no software downloads, etc. etc. Everything script and feature is turned off.
It's so much fun to look over a link in fear I'll be cut off. Oh yeh, like walking out in the morning hoping my dog won't poop.
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All About Limiting Competition on the Non-Internet Side
I've already filed a complaint against Comcast with the FCC, on the grounds that (a) they contracted with me for UNLIMITED Internet access (so it'sd consumer fraud) and (b) they are limiting competition unfairly.
They LOVE their money!
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It's all about last mile cost, No its not
Gambling that all your users won't be using their connection should not be an excuse/defense to scam. Fractional reserves is a scam in banking as well is network management.
Metered/Caps are inherently flawed due to the following:
- DNS redirections
- no control of incoming traffic
- usage data discrepancies
- popups
- spam
- spyware/malware/dial-home apps
- network mismanagement
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Re: It's all about last mile cost, No its not
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Re: It's all about last mile cost, No its not
That would be a terrible idea. Picture a market with two broadband providers for simplicity. If one of them hits capacity under your proposed rule, the other one can pretty much charge whatever it wants. This is because it is now the only option for not only new customers but its own existing customers, since the competitor cannot take on any new customers. If both of them hit capacity, 1) nobody new can get broadband now, so nobody will want to move to this location and 2) both providers can charge just about anything they want. Would you like paying $150/month for 200kb/s access? The only way this would work is if you combined it with some kind of provision guaranteeing low barriers to entry so competitors would quickly spring up to serve such a market. I have no idea what would accomplish that though.
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How much do I use?
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Pipe Sympathy
We require immediate offense. The spectrum is ours. Not to be divided among thieves or rationalized among managers, but delivered to everyone with no nation better. Uh, where you live?
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Re: Pipe Sympathy
That still doesn't fix the fact that last mile is expensive, though ;) Did you know that a fully kitted out Breeezecom WiMAX tower will run you a cool half a million? And that's if you don't have to buy the tower! Now put one every 3km! That adds up FAST, and it's not even top of the line kit!
Think about it in terms of context with respect to how internet access mediums work. We are 15th - behind countries that are smaller than most of our STATES. Of course they're beating us!
In my opinion our position in the "rankings" is mostly a factor of geogrophy. Our landmass is just friggin huge.
What I'd be more interested in knowing is how do we fair against a more even playing field? Russia? Canada? China? Australia?
When you look at it for simmilar sized land masses, we may not be first, but we aren't doing /that/ bad.
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Re: Re: Pipe Sympathy
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Re: Re: Re: Pipe Sympathy
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Defending Failing
Our pipes are profiteered and we know it. We opened the spectrum almost 100 years ago, a terrific number of years to deliver both capacity and profit. Price and cost are important factors, but so is promise and performance.
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Found a Chart
I found a global broadband graphic. Canada is so-so but better than USA.
This quote is no surprise, "In the first three years of the Bush administration, the United States dropped from 4th to 13th place in global rankings of broadband Internet usage."
Pressure to improve our pipes is important. Nobody is suggesting firms be crippled. If others do it, why not we? There's a real question there. A fair question.
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UK Broadband
Other, "unlimited", services in this country are so blatantly and cripplingly bent that they are not worth using in the slightest.
I consider myself to be a high-bandwidth browser, but not a high-bandwidth downloader.
My typical bandwidth demand is around 200-300MB per day, but that's without downloading any movies or other stuff.
However, my ISP allows me the hours between midnight and eight a.m. unmetred and uncapped. *cough*
I do get an 8Mbps connection, though, which I understand you guys rarely see.
Just throwing out a comparison here, for anyone who's interested.
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Re: UK Broadband
Maybe some are less consumer friendly, but it's easy to change and there is a choice in the matter.
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Australian Broadband
If you want broadband, or any sort of information service (including call centre operators that can speak the same language as you), don't move to Australia.
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If you spend around 6 hours a day constantly surfing sites like YouTube, or other video sites like that, downloading at well over 2Mbps, and if not near 10Mbps, you'll go over that cap. WHY CAP.
With places offering high def content like netflix streaming, media centers, etc.. what is going to happen when the large amount of people start going over/near 250GB?
Charge more and introduce more caps? So retarded. They should charge for what they offer, but give what they offer. What's the point of having a highspeed connection if it can only be high speed a few hours a day?
*pissed off at comcast*
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$215 internet access in 4 years
Here is prob the best article I have read on this and it includes the White Paper which explains what happens when Comcast (and others) forget to tell you if this takes the milestone to be the example for other ISPs.
Do you want $215 internet access 4 years from now? Thank Comcast.. And now, because of this and other problems with Comcast fixing their problems (in which they repeatedly admit is their problem) I will happily go back to DSL. Enough is enough. They protect their ASSets, not ours.
http://gigaom.com/2008/09/30/gigaom-white-paper-the-facts-fiction-of-bandwidth-caps/
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Hmmm....
Let's say company "X" doesn't cap. If everyone leaves for company "X", you can bet company "X" will cap.
This is a perfect example of how Corporate America forces its decisions upon its consumers, leaving little choice for anyone.
Of course, the way to fight back is to drop service altogether, but I can promise you another poll will tell you life without the internet is not an option.
I'm betting not a single company is going to reduce its rates to customers for this cap, either.
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Other countries?
1) Truly unmetered broadband, which is quite expensive
2) Unmetered* broadband, which has a "fair use policy", which costs less
3) Specific monthly limits (sometimes rolling, sometimes not) based on how much I buy as a bundle, with some sort of "top up" rate if I go over. Depending on the ISP, I either get billed for extra use (with email notification), or I get redirected (presumably via DNS interception) to make a further online payment
I think this works really well. The market can sort the mess out.
I think the difference here is that any ISP can provide the backhaul and this is mandated by the regulator. The company that looks after the physical phone lines (British Telecom) is required to sell DSL connectivity to homes (but not the Internet) wholesale to ISPs at a price that allows them to compete with BT's own full offering.
Mike: it's interesting that you're trying to predict which of these customers would prefer when the market has already partially decided that here. Anecdotally I would say that option 2 above is what most people here have, but that is probably because that's what BT's full offering is - a considerable proportion of the population think that BT's full offering is the best choice because they provide the line without looking into it further.
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Already dumped comcast
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Electricity
Customers recognize this implicitly. They hate the idea of any sort of mental transaction cost associated with "watching" their electricity usage -- especially since they have no clue how much electricity they really use. Many even have no an idea of how much electrical energy one kilowatt-hour represents.
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Re: Electricity
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