No Evidence To Support The Need For Broadband Tiers Or Caps

from the oops dept

Just as the various broadband providers are ramping up their bogus astroturf attempts to convince the world that broadband caps are necessary and good for customers, Saul Hansell has been digging deep into the numbers and can’t find any justification at all for the caps. All those stories about overwhelmed networks and exponential traffic growth? Not happening. If anything, the evidence is that the opposite is happening: advances in technology means that it’s become cheaper for broadband providers to meet the needs of their customers. And those needs are growing, but that growth rate has been slowing, and is quite manageable. So, basically, the broadband companies are hyping up a problem that just isn’t there. There is no crunch. There aren’t bandwidth shortages that require cutting off heavy users. The only reason to set up such tiers is to squeeze more money out of customers without providing any improvements in service (actually, while providing less service). And it’s all possible thanks to the lack of competition in the marketplace.

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Comments on “No Evidence To Support The Need For Broadband Tiers Or Caps”

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Tgeigs says:


If people actually PAID ATTENTION, they would be seriously pissed off when these media conglomerates pull this BS. There is no difference between the future results of this “need” for tiers and the results of cable deregulationin 1996.

Since cable was dereg’d, costs to consumers have risen some 46%, THREE TIMES INFLATION rates. When the cable companies pitched deregulation, they said it would benefit the consumer, which is as close to a PROVEN falsehood as you’re likely to get.

chris (profile) says:

Re: Broadband/Cable

telco deregulation was a huge success: it recreated the bell monopoly in the form of the verizon/AT&T duopoly. it also created the time warner/comcast duopolies. it also created a wonderful debt structure that has to be passed on to consumers in order to keep these companies profitable.

you need caps and tiers if you want to create an internet slow lane, and i think we can all agree that we need slower speeds with fewer features and higher prices. how else are these companies going to afford to buy up all of their competitors?

you need an internet slow lane so you can force companies like netflix or vonage to pay twice for speedy delivery of their content.

you need an internet slow lane to make telco and cable co video and phone services competitive with third party, pure play services. especially free/cheap ones like hulu and skype.

using hulu or skype will burn up your monthly ration of transfer. you better encourage them to pay your ISP for a “partnership” so traffic to those sites don’t count against your cap, or you should pay your ISP to use their voice or video service, which of course already doesn’t apply to your cap.

without tiers and caps, what other incentive is there for consumers to overpay for voice and video services?

please won’t someone think of these poor monopolies? they just want to crush innovation and competition, is that so wrong?

naivecynic says:


I would welcome tiered cable service. I don’t use anywhere
near their low caps. I would be able to get cheaper broadband.
I don’t see what’s do wrong with paying for what you use. I
would agree that there needs to be more competition, but I
have zero interest in subsidizing the bandwidth hogs.

Derek Kerton (profile) says:

Re: Re: Broadband/Cable

Yes, but that’s a competition problem. Not a problem with Tiers or Caps.

Tiers or Caps are fine. In a competitive market, they would be a great way for different providers to package services and compete on service and price. Sadly, in our market, they could be abused to gouge.

But the market is broken, not the idea of Tiers.

Anonymous Coward says:

Re: Re: Re: Broadband/Cable

Tiers or Caps are fine

No, tiers and caps are usually a way to ripoff subcribers. The reason being that the only way to get what you pay for in such a system is to use EXACTLY the amount your “plan” calls for right down to the very bit/byte. Any less than that and you’re not getting what you paid for. Any more than that and you’re hit with penalties and fees disproportionate to the overage. Can you predict exactly how many bits you are going to transfer next month? Well, can you? Of course not. And that’s exactly the con job they are running.

Tiers and caps are distinctly different from true metered service. With true metered service you only pay for what you use. No more, no less, no ripoffs. That’s why none of these ISP’s offer it. Nope, they want the “caps and tiers” game.

chris (profile) says:

Re: Broadband/Cable

I would be able to get cheaper broadband.

yeah, when has a cable company ever lowered it’s prices? you honestly believe that you would pay less? i have no idea where you are or who your cable provider is, and i am confident that there has never been a permanent reduction in subscription prices there.

the price might drop temporarily, but before long, you will be paying what you pay now plus overage fees if you go over your cap.

Derek Kerton (profile) says:

Re: Re: Broadband/Cable

Actually incorrect. When DSL was first made available here in Silicon Valley in 1998, I jumped on board for about $50/mo.

Years later, and today, there are available $20/mo plans, intro plans can be even cheaper, and they all offer some kind of limitation – either speed or caps.

So, you’re wrong. Prices can and do drop. But they don’t drop anywhere near enough because of the lack of competition.

We should set policy to happily allow carriers to cap and tier services, so long as they agree to allow line sharing as they were forced to do breifly between 1996 and 2005.

Anonymous Coward says:

Re: Re: Re: Broadband/Cable

Thats the problem…they will fight line sharing to the end. In the absense of something like line sharing which would create more competition they need to be heavily regulated. In a free market there wouldn’t be these ultra low caps that TWC was proposing. Until there is competition, the implementation of usage caps needs to be reasonable (such as Comcasts 250 GB cap) which would require regulation to enforce.

Anonymous Coward says:

Re: Broadband/Cable

There is not a significant cost difference to the internet provider for customers using 5 GB vs customers who use 50 GB per month so you should not think of it as light users subsidizing heavy users. This is just what the internet providers are saying to try to sell the idea of tiers to the public.

There would be more of a justiciation for users who are using an enormous amount of bandwidth such as 500 GB or more per month compared to nomral users but when tiers are like 20 GB vs 40 GB per month, their is virtually no cost difference to the IP for those extra 20 GB.

Derek Kerton (profile) says:

Re: Re: Broadband/Cable

So you’ve seen the business models, and data and figures for running an ISP? I have. You’re wrong.

While it is hard to determine exactly the cost for serving a GB, and it varies a great deal on a bunch of factors, it IS true that to serve more costs more.

For arguments sake, CableCos are currently upgrading their networks from DOCSIS 2 to DOCSIS 3. This is to provide much more bandwidth. This is the kind of upgrade that makes your top speed faster, and enables the users to pass more data each month. Do you propose that upgrading from DOCSIS 2 to 3 is free? Would you offer to pay your local cable company’s bill for the upgrade, then?

It costs money to install the next generation of technology. To bury more fiber in the ground, to upgrade the head-ends, to upgrade the coax to RG-6, to pay for the (free to the user) upgraded modems in the customer’s premise. Once the Cable Co does all that, then, yes, the Internet is basically free to provide until the next upgrade is needed – well actually not, since there are also Operating Expenses! So a bunch of naive consumers get on web boards and chat about how there is no data crunch, and how the service should be cheaper. Why do such people think this stuff is either free, or available in unlimited quantity? Doesn’t that sound too good to be true? It probably is.

Look you don’t just pay for the current service, you pay for past and future upgrades to the infrastructure. If you’re in a remote area, you pay for the lengthy connection to the backbone, too. This costs real money.

Yes, there’s oligopoly. Yes, the prices are too high. But don’t argue ridiculous telco arguments with your own ridiculous positions! Bandwidth costs. More bandwidth costs more.

Anonymous Coward says:

Re: Re: Re: Broadband/Cable

While it is hard to determine exactly the cost for serving a GB, and it varies a great deal on a bunch of factors, it IS true that to serve more costs more.

You care to explain then why they limit certain “kinds” of bits and not others or some bits apply to your cap and others don’t? I think you know what I’m talking about. Go ahead, tell me how some kinds of bits cost more than others.

Derek Kerton says:

Re: Re: Re:2 Broadband/Cable

Would I care to explain that to you?

Sure. The ISP is ripping you off.

I can see how my arguing the ISP side of this debate may make it appear that I’m a telco shill, but don’t read more into what I wrote than what is written. I NEVER said it was OK for an ISP to treat different bits different ways, such as those telcos that use Phorm, port blocking, VoIP blocking, P2P blocking, and other kinds of DPI. That is an absolute abuse of power, and would occur far less if there were adequate competition.

I find DPI to be an invasion of privacy. I find the use of DPI to de-prioritize or block my bits as extremely arrogant. How does the ISP know that I’m not a doctor who is using P2P to share X-rays and patient data with a global group of specialist expert MDs, who are all collaborating on the best treatment for a unique case of cancer, in order to save a woman’s life? Hey, ISP: I pay you to carry my bits…now stop snooping and carry my @#$ bits.

But ISPs should be free to set tiers, and charge more for more.

There’s dumb pipe: one price, do as much as you want of whatever
There’s smart pipe: tiered services, different service levels, different market segments
There’s Big Brother pipe: sniffs your packets, makes judgements
There’s Monopoly pipe: slows off-deck packets, prefers ISP and partner services

Consumer seem to want the first. Why not? Seems like a free lunch. The second is a fair compromise. The third and fourth are what the ISPs want to force into the market.

Anonymous Coward says:

Re: Re: Re:3 Broadband/Cable

There’s dumb pipe: one price, do as much as you want of whatever
There’s smart pipe: tiered services, different service levels, different market segments
There’s Big Brother pipe: sniffs your packets, makes judgements
There’s Monopoly pipe: slows off-deck packets, prefers ISP and partner services

You left off metered service.

Chronno S. Trigger (user link) says:

Competition: we need more of it

I switched to Verizon FiOS to get away from Comcast’s caps. As far as I can tell by reading the fine print, they don’t have one as of yet. I hope they don’t because I’ll be paying a lot of money for their 20up/20down service.

At least I have a choice here. I believe there are at least 6 different options. This may be why Comcast never complained when I passed the 250G cap (possibly twice in one month). From what I hear, in New York, NY they only have 2, Cox cable and satellite (and I don’t think sat counts).

Anonymous Coward says:

re: naivecynic comment

You might take a lesson from my mother. She would have been nowhere near the caps just like you. Then she discovered hulu. She is an AT&T customer right now, and I suspect that if they make good on their threats she would be blowing through several levels of the cap.

The point is that perhaps today you are not near the caps. But what innovation will come along tomorrow? Granted, at that point you can increase your service level, but now you will be subsidizing the low-bandwidth consumers.

An even bigger question is what new services would be stifled by the caps? I am involved in a project for sending a patient’s real-time bio-med telemetry from their home to our monitoring facility. What impacts will caps have on our application?

If the caps and fees were being set in a free market situation I would not be concerned. However, they are being set in monopoly and oligopoly situations where the customer is almost always going to come out as losers. My mother has a choice between AT&T and Comcast; that isn’t really much of a choice.

Derek Kerton (profile) says:

Re: re: naivecynic comment

So if an imput is artificially priced at “free”, like bandwidth, then we will see innovation that takes advantage of that free input.

Well, yeah. But does that mean it is an efficient allocation of resources? Certainly not if that input is actually NOT free.

Corn is a great example. We use corn for everything in the USA. For sweetener, for starch, for food, for animal feed, and of course as fuel for our cars. Awesome!! Talk about great innovation. Why is there so much innovation around corn? Because our screwy government gan’t get Iowa off the teat of corn price guarantees, such that we overproduce corn and have way too much.

The example illustrates that if you falsely price an input, you will see a lot of innovation around that cheap input. But that does not necessarily mean the innovation is good for the society. Our kids are fat on corn sweeteners, we have raped our soil to produce subsidized ethanol fuel for cars which is very inefficient, and we have wreaked havoc on the global market for foods, just by messing with the price of corn and falsely making it cheap.

Now you would propose we do the same with bandwidth. Act like it is free/cheap so that we can create some other “innocation” which abuses a resource that is actually NOT free.

Dru says:


Cynic: I think you are missing one point. If they introduce the tiered service, you won’t see your price go down. Rather what you pay now would probably be base service, and all the tiers beyond would be additional.
There may be no technical justification for tiered service offerings, but you can be sure that the bean counters in the accounting office are the ones selling this to the board room.
At the end of the day they really could give a crap what level of service you are getting, so long as they are bleeding you the each month for as much as they can get out of you for it.
THAT is what tiered services are about.

naivecynic says:

you won't see your price go down.

But factually it would. Currently time warner is charging
$45 in my area. I’ve read the 10 or 20G cap would be $30.
Which by the way is much, much better than dialup. I currently
use the crippled DSL, and I am certainly no where near the 10G
cap. So I would be able to switch to cable for same price
and get better bandwidth. It would increase the competition
for people like me. Hey maybe, verizon would lower their DSL
rates in reponse.

Anonymous Coward says:

Re: you won't see your price go down.

Sounds to me like you’re confusing a “CAP” with a “Throttle”. If they put a 10 or 20GB CAP on you, then the most data you could transfer in a month to and from your PC would be 10GB or 20GB. If they put in a 10Gb or 20Gb Throttle, the you can transfer as much information as you want in a month, but at no faster a rate than 10Gb or 20Gb. Notice the big “B” and small “b”. Just FYI.

Anonymous Coward says:

Re: you won't see your price go down.

Should they also have tiers for cable tv based on usage. They could make a plan where you can watch 10 hours a month for say $20, 20 hours for $30, or unlimited for $150. I am sure the people who only watch a few hours of tv a month would love this idea.

But who wants to have to monitor their usage, that is the biggest annoyance to me.

Greg says:

So what?

No one really wants these caps (unless you are an internet simpleton), but I doubt that public/internet outcry is going to be enough to make the tiered pay scams stop. They know they have thousands of people by the throat when it comes to providing broadband, and as long as they go unregulated they will continue to spew their BS rhetoric while upping your bill to stay alive until Verizon comes to town to wipe them out one market at a time.

Steve L says:

I’m paying 25 bucks a month for “unlimited” Verizon dial-up, I can guarantee I’m never going to approach any sort of cap, simply because It would take me more then a month to even get close to the lowest tiered service. I’ll also mention I’m out in the country, no options other then sat (which is really expensive and very limited) and our phone lines are so I connect at 28.8 on a good day, never, ever any higher then that. However even my dial-up account has seen price increases over the last five years, why, I have no idea.

Mechwarrior says:

The same thing that happened to cable would happen to internet service. Exponentially higher prices for what amounts to more shopping channels. The fact of the matter is that when a monopoly, or duopoly owns an industry or a significant area of service, there is no impetus to improve services. I believe its the opposite, that the companies would decrease services and increase prices, because that would be cost effective, and would amount to zero loss of customers due to no other choices for service.

We are corporate America’s ideal captive audience.

Gracey says:

We have tiered cable for our internet service. Prior to bringing in the tiers, it was unlimited high speed cable connection which cost us $42 and change a month.

Currently, we are on the second tier of service (there are two above ours) which is 60gb per month. This costs me $1 and change a month LESS than the previous service.

I do a lot of uploading of high res images, emailing of same, and work online, I shop online, do business online, maintain a website and roughly 10 blogs, do my banking, et al. There are 4 computers hooked up here and I personally am online a minimum of 9 hours a day, sometimes as much as 18 hours.

I just checked our usage…less than 1gb in total for the month.

No, I don’t use skype, no I don’t download movies or torrents or watch TV online either (that’s what the TV is for…which I’ll admit gets little use anyways). Yes, I listen to online radio while I’m working.

At this point in time, the tiered service costs me less per month but gives me the same speed and since we’ve had it a year and never gone over I am not overly concerned by the caps.

Anonymous Coward says:

Re: Re:

“We have tiered cable for our internet service. Prior to bringing in the tiers, it was unlimited high speed cable connection which cost us $42 and change a month.

Currently, we are on the second tier of service (there are two above ours) which is 60gb per month. This costs me $1 and change a month LESS than the previous service.”

You think that saving $1 and change is a good deal to go from unlimited to 60 GB cap???

Anonymous Coward says:

Re: Re:

I do a lot of uploading of high res images, emailing of same, and work online, I shop online, do business online, maintain a website and roughly 10 blogs, do my banking, et al.

That’s kind of like the little old lady who only drives her car to church on Sundays once a week talking about how a gallon per week of gasoline should be enough for anyone. It might be enough for you but others have different needs.

Ryan says:

More Bureaucratic Regulation?

Yeah, that sounds awesome. I really want my ISP to be completely at the mercy of interest groups representing the entertainment industry. I also love the idea of losing any hedges we currently have against privacy trespasses–why not just email all my personal data over to the NSA? Not to mention that this wouldn’t do much at all for innovation or progress.

Obviously what we want(those of us concerned for consumers) is expanded market competition. I can’t say I know the best way to do this, because it currently requires physical and sometimes exclusive access to a lot of ground, which is scarce. However, I imagine that if we relax a lot of idiotic regulations/subsidies/etc. that benefit incumbent providers, it would help. Nationwide wifi can’t be that far away, and assuming the government and its lobbyists stay out of this area, that would end a lot of the impediments to market competition.

Griffon (profile) says:

The caps have nothing to do with consumers, caps are to try to strong arm money out of end point destinations like Google. Providers want more pie and they intend to get one way or the other. I’m sure the cable co’s are pissed they don’t have some equivalent to SMS to gang rape their customers with. Anyway, if we had anything approaching real competition instead of a couple conglomerates all doing around the same kind of stuff this would never be a issue.

naivecynic says:

You're not listening.

> But You don’t sem to understand that the low end wouldn’t really get cheaper. You’d probably pay about the same but
> other people with even slightly more usage would be paying a ton more.

Look folks, hem and haw all you like, but for me it would get
cheaper. I would get better service from roadrunner for my
$30 then I do from verizon for my $30 crappy dsl, so
effectively it is cheaper.

You can set up straw men, you can whine about how it will
cost YOU more, but it is a better deal for ME.

> No one really wants these caps (unless you are an internet simpleton),

So not watching Hulu and not stealing movies makes me an
iternet simpleton. I suppose that’s better than being an
around simpleton.

Luís Carvalho (profile) says:


Everything was well in your argument until you said: stealing movies.

From that moment on, you lost your cover.

If there’s a FREE service being provided and you don’t want to use it, ok. Your choice. But, until you actualy know of what you are talking about, don’t go around calling the others bad names.

Strike simpleton. You are not that. You are a Biggot. Brain dead, uninformed, uninterested, and decisively uninteresting.

Do what you want with your life, apparently, you are the ONLY one that is right, and the ONLY one that matters. But, please, if you really don’t care for others, refrain to comment about what affects them. We really don’t need YOU or YOUR biased oppinions.


Anonymous Coward says:

> You do realize that you can get unlimited cable internet for $19.95 a month from TWC now.

No I don’t realize that. Currently the teaser rate for
Roadrunner is 35, the actual rate is (as far as I know) 45.
Could you provide a link documenting a $20 rate?

> Do what you want with your life, apparently, you are the ONLY one that is right, and the ONLY one that matters.
Because you can’t respond to the FACT that the tier’d service
would be a better deal for me, you attack me.

Chronno S. Trigger (user link) says:

Re: Re:

Hows this for a reply. It’s better for you (and seemingly only you) for now. When the other people who do know a thing or two about the internet switch to the uncapped DSL then Roadrunner will have two choices: Go out of business or raise prices for their lower tier people.

It costs the cable company the same if I download 250G vs downloading 50G. So, keeping the non existent price difference between high usage and low usage in mind, once all the higher paying people leave then all that are left to gouge are the people who are in the lower tiers.

Luís Carvalho (profile) says:


I don’t need to attack you. You do it very well on your own.

I don’t even have cable where I live, and DSL only in the last 4 years. Even then, only at low speed.

The most I could connect was a lousy 2Mbdown / 256 Kb up. Even tho, I had to pay 75€ plus the 20€ for the telephone line.

I had to pay all that because I had a 10GB download cap, to remove it I had to pay 25€ per month.

Now a new service appeared and I have a better deal, don’t pay for phone line, unlimited traffic, IPTv, don’t pay for calls, and 16 Mb down / 1 Mb up speed. The speed part is bogus, because it NEVER reaches that, but even tho is way better. Oh, almost forgot, I pay 50€ a month.

But, there’s not much of a difference in the amount of traffic I make between this service and the 2mb one, I reach the 400 GB every month.

Be thankfull you don’t live where I am, there’s no OTHER option here.

But, what I have, I USE. Trully use. To the limit.

BTW, my income, monthly, is only 600€. And I have to pay rent, gas, electricity, 3 kids in school, and all the normal expenses of living. Compare it to your reality.

A good day to you.

Gracey says:

[quote]You think that saving $1 and change is a good deal to go from unlimited to 60 GB cap???[/quote]

For me, it’s $1 a month less…better than $1 a month more for stuff I don’t use.

Since we have never used more than we currently use, unlimited makes little difference to me.

I checked our usage history, and our heaviest use was 2gb. Why would I be concerned about whether or not it’s unlimited? As far as I’m concerned, the 60gb IS unlimited because it’s unlikely we’ll ever use the limit.

It’s probably not enough for people who download movies and music (paid) all month long, however my daughter has the same service and they download a lot of movies (2 a week), and a fair bit of music. They’ve never reached the limit either.

Download speeds for software, photos, etc. is no more than a couple of seconds to three or four minutes, surfing is quick. Why would I pay for more.

I could…if I wanted get 95gb for an additional $20/month, or unlimited for $150/month.

Anonymous Coward says:

Re: Re:

“Cable TV service is already tiered, based on number of channels, not on usage.”

“I don’t think you can compare TV to Internet service.”

EXACTLY MY POINT, internet has always been tiered by SPEED of the connection, not on usage. Now they want to ALSO throw usage into the mix so that each tier has a speed AND usage cap. So, I think the TV analogy is fitting.

lpotter (profile) says:


When you use the word ‘world’, you mean ‘The USA’.

Australia has had tiered and usage caps on broadband for years. I cannot believe there is this big of outcry about caps there, especially when there are no big outcry’s about having to pay for _incoming_ sms messages…. or about the exorbitant price of text messages/per megabyte.

Chronno S. Trigger says:

Re: world?

“I cannot believe there is this big of outcry about caps there, especially when there are no big outcry’s about having to pay for _incoming_ sms messages…. or about the exorbitant price of text messages/per megabyte.”

There is a big outcry because we don’t like our freedoms taken away. If we have something that is one price we don’t like paying the same amount for less. We bitch to high heavens when our bills go up $1 per month.

That guy who keeps saying that he pays less now than before the cap is lucky. Everywhere else our prices stayed the same or, in my case, went up when we got the cap. And he still never answered to what happens when the people who are now supplementing his connection go away.

Yes there is a large outcry over paying for incoming SMS messaging and the price for said messaging. I hear it all the time, but I’m in the US.

another mike says:

against monopoly

I visited my city council to oppose renewing the cableco’s stranglehold here. They must be receiving favors from the executives’ mistresses because they renewed the monopoly without debate.

The cableco ISP sent me a nastygram about exceeding their bandwidth caps. I called them up and asked them about their definition of “unlimited” as used in their ads. We also talked about why they needed the caps and that if their network couldn’t handle all their customers then maybe I needed to find a different provider. I haven’t heard word two from them about caps.

Derek Kerton (profile) says:

Re: Re:

Well, yeah, to a certain extent. I’m also a Techdirt blogger since 2002. And you can click on my name to see that I run a consulting firm with a few foreign telcos as clients.

But I suppose your argument is that I’d make better arguments if I simply had a layman’s understanding of the issue? That would just exchange(alleged) bias for (certain) naivete.

I work and consult for the industry, but I’m a long, long way from industry shill. I find myself arguing against telcos more often than with them…and I take those arguments right to the telco executives themselves. That makes a bigger impact on getting the big ISPs into the 21st century than if I were just a blogger – which I also am.

Of course, there are lots of telco people that don’t hire me since I usually tell them some uncomfortable strategies. But those that DO hire me choose to do so because they expect good strategic advice. Turns out there IS a separate market for being right – as well as the bigger market for blowing smoke up the client’s ass. A fortunate coincidence is that it turns out the market for being right pays better.

Look, in this issue, here’s the problem:

1 The consumer wants everything, unlimited, for one low price

2 Carriers want to charge more, profit more, build less, and protect their services from competition.

3 There are real costs to upgrading networks, average cost per MB is NOT zero, both for CapEx and OpEx.

If I think both 1 and 2 are wrong, does that make me an industry flunkie? Nope. I think the answer is somewhere in between 1 and 2…so I guess I’m pissing off the average consumer AND the ISPs.

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