FCC Boss: Broadband Caps Are Good... No, Bad... No, Good... Wait, Who Am I Talking To Again?

from the politics dept

For many years, we've talked about why metered and capped broadband is bad for innovation. Beyond the fact that it introduces serious mental transaction costs ("do I really want to watch that video, or will I hit my broadband cap?"), it creates the exact wrong incentives for broadband companies. They have incentives to keep the caps low and to not invest in infrastructure improvements. Of course, as with the net neutrality fight, the appearance of meters and caps are really a symptom of a larger problem, not the problem itself. The real problem: a serious lack of competition. Meters and caps don't do anything that a user wants. Quite the opposite. They only serve the needs of the broadband provider. If there were real competition, then broadband providers wouldn't be able to get away with caps and meters, because customers would quickly move elsewhere, and companies that focused on not limiting users would be winners in the marketplace.

Over at Broadband Reports, they've been chronicling FCC boss Julius Genachowski's constant flip-flopping on whether or not broadband caps are good or bad. Tellingly, it seems to depend, in part, on what audience he's speaking to.

FCC boss Julius Genachowski has been busy lately paying lip service to Silicon Valley, most recently telling a bunch of Silicon Valley conference attendees that caps were something we should be "concerned" about, after telling cable companies just a few months earlier he thought caps and overages are nifty and innovative. Speaking again to Silicon Valley folks yesterday at a speech at Vox Media headquarters, Genachowski hashed out his muddy position a little further, again insisting he was "concerned" about caps -- sort of -- maybe

As the article makes clear, beyond tailoring his remarks to his audience, Genachowski seems to be discussing things as if we were in a world where there was real competition, where meters and caps were used to offer lower prices, where the meters actually worked, where money from these activities goes into greater broadband investment and where such things were needed to make broadband profitable. The problem: exactly none of those things appear to be true. It's kind of tough to make competent policy when all of your assumptions are basically wrong. More from Broadband Reports:

One, caps (and especially usage fees) are not technically or economically necessary whatsoever. Flat-rate broadband is perfectly profitable and despite doomsday prognostications designed to scare regulators (it apparently worked), most networks consistently keep pace with demand thanks to dropping bandwidth and hardware prices and improved engineering. Ten years of ISP earnings reports are proof the flat-rate pricing model is sustainable.

Two, they're not being imposed in a "competitive market"; they're just price hikes on already-expensive service, designed to protect TV revenues from Internet video -- and they're made possible specifically because of limited wireline competition, a problem the FCC refuses to seriously tackle. Most modern, well-managed wired broadband networks don't see much congestion. Caps and overages are an executive and investor pipe dream; an entirely new unnecessary fee system layered on top of what is already some of the most expensive broadband service in the developed world (OECD data).

Genachowski appears to have swallowed the lie that money gleaned from overages goes back into the network; yet CAPEX and wired network investment is dropping like a stone for most incumbents, and most of the cash gleaned goes into the pockets of CEOs and investors. While that's the public corporation's primary objective, pretending that caps are helping to create the networks of tomorrow is not supported by the facts. If the money from overage fees actually went back into the network, Canada would have some of the most advanced residential broadband networks in the world. Go ask our Canadian forum users exactly what caps have done to improve the quality of their services.

These things are important if we're going to actually get broadband policy right. The FCC has often seemed way too timid in recognizing that what the telcos tell them is often a complete fabrication. Given how that's been the case for decades, you'd think sooner or later someone would pick up on it and use it to try to fix things, rather than kowtowing to their latest talking points.

Filed Under: broadband, broadband caps, fcc, julius genachowski, metered broadband

AT&T Jumps Into The Metered Broadband Pool; 150 Gig Limit For DSL

from the don't-stream-too-much-there... dept

Over the weekend, Broadband Reports broke the story that after plenty of talk about it, AT&T is implementing broadband caps and overage fees. The caps are 150GB per month for DSL and 250GB per month for U-verse. AT&T claims that it's trying to be flexible, and the cap isn't quite a "hard cap." That is, subscribers will only be expected to pay overage fees if they go over the cap 3 times. But, if they do, the overage fees kick in, and it's $10 per 50 additional GB. AT&T had tested similar caps in the past, but the decision to implement these on a wider scale is pretty much the company publicly admitting that there isn't enough competition in the market, so it can put in place these kinds of limitations.

Now, I'm sure that plenty of people will say that 150GB is pretty high, and AT&T itself claims that only 2% of its current users tend to go over that amount. But... that's today. There are a large number of new apps and new uses for the internet that are increasing our use of broadband, and putting caps and meters on the end risks slowing down innovation in very serious ways. If people suddenly have to be worried about testing out some new high bandwidth streaming app, because they're afraid to make use of their connection, that risks harming a variety of potentially useful new apps and services. I know that, for example, once Sprint put caps on its EVDO/3G data service, I massively decreased my use of it (even though I don't think I ever came near the caps) just because I didn't even want to have to think about the risk or the fact that a single click might drive me much closer to the cap and overage fees. That mental transaction cost can be quite big, and I don't think the broadband providers recognize how powerful it can be.

Once again, the real issue here is the lack of competition. Despite claims to the contrary, plenty of places still really only have a single provider, and those that don't often are limited to just a single other provider (cable), with many of the providers there offering caps as well. AT&T is claiming that it's doing this to stop congestion on the network -- and even told the WSJ that bandwidth hogs were clogging the network -- but folks like Dave Burstein who follow this issue closely claim that congestion is minimal and that AT&T lied to the WSJ (who, it should be noted, didn't appear to question the claim).

Filed Under: metered broadband
Companies: at&t

Canadian Broadband Regulators Annoyed That People Are Pointing Out They Don't Understand What They're Regulating

from the job-hazard dept

If you were paying attention last week in Canada, there was a huge fight over an attempt by Canadian regulators, the CRTC, to implement new "usage based billing" pricing structures for independent ISPs who make use of Bell Canada's network. The effective result of this, of course, is to try to prop up old business models, while holding down new, more efficient, more economically valuable business models. However, due to public outcry, politicians asked the CRTC to justify itself, and the response was basic annoyance at having to defend the decision.

However, as some are noticing, perhaps a large part of that annoyance comes from the realization that the CRTC didn't even fully understand what it is regulating, focusing on the bogus consumer-focused claim that it's about "fairness" in broadband pricing, so that "broadband hogs pay their fair share." Of course, if that were truly the focus, then shouldn't it also mean that the broadband companies, like Bell Canada, should be refunding tons of money to the non-broadband hogs? Except, that's not happening. The whole "broadband hogs" claim has always been a red herring. As we've seen over and over again, "usage-based billing" is never about offering "fair plans" to those who don't use very much. Instead, it's almost always about setting very low bars to force normal users to pay much more while decreasing their incentive to use new, more innovative internet services.

Filed Under: canada, metered broadband, regulations, usage based billing
Companies: bell canada

AT&T Ditches Metered Billing Trials Without Telling Anyone

from the so-that-worked-out dept

Remember how all those ISPs and broadband providers have been so sure that metered billing and metered broadband is the solution? Yeah, well, perhaps not. Time Warner Cable got scared off by negative publicity, and as was rumored earlier this year, AT&T has ended its metered broadband trials that got so much attention two years ago. Of course, unlike the start of the trials, the end has received almost no attention at all -- perhaps because AT&T never told anyone. It's also a bit amusing that this is happening at the same time that AT&T is switching to metered billing for iPhone data plans...

Filed Under: metered broadband
Companies: at&t

Bad Publicity, BBB Complaints Causing AT&T To Reconsider Metered Broadband?

from the people-speak-up dept

In the US, there's been an ongoing battle by a bunch of ISPs who want to implement metered broadband as a way to increase revenue. While they've been spinning this as getting heavy users to "pay their fair share" you'll note they never promote any plans to drop prices for the person who barely uses their internet connection. But one thing that has become pretty clear is that consumers absolutely hate metered broadband -- not just because it can increase fees, but because it changes the way they use the internet. Rather than being free to just use it and experiment, suddenly you need to keep track of all that usage (without any kind of reliable meter). This introduces amazingly annoying transaction costs that lead people to just not want to use the internet as much -- decreasing the value of the connection, even as the price is increasing.

A year ago, after a ton of bad publicity around metered billing, Time Warner Cable backed off plans to implement it on a widespread basis, and now it looks like AT&T may be recognizing the same thing. AT&T, of course, has been running a few small scale tests, and it's been pissing people off so much that they've been complaining to the Better Business Bureau, which isn't making AT&T happy. For now, the company has stopped signing new customers up for the metered trials and has said that the "experiment" will end on April 1. Whether or not the experiment ending means no more metered broadband... or more widespread metered broadband, remains to be seen. But large number of complaints being filed should make AT&T think twice before deciding to roll this out further.

Filed Under: complaints, metered broadband
Companies: at&t, bbb, time warner cable

As ISPs Look To Charge Per Byte... How Accurate Are Their Meters?

from the not-very... dept

Various ISPs have been pushing for metered broadband for a while now, and we've wondered in the past who will monitor the broadband meters themselves to make sure they're accurate? After all, with things like energy meters, they're carefully regulated and audited to make sure they're accurate. But no such luck with broadband meters, for the most part. Broadband Reports points out that it looks like individuals will be on their own to check on whether or not their ISP is being honest with them concerning how much bandwidth they use.

Filed Under: accuracy, audits, metered broadband

If Per Byte Pricing Is 'Only Fair' Why Have Telcos Ditched It For Mobile Data Plans?

from the hypocrisy-in-action dept

For the past couple of years, telcos and cable companies have been pushing for metered broadband, usually with the bogus claim that "it's not fair" for a light user to be subsidizing a heavy user. This is a neat little disingenuous trick that implies "light users" would see their bills decrease under metered billing plans. However, the same telcos pushing for metered broadband on connections are the same telcos who have wireless operators as well... and for mobile users, they're doing away with the metered billing option at the lower end, forcing everyone into a much higher priced all-you-can-eat model. Oops. Metered billing has nothing to do with fairness. It's an attempt by telcos to squeeze more money out of customers in a market where they often have little in the way of competitive options. Because, as we've seen, when there's real competition, it's a lot more difficult for providers to offer such plans.

Filed Under: metered billing, metered broadband, telcos

If You're Going To Meter Or Cap Broadband, Shouldn't You Provide A Meter?

from the where's-the-problem? dept

With various ISPs implementing forms of capped or metered broadband, you would think it would be standard (if not required) that they also provide consumers with the tools to measure their consumption. Otherwise it seems a bit unfair to say you can only use x amount, but you have no way to know when you've actually done so. But, it seems that hasn't really stopped various ISPs. News.com is noticing that despite capping broadband connections at 250 gigs/month for many months (and rumors and screenshots of it), Comcast still refuses to deliver a broadband monitoring solution for users. If that's the case, it makes you wonder how accurate/reliable its own internal monitors are, and how it can guarantee that users actually get the 250 gigs they're promised. Perhaps I'm missing something, but is it really that difficult to measure broadband usage? If so, that would seem to be yet another reason that ISPs might want to stay away from metered broadband: the cost of developing a system to actually track it.

Filed Under: broadband, broadband caps, metered broadband
Companies: comcast

If You're Going To Meter Broadband, Shouldn't You At Least Make Sure The Meters Work?

from the it's-the-little-things dept

One of the things that's left out of the discussion about all these attempts to move to "metered billing" for broadband is the massive overhead increases it will put on broadband providers. In the past, with straight flat-rate plans, there wasn't much to monitor or adjust by the company (and fewer customer disputes over how much was used). But, as soon as you add in the meters, all that goes out the window -- and I'd bet the expense greatly outweighs any supposed "benefit" to the cable company.

Take, for example, Canadian cable provider Cogeco, who apparently has started offering metered billing, but whose "meters" apparently don't work. Customers are reporting very inaccurate readings on the tool provided by Cogeco for customers to watch their own bandwidth, and they're receiving usage emails from the company that don't match up with what the online tool says at all. So, now Cogeco's going to have a bunch of folks complaining, and will need to spend more time fixing its meter tool. Good decision, huh?

Filed Under: metered broadband, tools
Companies: cogeco