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

Broadband

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

Bandwidth Caps Forcing Users To Police Their Own Household Internet Usage

Broadband

from the just-what-the-entertainment-industry-wants dept

We’ve discussed in the past how broadband bandwidth caps can slow innovation by adding mental transaction costs to basic internet usage. People don’t want to have to think about how much bandwidth any particular usage might take. They don’t want to have to consider that if they click a particular link it might eat up a significant portion of their monthly allocation. There are some other issues as well. Mathew Ingram tells of his experience bumping up against bandwidth caps in Canada, in which he couldn’t figure out what had happened:

I have three teenage daughters who also download music, TV shows and so on. I figured someone had just gone a little overboard, and since it was close to the end of the month, I thought it wasn?t anything to be worried about. The next day, however, I went online and checked my usage (Rogers has an online tool that shows daily usage), and it said that I had used 121 GB more than my allotted amount for the month. In other words, I had used more than 100 GB in less than two days.

I just about spit my coffee all over the computer screen. How could I possibly have used that much? According to Rogers, I owed $181 in overage charges. Luckily there is a maximum extra levy of $50 a month (just think what it would cost if I was subject to usage-based billing).

So he felt forced to go track down what the issue was. At first (with prompting from Rogers tech support), he thought the issue might be his open WiFi, so he closed that down. He asked family members about their usage, and they all insisted they weren’t doing much. However, just a few days into April, he was told that his connection had already used up the monthly allocation, leading to a second search, and the eventual discovery that one of his daughters had downloaded some TV shows, but left a file sharing program running in the background, which probably accounted for the extra bandwidth usage.

In other words, he had to become his own local area network cop, to figure out how his own network was being used and for what. Now, I’m sure some will argue this is a good thing. They’ll say that you should be responsible for understanding everything that goes through your router. And, of course, those who dislike file sharing will argue that this is a wonderful side benefit to these bandwidth caps. But, it really shows yet another pain in having bandwidth caps. It adds a lot more work to having an internet connection at home — work that really shouldn’t have to be done by someone who just wants to access the internet. Perhaps we’ll end up with more sophisticated tools for people to track their home internet usage, but in the meantime, it seems a bit crazy to force everyone to be their own local area network traffic cops.

Filed Under: bandwidth, broadband caps, policing

As AT&T Introduces Caps, BT Removes Them; Says Investing In Network Is Smarter

Broadband

from the but-of-course dept

A few years ago, we noted that BT’s CTO had admitted that there weren’t any congestion issues that required traffic shaping or other limitations on the network, just so long as they continued to do basic investments in network infrastructure. And, indeed, just as AT&T is introducing broadband caps, BT has announced that it’s removing them, because there’s no need thanks to infrastructure investments.

BT will remove the FUP controls currently applied to customers with ?atypical? usage. Today atypical users are restricted at 300GB usage and account for less than 0.5% of the BT customer base. BT will not target any individuals with restrictions based on usage levels. However, we still have traffic management policies that will restrict certain applications / protocols, such as P2P, when the network is busy. As BT continues to invest in the network and network bandwidth we can now remove these restrictions and ensure the experience of the wider customer base.

Of course, it’s worth noting that following our original post, a commenter pointed out that there was plenty of competition in the UK market, but there still were caps. Perhaps that’s going away. Competition drives investment and innovation… and that gets you away from unnecessary limits.

Filed Under: broadband caps, uk
Companies: at&t, bt

Time To Face Facts: Broadband Caps Are Really About Protecting Video Revenue

Broadband

from the not-about-bandwidth-hogs dept

As various broadband providers drool over the idea of implementing broadband caps, they’ve mainly focused on the claim that they’re doing so to make “bandwidth hogs” pay “their fair share.” Sometimes they sprinkle this with claims of poverty over having to provide unlimited access to people who actually use it a lot. Of course, none of this is true. The various metered broadband plans almost always end up increasing everyone’s bills, and there’s little to no evidence that bandwidth hogs are a problem, either technologically or economically speaking.

For the most part, broadband caps are really about protecting video revenue. Many broadband providers these days also provide television, and that business is a total racket these days, with TV companies rolling in cash. Internet TV breaks up the artificial monopolies and the monopoly rents they can extract, so the last thing the broadband (and TV) providers want to do is make it easier for consumers to route around their television programming and access it directly on the internet.

As if to highlight that very point, Canadian telco giant Rogers decreased its already very, very low broadband caps just as Netflix announced that its streaming service was coming to Canada. The timing may be slightly coincidental, but it certainly highlights the point. Rogers doesn’t want you streaming videos on Netflix if it means you might not watch Rogers’ own TV programming.

Filed Under: broadband caps, video
Companies: netflix, rogers

Neat Trick: Rogers Offers Online Video And Broadband Cap To Punish You For Using It

(Mis)Uses of Technology

from the that'll-work-well dept

Two separate initiatives by cable companies are coming together in conflict. We’ve seen how many cable companies are trying to set up video portals that will let subscribers to cable TV get access to the same content online, as a weak attempt to reduce churn of consumers dumping cable altogether and concentrating on online options. But, at the same time, they’re also looking to implement broadband caps with high overage fees. Those two concepts are shown together with Rogers offering both a video portal and low metered caps with high overage fees. So your incentive is to not use the video portal (which apparently is limited in the first place). How is that going to reduce the churn? It seems like a far better option is to just go with another provider that actually focuses on adding value rather than limiting it. Too bad there’s so little competition up in Canada. Ahhh… that explains things, now, doesn’t it?

Filed Under: broadband caps, cable, canada, metered billing, overage fees, tv content
Companies: rogers

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

(Mis)Uses of Technology

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