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Sit Down For This: Astroturfing Friends Sold on Pro-Internet Overcharging Report

Phillip Dampier September 7, 2009 Astroturf, Editorial & Site News, Internet Overcharging, Recent Headlines 38 Comments
Phillip "Doesn't Derive a Paycheck From Writing This" Dampier

Phillip "Doesn't Derive a Paycheck From Writing This" Dampier

I see it took all of five minutes for George Ou and his friends at Digital Society to be swayed by the tunnel vision myopia of last week’s latest effort to justify Internet Overcharging schemes.

Until recently, I’ve always rationalized my distain for smaller usage caps by ignoring the fact that I’m being subsidized by the majority of broadband consumers.  However, a new study from Robert Shapiro and Kevin Hassett at Georgetown University is forcing me to reexamine my personal bias against usage caps.

There’s a shock, especially after telling your readers caps “were needed.”

As I predicted, our astroturfing and industry friends would have a field day over this narrowly focused report that demands readers consider their data, their defined problem, and their single proposed solution.  The real world is, of course, slightly more complicated.

I used to debate some of my economist friends on why I thought metered pricing or more restrictive usage caps were a bad idea, but I couldn’t honestly say that my opinion was entirely objective.  My dislike for usage caps stems from the fact that I am a heavy broadband user and an uncapped broadband service is very beneficial to me since everyone else pays a little more so that I can pay a lot less on my broadband service.  But beyond self interest, I can’t make a good argument why the majority of broadband users who don’t need to transfer a lot of data should subsidize my Internet requirements.

Your opinion is still not entirely objective, George.  Your employer has industry connections.

Our readers, many of whom are hardly the usage piggies the industry would define anyone who opposes these overcharging schemes, all agree whether it’s 5GB or 150GB per month, they do not want to watch an Internet “gas gauge” or lose their option of flat rate broadband pricing that has worked successfully for this industry for more than a decade.  George and his friends assume this is an “us vs. them” argument — big broadband users want little broadband users to subsidize their service.

That’s assuming facts not in evidence.

What is in evidence are studies and surveys which show that consumers overwhelmingly do not want meters, caps, usage tiers, or other such restrictions on their service.  They recognize that a provider who claims to want to “fairly charge” people for service always means “everyone pays more, some much more than others.”  To set the table for this “fairness,” they’ve hired Washington PR firms to pretend to advocate for consumers and hide their industry connections.  Nothing suspicious about that, right?

Although George can’t make a good argument opposing usage caps, that doesn’t mean there aren’t any.  Among the many reasons to oppose caps:

  • Innovation: Jobs and economic growth come from the online economy.  New services created today by U.S. companies, popular here and abroad, would be stifled from punitive usage caps and consumption billing.  Even the broadband industry, now in a clamor to provide their own online video services, sees value from the high bandwidth applications that would have never existed in a capped broadband universe, and they are the ones complaining the loudest about congested networks.
  • Consumer Wishes: Consumers overwhelmingly enjoy their flat rate broadband service, and are willing to pay today’s pricing to keep it.  The loyalty for broadband is much greater than for providers’ other product lines – television and telephone.  That says something important — don’t ruin a good thing.
  • The Fantasy of Savings: As already happened across several Time Warner Cable communities subjected to “experimentation,” the original proposals for lower consumption tier pricing offered zero savings to consumers who could already acquire flat rate “lite” service for the same or even lower prices.  Even when tiers and usage allowances were adjusted after being called out on this point, consumer outrage continued once consumers realized they’d pay three times more for the same broadband service they had before the experiment, with absolutely no improvement in service.  Comcast and other smaller providers already have usage caps and limits.  Pricing did not decline.  Many combine a usage allowance -and- lower speed for “economy” tiers, negating the argument that lower pricing would be achieved with fast speeds -and- a usage allowance.
  • Justifying Caps Based on Flawed Analysis: The report’s authors only assume customer adoption at standard service pricing, completely ignoring the already-available “economy” tier services now available at slower speeds.
  • Speed Based Tiers vs. Consumption Based Tiers: Consumers advocate for speed-based tiering, already familiar to them and widely accepted.  New premium speed tiers of service can and do already generate significant revenue for those who offer them, providing the resources for network expansion providers claim they need.
  • Current Profits & Self Interested Motives: Broadband continues to be a massively profitable business for providers, earning billions in profits every year.  Now, even as some of those providers reduce investments in their own networks, they claim a need to throw away the existing flat rate business model.  Instead, they want paltry usage allowances and overlimit penalties that would reduce demand on their networks.  That conveniently also reduces online video traffic, of particular concern to cable television companies.
  • Competition & Pricing: A monopoly or duopoly exists for most Americans, limiting competition and the opportunity for price savings.  Assuming that providers would reduce pricing for capped service has not been the result in Canada, where this kind of business model already exists.  Indeed, prices increased for broadband, usage allowances have actually dropped among some major providers like Bell, and speed throttles have been introduced both in the retail and wholesale markets.

More recently, building our colocation server for Digital Society has made me realize that usage caps not only has the potential to lower prices, but it can also facilitate higher bandwidth performance.  Case in point, Digital Society pays $50 per month for colocation service with a 100 Mbps Internet circuit, and at least $20 of that is for rack space and electricity.  How is it possible that we can get 100 Mbps of bandwidth for ~$30 when 100 Mbps of dedicated Internet bandwidth in colocation facilities normally costs $1000?  The answer lies in usage caps, which cap us to 1000 GBs of file transfer per month which means we can only average 3 Mbps.

One thousand gigabytes for $30 a month.  If providers were providing that kind of allowance, many consumers would consider this a non-issue.  But of course they are not.  Frontier Communications charges more than that for DSL service with a 5GB per month allowance in their Acceptable Use Policy (not currently enforced.)  Time Warner Cable advocated 40GB per month for $40-50 a month.  Comcast charges around $40-45 a month for up to 250GB.  Not one of these providers lowered their prices in return for this cap.  They simply sought to limit customer usage, with overlimit fees and penalties to be determined later.

Of course, web hosting is also an intensively competitive business.  There are hundreds of choices for web hosting.  There are also different levels of service, from shared web hosting to dedicated servers.  That is where the disparity of pricing is most evident, not in the “usage cap” (which is routinely more of a footnote and designed to keep Bit Torrent and high bandwidth file transfer services off their network). There is an enormous difference in pricing between a shared server environment with a 1000GB usage cap and a dedicated rack mount server located in a local facility with 24 hour security, monitoring, and redundancy/backup services, even with the same usage cap.

So the irony of a regulation intended to “protect” the little guy from “unfair usage caps” would actually force our small organization onto the permanent slow lane.

Actually, the Massa bill has no impact on web hosting usage caps whatsoever.  George’s provider friends would be his biggest risk — the ones that would “sell” insurance to his organization is he wanted assurance that his traffic would not be throttled by consumer ISPs.  I’d be happy to recommend other hosting providers for George if he felt trapped on a “slow lane.”  That’s because there is actual competition in web hosting providers.  If the one or two broadband providers serving most Americans had their way, it would be consumers stuck on a permanent slow lane with throttled service, not organizations like his.

So, who is in agreement with George on this question?  None of his readers, as his latest article carries no reader responses.  But fellow industry-connected astroturfers and providers themselves share their love:

PC Magazine reported even Robert Shapiro, one of the report’s authors, is not advocating for usage caps:

“We’re not talking about a bandwidth cap,” Shapiro said during a call with reporters. “We were looking simply at the different pricing models and their impact on the projections of broadband uptake based on these income sensitivities.”

The report does not specify how ISPs should implement pricing, Shapiro said. “The most important thing to me as an economist is the flexibility – that is, Internet Providers can better determine than I can the particular model that works best.”

That’s not the message astroturfers are taking forward, as they try and sell this as “pro-consumer.”

Currently there are 38 comments on this Article:

  1. jr says:

    These people all have fantasies about being at dinner parties with Glenn Britt types and they’re willing to justify quintupling of monthly fees to make their dream a reality

  2. I had to laugh when George pointed to usage caps as being the reason why bandwidth for Digital Society’s colocated server is affordable. Phil hits the nail on the head by pointing out the real reason is that web hosting and colocation services operate in a very competitive environment, offering a huge variety of service levels and options. George (who apparently lives in San Jose) sorted through the large number of choices he had for colocation, and eventually ended up using the services of a company called Waveform Technology that has a data center in Troy, Michigan. George knows that if he finds a better deal elsewhere, he can simply move the server elsewhere in the country, update a few DNS records, and he’s good to go. Or, he can simply threaten to move his server elsewhere, and depending on how hungry Waveform Technology is for business, they may try to keep him. That’s what happens when there is effective competition in an industry– the Conservative free-market ideology actually works and everyone benefits.

    Too bad the same can’t be said for those seeking connectivity for homes and small offices. Elsewhere George says it is a fact that 90% of homes have a choice between flavors of broadband (DSL, Fiber, or Cable). Of course, the choices aren’t equal in terms of speed and quality, so there really isn’t much of a choice. It’s a stupid game the industry plays with language; tout choice, but don’t dive in and look at the actual choices, comparing and analyzing them. When you do that– when you don’t go by what the industry says but what actual consumers say– you find there often isn’t a choice.

  3. Ron Dafoe says:

    The problem I have with alot of his articles is that he compares apples to oranges, just as this article does.

    His argument these days seems to be that becuase host providers have a bandwidth cap that ISPs should be able to have a cap. All your points are spot on above. I have posted comments on his site, and he has said that I don’t know how the internet really works. Guess what, I have 20 years of networking experience across all levels of networks.

    I know how it works. Keep watching those guys, as they are in my opinion, deliberatly clouding the sitution. Anyone that know anything about networks, datacenters, and hosting knows why that market exists and why they sell the way that they do. In fact, I have seen some web hosting companies starting to do unlimited data at this point. A hosting company is also very different than a home provider. You are not going to be gaming, downloading or playing movies from your host proviers. You are going to be providing services, mostly web oriented from them. A very different space than a generic home connection.

  4. George Ou says:

    “One thousand gigabytes for $30 a month. ”

    Do not conflate colocation prices (where you go to the ISP) with broadband prices (where the ISP has to install and maintain several miles of cabling to your house.

    The whole point of this example is that consumers should have the flexibility to trade usage allowance for higher bandwidth. Since the majority of consumers and businesses want bandwidth more than they want big usage caps, then this is an important choice for them to have.

    • “Since the majority of consumers and businesses want bandwidth more than they want big usage caps, then this is an important choice for them to have.”

      I want to be clear about what you are saying here. You are suggesting that given a choice between:

      a) Faster broadband service
      b) Usage caps

      …that the majority of people would choose “b”?

      I don’t think so.

      First, it’s a false choice, because with affordable network upgrades offering the option to market new premium speed tiers, people can have faster broadband service as an option without usage caps.

      Second, this reminds me of the false choice that started us down this path, namely Comcast being slapped down over throttling Bit Torrent and choosing the quick fix of a 250GB usage cap as an “acceptable” alternative. Their intent was to limit traffic on their network. They could do it with throttles on Bit Torrent, or simply removing those most likely to exceed 250GB in a month, namely Bit Torrent users. Either option apparently worked for them.

      With DOCSIS 3, the flexibility to provide much more robust service, and pay for it with premium speed tiers marketed to those heavy users can benefit everyone -and- require neither traffic-limiting measure.

      Besides, if you believe some of the marketingspeak in the industry, speeds are plenty fast enough now for “the average consumer” and it is the “power user” that wants more. The funny thing is they are ready and willing to pay a reasonable amount more to get it, as long as it doesn’t come with insulting paltry usage caps that destroy the value of the service.

      • George Ou says:

        Stop putting words in my mouth Philip.

        The choices I would personally like to see is

        VERY low cost option that is affordable to low-income people who currently don’t have broadband. This accounts for 20% of the population.
        a. Low bandwidth and small usage cap

        Mainstream option that is reasonably priced and reasonable performance for 60% of the population
        a. Balanced option where there’s sufficient bandwidth and sufficient usage cap big enough for most of this population
        b. Option that favors a huge usage cap over bandwidth (preferably lower priority but higher peak bandwidth)
        c. Option that favors much higher bandwidth over a smaller usage cap

        Enthusiast option at a premium price for 20% of the population
        a. Highest bandwidth and highest usage cap

        At the end of the day, you’ve already admitted that you’re ok with usage caps if the cap size was big enough and the price was right. I don’t see how that is any different from my opinion. The only place we disagree is that you want the government to regulate and set prices on broadband and I don’t.

        • Tim says:

          Quick queastion:
          How low in price do you really think the ISP’s, ie cable and phone companies, will go if there were caps implemented? Just curious what you think is low.

        • You are never going to see that very low cost option George. TWC coughed up a throwaway “economy tier” that was a measly few dollars less than their current unlimited economy/lite tier. Their all-new usage capped tier proposal for a lite user threw on a 1GB usage cap and $2/GB overlimit fee. Nobody in their right mind would ever sign up for that.

          I’ve looked across the range of providers in Canada and the United States, from small to large providers, including wireless mobile data prepaid options. There is absolutely nothing out there in capped broadband that represents more than a few dollars savings over today’s large MSO-provided “economy” tiers that sacrifice some speed (but are still higher than what DSL provides many rural communities today at the everyday regular price) but also have no cap. And with overlimit fees and paltry caps, there is every chance a consumer will actually pay more.

          It’s obvious that the business model, even in Canada where caps, tiers, and throttles are commonplace, assumes that a broadband product lower than, say, $20 a month simply doesn’t drive enough new business among interested non-subscribers. My guess is that price resistance is not the big factor at the $20-25 a month level — interest in buying the service itself is. Providers are also worried about covering the basic costs in providing and servicing the connection itself.

          I think 100% broadband penetration is fiction, at least in 2009, because we still have people out there that have absolutely no interest in computers or broadband, much less dial-up, no matter what the price. I think, in time, penetration rates will rise because younger people see broadband as essential as telephone/mobile or electricity service. Targeting low income people might be better accomplished with a “Lifeline”-type broadband service, such as is being advocated by some New York telecom advocacy groups that focus on low income residents.

          Your Mainstream option is what exists today in broadband in Canada and it sucks, except for providers like Bell and Rogers of course. They love it. Canadians are fuming about the fact their costs did not decline a bit (they increased), and they’re now stuck with caps, tiers, and throttles on service and providers dragging their feet on upgrades, as Canada plummets in the broadband service rankings.

          Your view is completely in opposition with consumer interests, which is hardly surprising since you are now essentially representing the provider’s viewpoint.

          What consumers want is a continuation of today’s easy to understand speed based tiering model. They don’t have to watch a gas gauge, pricing would remain easy to understand, and there is plenty of cream to skim off the top with upgrades that generate new price and speed tiers for those heavy users, who will gravitate to higher speeds on their own if they were priced smartly.

          Any reader here knows that despite what you suggest, I oppose all usage caps because they are a sloppy, punitive way of dealing with network traffic. If a consumer abides by the terms of the ISPs policies governing traffic (no servers, no commercial use, etc.), don’t hassle them.

          I believe companies should invest in their networks, both incrementally and long term, not only to provide good customer experiences, but to create new innovative product lines that can generate additional profits. What I oppose are the kinds of market abuses possible in an under/un-competitive broadband industry, where it is easy to leverage control by imposing limits on services, increase prices, and live off the savings from not having to upgrade your usage-capped network, all with the knowledge many consumers have nowhere else to go for service. In the absence of provider abuses and “experiments,” this website wouldn’t even exist.

          Because broadband is completely unregulated, and because providers have started to abuse that privilege, I want the government to start providing oversight and a check and balance on this industry so consumers need not be gouged and be stuck in a broadband backwater. The disproven “free market will solve all” approach is not enough, because it leaves consumers’ wallets open for the taking, with no evidence competition will rush in and fix the problem. The evidence for that is right here in my own community. You can’t pay Verizon to enter a community with pre-existing telephone service. Communities around the nation that open up invitations for competing service providers for cable TV during franchise renewals only get the incumbent operator filling out the forms. Only a handful of overbuilders exist, mostly in the largest cities, and most of them have trouble raising capital because Wall Street has determined it doesn’t make sense to invest in those troublemaking overbuilders that generate price wars and hurt profits. The only reason we have telco TV today is the fear by big incumbents that if they didn’t upgrade their networks, they’d be completely irrelevant in 10-15 years as wireline customers continue to disconnect.

          I have never advocated the government set pricing for broadband either. My words are here for you to peruse. Find where I advocate government pricing models. You can’t.

          You clearly have never read the Massa bill. It doesn’t set prices either. It simply provides oversight and a mechanism for consumer protection from the gouging possible in undercompetitive broadband markets.

          I’d love to see five or six broadband choices offering essentially equivalent types of services, all competing on price, service, quality, etc. We would not need any government regulation because consumers would simply flee one bad provider for another. That was your solution as well over TWC. But what happens in too many cases is that consumers have no good alternative — just dial-up or another provider with its own Internet Overcharging schemes. You are okay with that and I am not.

        • preventCAPS says:

          I fail to see why each option has an “and blah blah blah cap”. Charging by bandwith (as has been the standard) has cap is built in already…

          Say I have a 10mbps connection from my ISP. I then have a cap of 108GB a day, or roughly 3 terrabytes a month. (10mbps/8bits * 60 seconds in a minute * 60 minutes in an hour * 24 hours in a day * 30 days in a month).

          ISPs gambled that not everyone would be using their allotment concurrently with everyone else, and so they cheated by sharing bandwith to keep it economical and maintain high profit margins. There is nothing wrong with this model – it’s worked for years!

          • Smith6612 says:

            And it does. For a matter of fact, a few local ISP technicians in my area do agree that caps are in fact the worst way to go with managing a network, and if they didn’t want people using the network or even heavily in that sense, they simply wouldn’t even bother offering higher speeds in the first place and we’d still be stuck with low speeds. This is exactly the way they said it. Like with DSL, your “cap” is your sync rate minus overhead. With cable, it’s whatever you get in the configuration file. Fiber, that’s whatever the equipment is set for.

            Otherwise I’m almost certain many of the ISPs and data centers these days buy transport based on amount of total bandwidth over a certain link rather than a burstable line that has X amount of cents per gigabyte tied to it. When this happens, I’m also pretty sure that those cents per gigabyte are based on total line cost vs. amount of data the line can transfer if it’s fully used up and down (which is also why data centers say they have 10Gbps of connectivity to the Internet rather than real-time burstable bandwidth availability with so much data that can be used). There are those plans out there that I’ve seen that say that you can have the largest amount of bandwidth possible for a fiber line and the equipment, but you pay for how much you transport over that link. So honestly saying that, in data centers, you’re not able to use up their full connectivity like I’m saying unless you’re really running a heavy site and you have tons of servers with them. Heck, this would even flow along with saying that if my ISP wants to put caps on me, they should set something pretty high and set my lines to sync up as high as they can possibly go.

            Heck data centers and ISPs are already overselling their lines offering unlimited data (for those that do) in hopes that it won’t be maxed out for long durations. Heck with the case of data centers, unless the data center seriously bought too many peering agreements with transport providers to the point where they can’t recoup the cost, or they’ve got some very abusive users there running uncapped/unthrottled seedboxes, there shouldn’t be a need for those caps in the first place. Of course, for what you get in a data center, it’s pretty generous. Many free hosts these days give 10GB+ of bandwidth, heck some even give 45GB up to some “unlimited” transfer a month. Buying a VPS or a dedicated server can certainly often times yield you 250GB 100Mbps port for $15 per account, even a few Terabytes of bandwidth a month with maybe 20 cents per Gigabyte that you go over the limit. Of course, this is thanks to the oversell and use other user’s cash to pay for the usage, not to mention that the data usage counters data centers have are already very robust and pretty much problem free (unlike the crap that ISPs these days are pulling out that are broken or count ARP traffic :| )

        • Michael Chaney says:

          And what I don’t understand is why the current model is broken in your eyes?

          http://www.timewarnercable.com/SanAntonio/learn/hso/roadrunner/speedpricing.html

          Why not just roll out DOCSIS 3.0 and add another tier to the top of the lineup? Simple, fair, and extremely profitable.

          • George Ou says:

            “And what I don’t understand is why the current model is broken in your eyes?”

            What I don’t understand is why you insist on putting words in my mouth. You seem to have bought into Mr. Dampier’s misleading blog headline that I somehow want consumers to be “overcharged”. Dampier has already admitted that he is ok with some form of usage cap so long as the cap size and the price is right, which is no different than what I am suggesting. So does that mean Dampier is in favor of overcharging consumers as well since he’s admitted he’s ok with some form of usage caps?

            What I said was that we don’t need the government to impose inflexible rules on what kind of business models should be legal or illegal. What I explained is the benefit of having cheaper connections that trade usage cap allowance for higher bandwidth, or it allows for the possibility of having even cheaper options on the table to allow low income people the chance to get on broadband. Dampier and the reason for this website’s existence on the other hand want the government to set broadband prices. Mr. Dampier has a right to his opinion, and I have a right to disagree with him. That doesn’t mean I want consumers to be “overcharged” anymore than Mr. Dampier wants consumers to be overcharged.

            • Ron Dafoe says:

              I think you need to go back and read the history of this site. This site does not exist to get the government involved. . Let’s face it, TWC did not back down becuase their customers where against it, they backed down because the government stepped in and made a deal. The fact is, there is no competition in most markets. The free market solution will not work. What is so wrong with consumer protection oversight when there are no choices to choose from? The market will not work with 1 or 2 providers in most areas. That is the way it is. When asked, I think most people would welcome 4 or 5 broadband/television/phone systems to choose from. The major problem is, most of us do not have those choices – it is cable or dsl, and guess what – they follow each other. It might as well be price fixing.

              Do you really think providers want to offer cheap internet for $10 a month? No they don’t

              • George Ou says:

                “This site does not exist to get the government involved”

                Are you kidding? http://stopthecap.com/take-action-2/ How do you make such a blatantly misleading statement with a straight face?

                “The fact is, there is no competition in most markets. The free market solution will not work”

                OK I see what your problem is. Your understanding of the facts simply do not reflect reality. The fact is that even if we don’t include wireless and satellite broadband service, nearly 9 out of 10 homes have a choice of two wired broadband providers.

                “When asked, I think most people would welcome 4 or 5 broadband/television/phone systems to choose from”

                You do have 4 or 5 today if you count intra-modal as well as facilities based compeition, and that’s not even count satellite or wireless. I hope you’re not naive enough to think that 4 to 5 wires coming into each home is even remotely feasible. Moreover, there are a growing number of people who don’t want wired broadband or telephone service at all and they do everything wirelessly because they need and value mobility.

                • Ron Dafoe says:

                  You show a blantant misunderstanding of the history of this site, as well as it’s users. Regulation was brought into the picture, because it was forced into it, by the companies themselves. It has been stated by Philip himself, this site, and many of it’s users that regulation was the last resort. It has become clear to alot of people that the only way these things are not going to be forced onto consumers is with the help of more powerful people than us.

                  When you don’t get something, or understand a differing viewpoint, you attack and degrade things.

                  Do you really think that these cable companies have our interests in mind with these caps? I would really like to know an honest answer from you.

                  Have you actually read the bill you so despise to understand what it is trying to do? Have you given thought to work with the representatives to understand their concerns, where they are coming from, have them understand and appreciate your input and help them craft a plan that may be fair for everyone involved?

                • Ron Dafoe says:

                  You act like this site did not exist before this legislation existed. The fact is it did, long before. That is certainly not the focus of this site, as you suggest:

                  http://stopthecap.com/about-us/

                • George, you can suggest there is ample competition, and simply hope consumers won’t check out the facts about that competition, at which point your argument falls apart and more people join our cause.

                  The wireless industry might as well openly collude when it comes to broadband data pricing. That industry has providers so cozy with one another that their abusive pricing and business practices have been rated R (for ripoff) and triggered an FCC investigation.

                  For wireless data, regardless of the provider, you can choose between 5GB for $60 a month, or 5GB for $60 a month, or 5GB for $60 a month , or 5GB for $60 a month. A few regionals offer 5GB for slightly less, or suggest “unlimited” that can be cut off or throttled… after 5GB per month.

                  http://stopthecap.com/2009/06/06/wireless-broadband-a-bountiful-garden-of-consumer-choice-pricing-plans-not/

                  They’ve learned it’s better not to risk actually competing with one another when they can just sit back and enjoy equivalent pricing benefits for the same usage capped experience.

                  Satellite broadband? No actual subscriber would ever consider them their first choice for broadband. It’s generally their ONLY choice in the markets where they have customers.

                  http://stopthecap.com/2009/05/21/californians-launch-class-action-lawsuit-against-hughesnet-for-slow-capped-service/

                  I especially found the daily 200MB limit on Hughes service all warm and consumer friendly. :-) Our readers who endure the lousy satellite experience are clamoring for ANY other provider to come to town. Unfortunately, without a national broadband plan and funding support, they’ll probably wait forever.

                  More evidence that you can always find one thing accompanying usage caps: higher prices.

                  I don’t think 4-5 wires necessarily makes sense either, but one more might, along with a more competitive wireless marketplace. George will hate my solution to too many wires — fiber to the home wired by municipalities that offer common carrier status to all-comers to use those wires to deliver service. Any provider that wants to provide service can get access at a reasonable rate and deliver service on one wire. That’s the plan on offer by several communities that were forced to do it themselves because private providers refused to. Residents happily supported such measures. Incumbent providers didn’t, of course.

                  For the private sector, provide tax credits and other incentives for true FTTH networks and help bypass the Wall Street angst over the money spent on them.

                  • George Ou says:

                    Philip,

                    Do you expect your laptop to have the same processor speed, same storage, and same screen size as your desktop computer? Why is it that people pay more money for a smaller screen, slower processor, and less storage? Could it be because laptops are more expensive to produce and that people value their mobility? Has it occured to you that people pay for wireless data access for the same reasons?

                    We know that a 150GB cap 6 Mbps DSL connection at $35 a month sounds MUCH better than a 5GB cap 1 Mbps connection at $60 per month. But how fast is that DSL connection when you’re more than 100 feet from your home? Does it work on the street, the bus, the hotel, the airport?

                    Do you even understand what it costs and takes to build a wireless infrastructure? Do you expect to hog a $600,000 cell tower to yourself? Do you understand that each base station is there to serve a few thousand people for phone and voice? Do you understand that there might only be about 2500 GBs of capacity per base station per month? Do you understand what you might have to fight in court for 14 years with local city officials to win a permit to put down a cell tower? I would venture to guess that you probably don’t.

                    • Yes George, I just “don’t understand.” :-) Whenever consumers are confronted with bad deals, it’s not that they are bad deals, it’s that consumers don’t understand why, from the industry’s perspective, they’re actually great deals.

                      It’s not about the fact you can’t play The Price is Right with mobile broadband pricing because the actual retail price is always the same. It’s about the added features you get when you travel with your heavily capped, expensive wireless broadband service that used to be uncapped.

                      But no worries, because you are here to replace our reality with your own. :-)

                      Remarkably, your version of reality always seems to take the side of the provider. Imagine that.

                      Expect a tough crowd of consumers who actually understand only too well.

                  • Ron Dafoe says:

                    Thank you Philip, I actually wrote a very similiar comment, but then did not submit it. I didn’tfeel it is worth it to talk to him about these things last night. He continually changes the subject, does not address points of comments and latches on to useless things, like I wanted 4 or 5 lines coming into my house. I want the same thing – 1 fast wire, where I have a choice of who provides the service over that wire. I will use one of their favorite analogies – Electricity. Guess what? I ahve a choice of who I pay for my electricity and the rates are different, and they provide different packages of service that RG&E!

                    Cell Wireless is not competition to cable, or even DSL at this point. Neither is Satellite. I would like George to tell me, what other providers offer a similiar level of service as a competitor to TWC in Rochester, NY. I would gladly pay the $90ish a month other providers are chargind for DOCSIS3 speeds, they just have to provide it with no caps.

                    I have RR Turbo coming into my house and it is used for an internet connection. That is my “pipe” that I pay monthly for for all my needs of the entire household.

                    What other provider in my area competes with 15Mb down and 1Mb up? Frontier DSL gives me less than 1/2 of that speed with 4ish Mb down and only 384 up. My Iphone data service plan on the 3G network is slow on the iphone, please tell me how I am suppose to use that connection as a whole house solution besides some one off, travelling solution? That is what wireless is – a travelling solution.

                    • “Thank you Philip, I actually wrote a very similiar comment, but then did not submit it. I didn’tfeel it is worth it to talk to him about these things last night. He continually changes the subject, does not address points of comments and latches on to useless things, like I wanted 4 or 5 lines coming into my house. I want the same thing – 1 fast wire, where I have a choice of who provides the service over that wire. I will use one of their favorite analogies – Electricity. Guess what? I ahve a choice of who I pay for my electricity and the rates are different, and they provide different packages of service that RG&E!”

                      It’s pretty transparent. When backed into a rhetorical corner, he accuses people of putting words in his mouth, argues with positions he invented for the people he debates with, changes the subject, or claims that ‘you just don’t understand.’

                      In fact, there have been so many straw men around here lately, the Fire Marshall is threatening to issue a citation in the comments section. :-)

                      George has a job he’s paid to do and everyone knows it: it’s to advocate for his provider friends.

                      I don’t think you’ll convince him to change his views on these things, especially when you consider with whom he’s working these days. But I enjoy exposing the fact that time after time, people like this are not on the same side as you, I, and other consumers who really don’t want to make this that complicated.

                      We simply want to enjoy a service that is already profitable, will remain so in the future, and works just fine under the current pricing models that consumers OVERWHELMINGLY support being left right where they are – based on speed. More competition would be great, rural broadband expansion is necessary, and when providers behave responsibly, consumers are just fine leaving them to do their thing without any regulatory changes. But we’re not going to sit still for abusive practices either, whether it’s screwing with the pricing or trying to interfere with the traffic crossing the wires.

                • Michael Chaney says:

                  “9 out of 10 homes have a choice of two wired broadband providers” …cite sources please.

                  “You do have 4 or 5 today if you count intra-modal as well as facilities based compeition, and that’s not even count satellite or wireless.” ….umm…what? Last time I checked I didn’t have the option of calling up my favorite intra-modal whateverthehellthatis and getting Internet service. And let’s keep not counting satellite and wireless as they are either sub-par or limited services.

                  “I hope you’re not naive enough to think that 4 to 5 wires coming into each home is even remotely feasible.” ….it’s called common carrier status…..worked great for the phone companies, so why not for Internet?

                  “…there are a growing number of people who don’t want wired broadband…” …again, sources please. I have a hard time swallowing this one. I as well as most people want broadband at my house…period! I don’t care if it’s WiMAX, fiber, coax whatever so long as it’s fast, low-latency, and reasonably priced. I do need and value mobility, but that’s a completely different argument to be had with my wireless carrier….and is not the core issue of this site.

                  • George Ou says:

                    ““Close to 9 out of 10 homes have a choice of two wired broadband providers” …cite sources please.”

                    Cable covers roughly 95% of all dwelling units in America. DSL covers roughly 86% of all homes in America. I would say that’s pretty close to 9 out of 10 homes with access to two providers.

                    “You do have 4 or 5 today if you count intra-modal as well as facilities based compeition, and that’s not even count satellite or wireless.” ….umm…what? Last time I checked I didn’t have the option of calling up my favorite intra-modal whateverthehellthatis and getting Internet service.”

                    Intra-modal just means DSL resellers who use the same facility. Most countries in the world rely on this type of competition since they don’t have wide-spread cable broadband. Cavad and Sonic are two examples of intra-modal competitors.

                    “I hope you’re not naive enough to think that 4 to 5 wires coming into each home is even remotely feasible.” ….it’s called common carrier status…..worked great for the phone companies, so why not for Internet?

                    Sigh. We’re not going anywhere with this if you thing running 5 broadband wires into each home means “common carrier”. The least you can do is look up what common carrier means on Wikipedia.

                    “…there are a growing number of people who don’t want wired broadband…” …again, sources please. I have a hard time swallowing this one. I as well as most people want broadband at my house…period!

                    Most people still do want wired broadband, but that doesn’t change the fact that there is a GROWING number of people who don’t want wired broadband OR fixed telephone service. If all you do is use the web and email like a lot of business customers who happen to travel a lot and you have to have mobile Internet anyways, it makes sense to skip wired broadband service.

                    • Michael Chaney says:

                      I’m well aware of what it means to grant common carrier status to a SINGLE infrastructure to handle multiple providers. I guess I should have be more clear. My point was that no one here is naive enough to think overbuilders are going to drag 4+ wires to everyone’s house.

                      There’s also a GROWING number of people who are adopting 4G LTE too, but that really doesn’t mean anything to anyone here or anywhere (if so then lucky you). I can also guarantee you that current 3G networks are no wire-line substitutes for even the lightest business user. Most mobile business use is still over WiFi networks which still require wired broadband service at some point.

                      I love the mobility I get around the house with my personal home WiFi setup, but I still need a fast, affordable Internet connection that doesn’t limit me to 5 GB. I would blow through that in a heartbeat working from home with all my Live Meetings, VNC, and Remote Desktop use.

                    • DM says:

                      Mr. Ou,

                      I don’t think you understand the concept of citing your sources. Could you please provide a proper citation to verify your claims? I think that it would be best to format this into APA style.

                      “Cable covers roughly 95% of all dwelling units in America. DSL covers roughly 86% of all homes in America. I would say that’s pretty close to 9 out of 10 homes with access to two providers.”

                      I really do want to see where you are getting your data from. I also find it interesting how you worded your comment. Is there a difference between “dwelling units” and “homes”? Do both the cable and DSL statistics include apartments and condos? What about the states of Alaska and Hawaii? Are they included in this data too?

                    • Ron Dafoe says:

                      George, you are either not reading what people write, or intentionally misrepresenting people. Either way, the trait is not a good one.

                      Please go re-read the messages and comment on the points, unless you have no answer.

                    • Ron Dafoe says:

                      DM, his sources are straight from the cable companies and DLS companies. Here is the method that they use:

                      “The cable industry calculates the Homes Passed percentage by dividing the total number of TV households supposedly passed by cable into the total number of TV households in the country. But even a cursory comparison of Census Bureau and cable industry statistics shows that the distinctions between housing units, households and TV households were lost long ago in an apparent rush by the cable industry to demonstrate a comprehensive nationwide build-out.

                      In 2000, the cable industry in half a dozen states reported more TV households passed than the total number of households reported by the Census Bureau. For example, in New Jersey the cable industry supposedly passed 662,167 more TV households than the Census Bureau reported households. In the District of Columbia, the cable industry even said it passed more TV households (44,000) than the Census Bureau reported housing units.

                      Nielsen Media Research’s estimate of TV households for June 2001 (107.1 million) — used by the cable industry and the FCC for computing homes passed — actually exceeds the Census Bureau’s national estimate of households for the same period (106.7 million).”

                      http://www.allbusiness.com/government/government-bodies-offices-us-federal-government/6355927-1.html

                      It is a few years old, but from what I understand, the calculations are basically still the same and the data still is in dispute.

                    • Michael Chaney says:

                      Well 99.999% of people are fed up with astroturfers and their skewed “data”.

                      Source:
                      http://www.michaelchaneyisalwaysright.com/myowndatatobackmeup.aspx

                    • George Ou says:

                      Source? http://www.ncta.com/Stats/BroadbandAvailableHomes.aspx

                      119.8 million homes passed by high speed cable broadband service as of 2008. That’s virtually every home in America.

                      Some of NCTA’s stats used to say “dwelling units” because there are more dwelling units than there are homes in America. They actually passed 123.4 million dwelling units but the NCTA recently changed their stats to reflect just homes.

                      DSL penetration is not that high, but ithey’re still in the high 80% range. I sources I had were in for-fee reports from some of the major analyst firms. I have to look up a publically linkable source.

            • Our Mission Statement, available here: http://stopthecap.com/about-us/ makes it quite clear in the very first sentence we oppose all usage caps. Pot, meet kettle, on the subject of putting words in others’ mouths.

              It’s sort of hard to represent yourself as the Friend of the Consumer by trying to agree with a position I don’t even hold. Hell, on your own blog you were complaining about me not even liking Comcast’s 250GB cap. I don’t.

              Some caps are bigger targets for this site than others. We target the worst offenders first. Comcast is not the worst offender, so they don’t get as much attention as others, but don’t mistake that for support of their cap.

              Also, you can repeat the mantra that I want the government to “set broadband prices” but that doesn’t make it true.

              I oppose Internet Overcharging schemes like usage caps, throttles, and all of the other profit exciters that go along with them – overlimit fees, higher monthly pricing, penalties, etc.

              Honestly, George cannot say the same thing as he wavers between one overcharging scheme or the other (along with the rationale for doing so — now it’s to provide cheaper broadband to poor people.)

              Consumers are smarter than that. Usage caps and throttles don’t come with lower pricing – they come with higher pricing, and none of the promised “savings” or service “improvements.”

              • Tim says:

                What boggles my mind about George is that he wants caps because he thinks it will “lower” the prices for the po’ people. He is dreaming if he thinks they will lower the prices. That would cut into their profit margin. Ever wonder why Time Warner didn’t open advertise their Road Runner lite service until recently? They don’t want you on a low priced tier period! They don’t make money on low priced tiers like they do on the premium tiers. He has yet to answer a basic question I posed to him because he can’t. All the hubbub that he espouses is based off of complete conjecture. He has no proof whatsoever, that if caps were indeed implemented, they would immediately “slash” the current pricing scheme for something lower. That is a pipe dream, no pun intended.

                • Tim, you and tens of thousands of other consumers get it. You are not going to be suckered into paying more for your broadband service no matter what the astroturfers pull out of their hat. They keep thinking it’s going to be a cute bunny, but instead it’s like that old Rocky & Bullwinkle sketch. What comes out of the hat isn’t pretty, and it usually wants to be fed… your money.

                  I’ve seen these magical promises from providers time and time again. If only they deregulated us, gave us statewide franchises, allowed us to experiment with pricing formulas, gave us the freedom of the marketplace to merge into a Borg-like collective, it would be just beautiful, a place where bluebirds sing and there’s a whiskey spring. Sure… for them.

                  Consumers get the bill, bigger than ever, along with a whole mess of broken promises. Hell, Loretta Lynn couldn’t fit the number of broken promises we’ve reported on in the last year into just one country song! From FairPoint Communications, the Towering Inferno of phone companies, to AT&T’s statewide franchises that don’t lead to big savings, to Internet Overcharging experiments.

                  Fool me once, shame on you… fool me twice, shame on me (or to quote our former president… “can’t get fooled again.”)

            • Michael Chaney says:

              I just want to know why all the choices you “personally want to see” involves caps? What wrong with just reinvesting in your network to provide the uncapped service consumers want? Why all the personal love for caps?

              Do you enjoy paying for overage time on your cell phone or getting dinged for extra text messages? Do you enjoy having to constantly check your used minutes or texts and curbing your usage to accommodate some cap? Do you love it so much that you want to apply that to every other service you have? Do you also want to apply caps to the amount of TV you watch so you can constantly be watching the clock instead of the show?

              Why would you not personally want to see a robust and adequate network that can handle the ordinary and legitimate traffic consumers want to use without having to even think about caps?

  5. Ron Dafoe says:

    Here is some more of “their” unverified data:

    “At the direction of Congress, the FCC has issued an Annual Report in each of the last seven years describing the status of competition in the video programming market.[11]
    One of the foundations of the FCC’s Annual Reports, and the most widely used measurement of cable availability, is the number of “Homes Passed” by cable.[12] The cable Homes Passed number is intended to reflect the percentage of American consumers who have access to cable services. Conversely, the remaining percentage reflects those consumers who likely have access to MVPD services only through DBS.
    In previous Cable Competition Reports, the FCC has unfortunately accepted without review or challenge the cable industry’s claim that approximately 97% of homes across the country are passed by cable.[13] However, a joint report released in April of 2000 by the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS), titled Advanced Telecommunications in Rural America: the Challenge of Bringing Broadband Service to All Americans (“NTIA/RUS Report”), questions the manner in which the percentage of cable Homes Passed has typically been calculated. The NTIA/RUS Report found that the actual percentage of Homes Passed could be as low as 81%”

    http://archives.energycommerce.house.gov/reparchives/107/hearings/12042001Hearing433/Phillips741.htm

    It seems that for a long time, the government has just been trusting the cable companies without data verification. When they tried to verify, they found different results, by what could be a large percent.

    • Ron Dafoe says:

      There is also this:

      http://www.allbusiness.com/government/government-bodies-offices-us-federal-government/6355927-1.html

      The cable industry calculates the Homes Passed percentage by dividing the total number of TV households supposedly passed by cable into the total number of TV households in the country. But even a cursory comparison of Census Bureau and cable industry statistics shows that the distinctions between housing units, households and TV households were lost long ago in an apparent rush by the cable industry to demonstrate a comprehensive nationwide build-out.

      In 2000, the cable industry in half a dozen states reported more TV households passed than the total number of households reported by the Census Bureau. For example, in New Jersey the cable industry supposedly passed 662,167 more TV households than the Census Bureau reported households. In the District of Columbia, the cable industry even said it passed more TV households (44,000) than the Census Bureau reported housing units.

      Nielsen Media Research’s estimate of TV households for June 2001 (107.1 million) — used by the cable industry and the FCC for computing homes passed — actually exceeds the Census Bureau’s national estimate of households for the same period (106.7 million).

      Now we really have a problem. Almost half a million

      Kind of hard to beleive their data after seeing things like this. It needs to come from an independant company that has nothing to do woth the industry.

  6. DM says:

    Mr. Ou,

    I am a bit frustrated by your response to my comment.

    First, you did not provide a citation in the APA style. I feel that APA is important because it attempts to specify the author(s), date of publication, and the party or parties responsible for releasing the information. It also acts as a filter in narrowing down where exactly the cited information can be found.

    Second, the link you did post, in my opinion, does not verify any of the information that you have provided. It is simply a web page on the NCTA’s web site that shows a graph with numbers. Granted, this may not be your fault, as the NCTA does not do a good job of citation either. They list the source of the material as SNL Kagan. However, if I was using this data in a debate format then I would want to personally verify that the data was correctly represented.

    Third, I think you even confuse yourself with your explanation of dwelling units versus homes.

    “Some of NCTA’s stats used to say “dwelling units” because there are more dwelling units than there are homes in America. They actually passed 123.4 million dwelling units but the NCTA recently changed their stats to reflect just homes.”

    Could it be that they “changed their stats” so that they would end up with a higher “passed” ratio? If there are more dwelling units than homes in America, then why downgrade the statistics? Does this mean that consumers who live in dwelling units but not in homes (apartment renters) don’t count as study participants?

    Fourth, could you please provide citations for your DSL data? Even if those are not available for free, I might be able to access them through my university’s library resources. There might also be an individual who would be willing to pay to access the data to verify it.

    Finally, could you explain this statement a little better?

    “DSL penetration is not that high, but ithey’re still in the high 80% range.”

    When exactly is DSL penetration considered high? Would that be in the lower 90% range?

  7. CONSUMER says:

    George, George, George!
    I beg you to stop insulting our intelligence. I know it is hard for you to believe, but nobody buys your BS. Consumers are not stupid. You are simply a very ineffectual and annoying paid mouthpiece. I apologize for sounding harsh….but you really need to accept the fact that consumers DO NOT WANT CAPS OF ANY KIND. You can spew your specious arguments until you are blue in the face, but you will never convince anyone that caps are good for anything other than draining a consumers wallet….. oh yeah, they also make for one hell of a money party for the ISPs!

  8. Stew says:

    George,

    You do not understand the consumer. I live in beaumont TX. When TW went to caps I dropped them (as well as the tv anbd phone). I went o ATT and they sent a letter after sending my modem saying they would have caps (funny compition). I called them to cancel my internet, phone and satellite tv. (also my yellow pages ads). They relented and gave me unlimited internet that they advertized.

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