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Tip for Rational Thinking #2: “Unless We Limit You To 5/40/150/250GB, We’ll Be Out Of Business?”

Phillip Dampier April 7, 2009 Broadband "Shortage", Talking Points 8 Comments

Talking Points

One of the grand mysteries of the entire “broadband can no longer be unlimited” argument is the incredible range of usage caps cable operators and telephone companies suggest are required to keep them from going the way of the U.S. auto industry.  Broadband providers doing capping will swear that their cap model is the only one that is “fair” and “protects consumers” and “allows us to make required upgrades.”  Once those arguments are recited in a unified chorus, corporate spokesfolks zig zag their way all over the place explaining why their 5/40/150/250GB cap is fairest of them all, while trying to ignore those providers who are quite happy and profitable with no cap at all.  The customer is the last person they ask, because they know the answer from most will be, “no cap at all.”

This bring several questions to the table:

  • Can you provide us with the raw data that illustrates there is a major problem with the current unlimited broadband model and that it cannot sustain profitability except with usage caps?
  • Can we obtain independent analysis of that data by a third party and/or put together a conference of business, public, and educational groups to consider new possibilities to deal with what is rapidly becoming a utility-type service?

The answers to those questions have been, by all major industry players, an emphatic “no.”  You are required to take their word there is a problem and their solution is the only one that works.  And, for that matter, take their word they have an infallible way to measure and bill for usage under a consumption based model.  You can independently verify your usage all you want, as long as you pay the bill they send you with their own usage measurement.

It’s not that we’ve been the only ones asking.  Broadband Reports has the same questions we do, and asked for the hard data to prove that flat-rate pricing is simply untenable going forward.  And here was their response:

“We’ve shared our analysis of our data. We’re not going to share raw data…just not going to happen.”

Okay then, I guess that settles that!

That provokes us to first ponder whether there actually -is- a crisis in the flat rate broadband industry at all?  A press release or a claim by a company official isn’t evidence of anything.

Assuming we will never get a satisfactory answer to that question, how about these:

  • Why can a company like Time Warner be unable to survive with flat rate pricing in Rochester, Austin, San Antonio, and Beaumont, but can deliver faster speeds with no cap in cities where they face strong competition from uncapped providers?
  • If the company was interested in an honest assessment of marketplace reaction to usage caps, why not test in communities with the most robust and challenging competition?
  • Why should customers not be deeply offended for being involuntarily turned into guinea pigs and be expected to pay more for a dramatically reduced level of service?
  • Why is the nation’s largest cable operator Comcast able to deliver service with a 250GB limit at their current pricing, Verizon FIOS is able to deliver a product line twice as fast as Time Warner with no usage cap at all, and the nation’s second largest cable operator Time Warner needs consumers choosing a meager 20GB tier to not only pay $10/month more than their current unlimited service, but also pay a penalty of $1 for every extra GB?

That old axiom about pricing what the market will bear comes to mind, particularly considering the fact Time Warner is only interested in “gathering facts” from cities where the competition is limited.

The fact the Internet of the last few years is becoming an increasing threat to the video side of the cable industry may also have something to do with it.  That will be the subject of an upcoming Talking Point.

Usage Caps on Selected Broadband Service Providers
Charter Cable – Cap starts at 150GB for “light user” plan, removed entirely for deluxe plan (60Mbps service) – Violators are asked to select higher tier service or face account suspension – No meter yet
Comcast Corporation – Residential accounts limited to 250GB usage per month – Violators face account suspension – Tracking meter provided
Time Warner Cable – Residential accounts limited to 5-40GB currently, Violators face $1 per GB overage fee – Tracking meter to be provided
Verizon FIOS – Residential accounts are unlimited.  No violation, no tracking meter required

Currently there are 8 comments on this Article:

  1. Joe says:

    It takes a company with a huge ego, a large amount of greed, and no concern for their customers to do what TWC is doing to the folks in these cities. The only way to fight something like that is to fight fire with fire. Here are some of the ways to do that:

    1) Once the caps are implemented steal broadband from wireless routers. Wireless routers are not secure even when they are “secured”. There are programs available (if you look for them) that can get around these security measures. When TWC customers start getting huge overage charges for bandwidth they weren’t responsible for they will drop TWC like a hot potato.

    2) Cancel your TWC service then buy a modded cable modem – these are easily found on the net. Using one of these you can get unlimited broadband at the fastest speeds for FREE.

    3) Find the businesses in the area who use TWC (just look for TWC connections on the outside of the buildiing). Ask them nicely to switch providers. If they refuse picket their businesses until they switch. Losing a large amount of their business class customers would put a fairly nice dent in TWC’s bottom line. You could also do some flyers listing the businesses who have been concerned enough about the plight of their customers to make the switch.

    4) Educate the broadband sheep. Make a list of all the things that use bandwidth and how much bandwidth they use. Starting with those items we have little control over such as auto software updates like those from Microsoft, Firefox, etc. Add up the amount of bandwidth all the advertising uses on popular websites. Then show how much bandwidth video, VOIP, and video game systems use.

    5) Share links and informative posts on how to install Tomato or DD-wrt on your router so that you can measure the bandwidth you’ve used across all of your internet devices. If (more like when) there is a difference between your logs and their “gas meter” you can complain like crazy. Some cases may even constitute billing fraud and can be taken to court. If TWC’s overhead goes up drastically due to increased customer service that will also put a dent in their bottom line.

    6) Keep a sharp eye on whether TWC will include their own VOIP in the cap. If they do not this would be unfair business practice. Also, since they use the same pipe (cable) to deliver both broadband internet and cable tv shouldn’t cable tv be included in the cap as well???

    • Brent says:

      Joe, you have some excellent ideas there, but they are overshadowed by points 1 and 2. We cannot encourage people to engage in illegal or borderline-illegal activity, regardless of how frustrated they are at the situation.

      • phil says:

        I agree, Brent. There is no logic is combating extortionist pricing, which is what this represents, by engaging in behavior that is a crime in and of itself.

        Plus, hopping on someone else’s unsecured network does not hurt Time Warner, it just victimizes an innocent third party.

        There are more appropriate and direct methods of hurting this company’s bottom line. Cancel their service and tell them why.

      • Mike says:

        He brings up an important point, though. Bandwidth stealing will become a much bigger problem under the proposed plans.

        What happens if the neighbor’s kid (or anyone else nearby) cracks my WEP key and I don’t notice until they’ve blown through my usage cap? Would Time Warner have a system for dealing with that, or will I get hit with a huge bill every time some script kiddie wants to run a few torrents for “free”?

  2. Xoky says:

    Phil, you might want to add AT&T U-Verse to your list of usage caps. AT&T is “testing” a cap of 150 gig a month in Beaumont, but has not rolled it out anywhere but there yet. Who knows where they go with it from here, but they *are* testing it.

  3. Joe says:

    @Brent – I understand about points 1 & 2 above. This is not something I would enjoy doing or have ever done. But the simple fact is if we play by the rules in this case we will lose, period, game over. TWC had the guts to try this in the first place because they know they hold all of the cards – they have the politicians in their pockets. And I understand that Rep. Eric Massa has stepped up vocally against TWC but from my experience 95% of the time what a politician says and what they actually do are two entirely different things.

    @Mike – Under caps such as these broadband stealing is going to happen whether it is encouraged or not. And TWC’s response will be the same – tough cookies – not our responsibility.

    • phil says:

      When Congress starts speaking out on this issue, that will be sometime TW will take extremely seriously. It adds a whole new dimension to their little plan, and will start to complicate things enormously. Our goal is to see this experiment end before it even begins, by demonstrating a swift, coordinated, overwhelmingly negative response to capping Internet access. The cost is already calculating higher as we learn of increasing numbers of people who aren’t even waiting – they are just canceling their services now. This was the last straw. And a much larger number who will wait and see what happens will almost certainly leave the moment this plan is put into effect. Putting them on notice is important either way.

      In our battle with Frontier, we played entirely by the rules and were successful at driving back their proposed usage cap. It’s not a guarantee we won’t have to return to fight this again, but let’s be honest. Doing nothing guarantees the pillaging of your pockets.

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