ISP Feebly Tries To Defend Usage Caps By Comparing Them To...Oreos

from the words-are-like-wind dept

Wed, Sep 28th 2016 11:47am — Karl Bode

Earlier this month, we noted how Netflix had complained to the FCC about broadband usage caps, quite-correctly noting they're little more than price hikes on uncompetitive markets. Netflix also was quick to highlight how caps can be used anti-competitively against streaming video providers, something the FCC opened the door to when it decided to turn a blind eye to the practice of zero rating (or exempting your own or a paid partners' content from counting against the cap). As such, Netflix urged the FCC to finally crack down on usage caps using its authority under Section 706 of the Telecom Act.

Apparently worried the FCC might take Netflix advice seriously (there's zero indication of such), a cable broadband ISP named Mediacom filed its own complaint with the FCC trying to defend the practice. Mediacom, which imposes usage caps as low as 200 GB on its users, tries to complain that criticizing ISPs for imposing caps is hypocritical...because Netflix charges different tiers of service for higher quality content and more streams:

"Ironically, those who think ISPs are greedy pigs or evil villains because they charge based on consumption through caps or usage-based pricing do not direct the same moral outrage toward edge providers who price their services in basically the same way. Netflix, for example, charges $7.99 a month for its “basic” subscription. A basic subscriber does not get unlimited usage of Netflix’s library for that price but, instead, is limited to videos in standard definition format and on only one screen at a time."

Of course, Mediacom knows it's comparing rotten apples to oranges. In broadband, users have no competitive options, so if an ISP (or both of the duopoly ISPs in a market) imposes usage caps, a consumer can't vote with their wallet. In contrast, users frustrated by Netflix's practice of charging more money for HD (or 4K) streams can just go get content from another streaming or traditional cable TV provider.

But this type of ill-suited comparison is trotted out again and again in the FCC filing, with the ISP going so far as to compare broadband service to game consoles, video games, socks, and cloud storage. Ultimately the core of the ISP's astonishingly flimsy argument leans heavily on Starbucks coffee and...Oreos:

"Imagine you are out for a walk and experience a sudden, irresistible craving for Oreo® cookies. You only want to spend two dollars, which means that you will be able to buy a two-pack or maybe even a four-pack but for sure you cannot get the family size of over 40 cookies. For that many, you have to spend more. Of course, it would be nice if your two dollars bought you the right to eat an unlimited number of cookies, but you know that is not the way our economy works. It is the same for the Starbucks latte you might want to drink with your cookies and for socks, gasoline and just about every single one of the thousands of other products and services that are for sale in the United States, including essentials like water and electricity."

Again that's so misleading as to be insulting. Consumers have a myriad of competitive options for both coffee and cookies, whereas Mediacom is very often the only ISP available to its customers. It's that lack of competition that encourages ISPs to begin charging more money for the same money via caps and overage schemes where -- unlike utility markets -- nobody confirms usage meters are accurate. As for how the economy actually works in broadband: incumbent ISPs buy state legislatures and federal regulators to ensure nobody lifts a finger as they price gouge the living hell out of a captive subscriber base.

You know, just like the damn lederhosen industry.

9-19-16-Letter-to-Ms-Dortch-1 (PDF)9-19-16-Letter-to-Ms-Dortch-1 (Text)

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Filed Under: business models, choice, data caps, fcc, oreos, usage caps
Companies: mediacom, netflix

44 Comments

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radarmonkey (profile), 28 Sep 2016 @ 11:54am

Where can I sign up for Unlimited Oreos?!
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 11:59am

Re:
UNLIMITED OREOS OR BUST!!!
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Zonker, 28 Sep 2016 @ 12:01pm

Re:
* Unlimited Oreos limited to 26 Oreos per month, after which your Oreo supply is "optimized" to one Oreo per day for the rest of the month.

-- O-Mobile
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Anonymous Coward, 28 Sep 2016 @ 12:06pm

So they are in effect saying you can eat all the Oreos you wan so long as they are our Oreos, but that other companies Oreos are bad for you.
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Anonymous Coward, 28 Sep 2016 @ 12:06pm

Finite vs. near infinite good comparison?
Oreos are limited, 1's and 0's are nearly unlimited.
[ link to this | view in thread ]
Machin Shin (profile), 28 Sep 2016 @ 12:10pm

Utility
I love how they like trying to pick and choose things to get what they want. They want the best of all worlds. I really think they should wake up and realize they are pushing for something that is going to hurt them really badly.

They want to be able to charge more for people that use more, as an example they point to power and water. The thing about that though is those are purely by usage, and your not charged by the "speed". The power company is not putting a throttle on how fast I can use power, the only limit is the amount the wire can take without melting.

So the way I see it. They can charge by the speed like they have been doing, or they can drop the stupid throttles and charge me by my usage. They can't have both.

While I really really don't want them to go to a strict by usage model because it will hit me hard. I also know it would almost kill the internet companies. Just think how many people have the internet and use maybe only 100 MB in a month....
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Joshua Jones (profile), 28 Sep 2016 @ 12:10pm

Tangible Goods Versus Access Fee
This isn't even getting into the idiocy of comparing physical tangible goods to an access fee. While the basic Netflix account does not provide access to everything in the highest possible resolution, it does allow me to watch as many movies as I wish. The access fee is a fee for my having access to the basic Netflix library.

A better comparison is perhaps paying for a day's access to a park or a zoo. I have paid to be able to gain access to the place. I am not then told that I can only take 1,000 steps before I have to crawl on hands and knees or be physically removed from the park.
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Anonymous Coward, 28 Sep 2016 @ 12:12pm

So wait...
If they are selling me "oreos" at a fixed rate, and I have to pay more to buy more of their "oreos", then do I get my money back if I asked for an oreo and actually get half an oreo and 3 cheezits?
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Anonymous Coward, 28 Sep 2016 @ 12:12pm

I knew it!
Those "bits" and "bytes" all those nerds are talking about are like Oreos and one day there won't be enough for everyone.
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Rich, 28 Sep 2016 @ 12:18pm

Re: I knew it!
Don't worry. They will start rationing the bytes in nibbles.
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Anonymous Anonymous Coward (profile), 28 Sep 2016 @ 12:23pm

The benefits of a competitive market
I prefer Sunshine Hydrox myself. Those Oreos are pretentious and ego filled. The double stuffed ones have extra ego.
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Anonymous Coward, 28 Sep 2016 @ 12:45pm

Mediacom...
I want to make sure people are aware too that Mediacom truly has no competition. They tend to offer service right outside areas where your major cable providers are, where you're lucky if DSL is an option.
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I.T. Guy, 28 Sep 2016 @ 12:46pm

I can get the family pack of Oreos from the Amish deli for 50 cents more than the regular pack at Walmart or Shop-Rite. Most PPL are stuck with Walmart.
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Anonymous Coward, 28 Sep 2016 @ 12:46pm

Buffet?
ISPs have never heard of the concept apparently. It even involves finite goods with infinite consumption, at least until the food does not fit anymore. And it is a rather common business model.

And there is no reason a buffet could not serve Oreos on the desert cart.
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Anonymous Coward, 28 Sep 2016 @ 12:49pm

Re: Re:
** When your supply is optimized, the Oreos you get are the new "thin" ones.
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Angetenar, 28 Sep 2016 @ 12:57pm

Food analogies? OK, then imagine...
If AT&T decided to begin charging an extra $5 "connection fee" per phone call. Hey, it's their phone service, they can charge what they want, right?

Now suppose that out of the goodness of their hearts they decide to "zero rate" calls to everyone except pizza shops. Isn't that a great innovation? (in the FCC's eyes).

Now suppose they decide to "partner" with Pizza Hut and further "zero rate" calls to Pizza Hut. Hey, more money saving innovation for the public! Isn't that great? (never mind that Pizza Hut then adds a $5 "phone order" fee)

That's the kind of scammy "innovation" the FCC is encouraging.
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 12:58pm

Unlimited
If I was sold 'unlimited' Oreos and received a package containing only 200 of the Oreos, then I would be rather upset ... ...

What ever happened to false advertising?
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Angetenar, 28 Sep 2016 @ 1:03pm

Re: Unlimited
What ever happened to false advertising?

It went mainstream when we "got government off the backs of business" back in the 80's.
[ link to this | view in thread ]
PlagueSD (profile), 28 Sep 2016 @ 1:42pm

So close...but not quite correct.
Netflix, for example, charges $7.99 a month for its “basic” subscription. A basic subscriber does not get unlimited usage of Netflix’s library for that price but, instead, is limited to videos in standard definition format and on only one screen at a time."

Close...What the phone companies are doing is acting like Netflix and charging $7.99/month, but only allowing us to watch 20 movies a month. Once we reach our 20 movie cap, we get charged $1.99/movie extra. Now compound that with Netflix/other companies sending us movie "previews" that count against our movie cap, but they won't tell us by how much...

Data caps have been idiotic when the data is "infinite" There's no way you're going to run out of 1's and 0's in the middle of downloading something.
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 2:19pm

Did Mediacom hire the Feebler Elves to write that mess?
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Anonymous Coward, 28 Sep 2016 @ 2:31pm

Re: Finite vs. near infinite good comparison?
shhhh don't say that people might realize how big of assholes ISPs are
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Techdirt Dark Ages Edition, 28 Sep 2016 @ 2:33pm

Since it's impossible to defend usage caps without looking like an idiot I assume the thinking here was to just accept this grim reality and run with it. Incidentally, more banana republic news where "usage caps" are still a thing.
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Anonymous Coward, 28 Sep 2016 @ 2:46pm

Unlimited Water
With water, it is possible in some places to pay a little bit more for an unmetered connection.
[ link to this | view in thread ]
That Anonymous Coward (profile), 28 Sep 2016 @ 2:47pm

Imagine if it only cost 1 cent to make an oreo and you rigged the market so that the only 2 way you might get oreos made sure they charged the same inflated price. Then they both put in place limits on the oreos you could buy at the the inflated prices, but offered you more oreos for an even larger fee when you went over what they think is a fair number of oreos for anyone to have. Of course diabetics who don't eat many oreos don't pay less because they eat less. But families with many children who are wild about oreos are punished with huge fees despite the fact all of the oreos still only cost 1 cent to make (and if demand surges pricing can go even lower as they get a larger supply).
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afn29129 (profile), 28 Sep 2016 @ 3:43pm

Re: Utility
Or like Ma-Bell used to charge for toll lines (long distance), a higher rate during the day. We will soon have Prime-time Internet rates and off-time Internet rates.
An example could be: 600 GB per month but you use up that allotment at 5x the rate during prime-time... say 6pm till 11pm you use 10 GB but get deducted for 50 GB.
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 4:10pm

It was finally found, the correlation between internet usage and diabetes.
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 4:23pm

Problem is the factory is making oreos 24/7
The oreo factory is making the same number of cookies an hour, whether or not their eaten. The only real variable that comes into play is how many cookies an hour are made, which is where what the user pays comes into effect.
[ link to this | view in thread ]
Anonymous Coward, 28 Sep 2016 @ 7:29pm

But the Internet is like Oreos. Each Oreos packet has a limited number of Oreos. When you bite them all, they're gone. No more Oreos for you.
Each Internet packet has a limited number of bits. When you byte them all, they're gone. No more Internets for you.
When a person doesn't have any Oreos or Internets left, they are a sad person. Then they have to go and buy some more packets of Oreos/Internets.
Depending on where you live, you might have only one Oreos brand available. You might have only one Internet brand available.
[ link to this | view in thread ]
Pixelation, 28 Sep 2016 @ 9:05pm

ISP's to customers...
Bend over, you're about to get double stuffed.
[ link to this | view in thread ]
techflaws (profile), 28 Sep 2016 @ 10:39pm

Re: Finite vs. near infinite good comparison?
Which is a far more convincing argument than the lack of competition.
[ link to this | view in thread ]
techflaws (profile), 28 Sep 2016 @ 10:41pm

Re: Tangible Goods Versus Access Fee
I don't think that's a better comparison, again because this too compare apples and oranges. The zoo can become crowded and 'unusable', moving more bits and bytes is far easier and cheaper.
[ link to this | view in thread ]
Anonymous Coward, 29 Sep 2016 @ 1:20am

Re: Re:
Wow. Redefining 57 as infinity takes balls.
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WickedMONK3Y (profile), 29 Sep 2016 @ 1:49am

Madness
We do not have the greatest internet where I am from (South Africa) as we are just getting to grips with FTTH and it is extremely expensive compared to the US. I have a 10MB connection at home and that is considered FAST for most homes, but it costs $ 60 a month at current exchange rates BUT it is completely uncapped. Uncapped is quite prevalent here with most users opting for 4MB to 10MB uncapped DSL or 10MB to 25MB uncapped FTTH. And we are not considered first worlds by any means. We have fair usage policies in place that throttle heavy users but they still don't cap us.

It is quite sad to read that a highly developed nation like the US has caps imposed on users...
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That Anonymous Coward (profile), 29 Sep 2016 @ 3:57am

Re: Madness
How much sadder are you knowing some of us were paying $30+ (US) for 1.5MB DSL.... with caps....
[ link to this | view in thread ]
Anonymous Coward, 29 Sep 2016 @ 4:24am

In the State which I live they have a dept. of weights and measures (I am sure most other States have the same type of agency). They regulate anything that is sold to the consumer on metered pricing. ie... gas, meat at the deli. They do so by having inspectors validate the precision of the measuring device and affix a seal to it. I am not a proponent for increasing the power and reach of the government, but in this case if I were a customer with bandwidth caps I would consider petitioning the State's attorney general about this.
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REM(RND) (profile), 29 Sep 2016 @ 4:53am

The problem can be likened to Oreos with a few changes. Like the internet, the ISPs do not provide nor create Oreos. Like the internet, there is a virtually unlimited supply of Oreos out there in a myriad of flavors. The ISPs are the bottleneck, the choke point, to Oreo consumption. France says you can have 100 Oreos a day. You might not eat that many, but that's how many they can send to you. Japan says you can have 200 Oreos a day. Korea 250. United States 10 Oreos per day and if you have more than 10 Oreos delivered, you have to pay for more. You want something other than plain Oreos? Fuggitaboutit. Oh, you want someone else to deliver your Oreos? Well, the ISPs have WRITTEN THE FARGING LAWS that say no one else but them can deliver Oreos to you. Nevermind the fact that they don't create the Oreos and are using rusted, half-broken down trucks instead of the super-mag trains of Europe to deliver said Oreos. Oh, and if there's no road to your house, no Oreos for you. No, ISPs are not going to pave a road there so you can get Oreos. What, do you think ISPs are made of money even though they continually post record profits? And if you want milk all the ISPs do is hope you choke on your dry, stale Oreos because that's all they're contractually obligated to supply you with. Don't like it? Well the laws THEY WROTE say you do, so there XP
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Anonymous Coward, 29 Sep 2016 @ 6:25am

Re: So wait...
no but we will be adding a service charge for the cheezit

.... OREO ISP 'The one with the shit on the outside and the creamy evil inside'
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Ninja (profile), 29 Sep 2016 @ 6:27am

Their example is flawed. Oreos don't cost a fraction of a penny. If they did you could have a virtually unlimited supply. That's what happens to your connection. After you paid for the delivery (in the Oreo case it would be the shipment), the Oreos themselves cost next to nothing (there is a very tiny bit of incremental cost towards electricity that is negligible). So a proper analogy would be:

Imagine you want Oreos and you can have them for zero (the data itself) if you pay an amount for a fixed transportation capacity. Imagine the added costs of using that transportation capacity to it's full were very, very, very small and you could add them to the fixed cost. There, you don't have unlimited Oreos because they are limited to the size of the truck you contracted but you can eat the maximum the truck can transport if you want. If you can't eat that much it's ok, the truck will still be there waiting for the orders but you will have to pay to keep it working exclusively to you.

You wouldn't download Oreos, would you?
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DeathWoks (profile), 29 Sep 2016 @ 9:18am

Just Glad they didn't figure this out sooner...
Essentially they want to direct bill for time/bandwidth used.

Meanwhile back in the 80's and 90's before digital cable watching shows all day actually ate up, huge amounts of bandwidth!! They need to go back and show how someone's choice and consumption affected their bottom line!

They have since then offered enormous upgrades in bandwidth and compression for video offerings, and upgraded the technology to deliver two way communication - the only way they are not making money off of huge upgrades is if they are poorly designing their networks.

Charging extra to the few who are using more bandwidth - would be like going back to the 80's and changing extra for those who watched TV for 15 to 20 hours a day. Your system should be able to handle it, if not - return the grant money, tax incentives, and other government handouts that pad your bottom line and let those who want to offer service do so. Maybe someone like Google Fibre or Sonic.
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Anonymous Coward, 29 Sep 2016 @ 9:53am

Re:
I would if I could. And then throw them to garbage.
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Michael, 29 Sep 2016 @ 9:58am

Re: Re: Re:
You do not understand.

We are not saying "unlimited" in the sense that you can have an unlimited supply of Oreos. We are saying the 57 Oreos you can get (if you choose to get all of the ones available) are not limited in use. Feel free to eat these Oreos as fast as you receive them, put them away and eat them at the end of each day, share them with your children (only if they are eating them using your glass of milk).

There is really no limit to how you can use these Oreos you are given - hence the term "Unlimited".

Of course, in addition to the advertised price of the "Unlimited Oreas" plan, there is a small charge for Oreo assembly, transportation, a "fat bastard" fee if you actually eat them, taxes, and a fresh surcharge that will be included in your bill. Oh, and if you want to receive that bill in the mail, there is a small fee for that as well.
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That One Guy (profile), 29 Sep 2016 @ 1:59pm

Re:
If nothing else it would be entertaining watching them run around like headless chickens, bleating about the 'invasive, unwarranted government interference in private business.'

They want to be able to bill if you use 'too much' by claiming that paying by use is only fair. Except using less doesn't mean you pay less, and they are completely indifferent to making sure that the systems counting 'how much is used' is actually accurate, since again, using less doesn't mean paying less, so any mistakes come out in their favor.

They want it both ways basically, they want to excuse usages caps by comparing it to stuff like water and electricity('Pay more to use more'), but they don't want their services treated as such by an outside party, and they certainly don't want to apply the other side('Use less, pay less').
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Industrial IT, 30 Sep 2016 @ 7:30am

They want to be able to charge more for people that use more and are trying to compare it to electricity and gas - utilities - although they seem to forget that they are not based on the "speed"!
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Anonymous Coward, 30 Sep 2016 @ 3:10pm

Re:
They want to be able to charge more for people that use more and are trying to compare it to electricity and gas - utilities

Those shouldn't be metered either!
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