Look At That: Competition Helps Stop Broadband Caps
from the it's-all-about-the-competition dept
For years, many people have been pointing out that the real problem with broadband in the US isn't an issue of net neutrality or broadband caps, but the lack of competition. While having only two providers in a region usually isn't enough to ensure reasonable broadband practices, it may actually be working in upstate NY. While Frontier Communications has been talking about really low usage caps, it seems that now that Time Warner Cable has decided to launch capped broadband in one of Frontier's regions, the company may be thinking about going in the other direction, potentially even running a whole ad campaign about why TWC customers should switch to avoid the caps. Of course, given Frontier's previous statements about caps, it's difficult to believe that customers will be all that well protected from an eventual capped broadband anyway. But, still, this demonstrates that competition can sometimes keep these things in check. But, what you really need is more than just two players.Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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Filed Under: broadband, broadband caps, competition, upstate new york
Companies: frontier communications, time warner cable
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Down Here...
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Just gimme some FiOS son!
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I haven't seen such a great and level playing field before or since, and the slackjaws who voted to sell out have no idea what they're in for!
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End competition.
Uncapped is nice for users, but perhaps less realistic as a business model.
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1. If you run a campaign offering uncapped services, you set the price point for that higher. It keeps all but the most serious users from going uncapped which means you get the cake and the delicious sensation of eating it too. You've also got the whales and those type also tend to be influencers in this particular sphere. So there's a little side benefit.
2. Saying you're uncapped is a great way to attract normal users who like to think that they use lots of bandwidth or will use it, or dammit they ought to be able to use it. Plus it's an easy campaign to run. You show people getting giant overage bills from the "other guys" or miserly dads cutting the network cable on teens, etc., etc. I could build a campaign for that in about 35 minutes.
Also, you're forgetting that once one companies offers it, the other(s) usually follows suit, so the field levels out again and the havoc continues to ensue.
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1) If your price point is higher, only people doing massive overages (capped price point plus usage) will see a benefit. So which users come over?
2) Most normal users won't consider themselves great bandwidth users unless they are getting billed, see (1). Without reason, people aren't going to start paying more for what they are not using. The campaign is easy to write, but the target users are only the ones getting an overage bill. SOmeone paying $39.95 a month capped and never going over isn't going to line up to pay $49.95 just for the heck of it.
So what you end up with is a service for people who use a ton of bandwidth, and in cable terms, that can made nodes slower and give poorer response to users inside busy nodes.
In the end, companies need a mix of a few heavy users and mostly light users to make the costs work out well. Actually providing 100% of the bandwidth suggested (but not promised) by the connection speed to each user is beyond to reach of the average consumer still to this day.
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I don't know why they pay either...but, they do.
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Your original complaint is that high usage users are eating up all the bandwidth. To you, this causes an imbalance, because the cost-for-usage for high usage users is much lower than average.
Now you say that the only people who would pay more for uncapped service are the high usage users, but wouldn't this bring their cost-for-usage closer to the average user?
Also, and I could be way off base here, but isn't part of the [way overpriced due to lack of competition] bill I get every month supposed to go to upgrading the system? It's not all pure profit, or just for maintenance. Technology isn't standing still-- it's obvious that the data transferred today dwarfs the data transferred just 5 years ago. So I see no problem with high usage users paying more-- though I believe we pay plenty as it is-- in reality, it should be that low usage users pay *less* than I do. (I just downloaded Jaunty Jackalope i386 and 64b, plus I watch hulu all the time-- so I think you'd consider me high usage)
The real point is that competition can never hurt the economy, though it can hurt specific [outdated] businesses. If uncapped data plans are *really* out of the question for ISPs, then competition won't change that-- but I believe they are in the same mindset as you are-- "Customer-be-damned, let's milk them for all they have."
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Frontier Communications? Upgrade equipment?
I'm with the guy who posted "Give me some FiOS!" (or LTE)
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Re: Frontier Communications? Upgrade equipment?
If Blue Wave is still around in WNY, that's a competitor, but again, I've yet to hear a good thing about them either.
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Look. Romania here. Friggin' Romania. Not exactly the most prosperous country in the world. I have the cheapest Internet plan at a small-scale neighborhood ISP. That's $10/month. Can you guess how much I get for it? A constant 300KB/s both ways, with NO TRAFFIC CAPS whatsoever. That's more than they're officially guaranteeing. And the speed is, like, 10000x that for local mirrors.
And now for the big question: how come a tiny company from Eastern Europe can offer a better deal to its not-so-many customers than a big North American corporation with thousands of times their resources?
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Most "big" users don't want to pay more, until there is a cap. Then suddenly they are either willing to pay, or they will take to the virtual streets to protest the greedy ISPs.
You are correct - the lower usage users should pay less. Bandwidth caps accomplish this - anyone under the cap pays one price, everyone over pays over.
Competition never hurts the economy, but often companies looking to gain market share will take on more than they can handle, more difficult customers, or make other cuts in their business plan to try to grow. It's all part of free enterprise, and it's fun to watch.
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I work in the data center industry right in downtown Atlanta. If a client needs more bandwidth, I just make a deal with the providers and get a 10GigE cross connect run to the providers and call it a day. Yes, the client pays for what they use, But at less than $5/meg it is dirt cheap. it is not that bandwidth is hard to get or is expensive, it is just that they are not making as much of a profit off the larger users. well... too bad. you are already paying for it, why not use it?
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Besides, with caps as low as 5GB, it really is not unreasonable for even mid-level users to get paranoid about their usage. A few too many YouTube videos, or one HD stream from Netflix puts you right over the top. I really don't mind caps if they are reasonable, as they are with Comcast right now. But TW's are ridiculously low.
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I wouldn't believe much that either one of you had to say.
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And it all comes from having 3 major and a bunch of minor companies that all provide broadband to the same area. Better competition gets better deals for the customers, and gets more money for the providers (not less), because their good deals and incentives are enough to get even old people and others who usually wouldn't care about getting broadband to sign up.
I feel sad for my family living back in the States when I hear about the insane prices the 1 company that gives "real" (8 Mbps) broadband in the area charges.
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