It’s baaack.  Gary Kim, self-described member of MENSA, elected to link to our recent article about a customer in Austin having his Road Runner service cut so that he could drag out that we have heard before.  Mr. Kim, who has penned his views for a boatload of industry trade publications, as well as running a few of his own, has trotted out that old chestnut about not paying flat rate for gas, electric, and water.  Except he takes the analogy to the extreme “conservation” argument, as if the world of online video is leading us to a broadband global warming catastrophe.

Are you as smart as the industry guy?

Now I’m not a member of MENSA.  My experience with IQ tests was limited to those wooden pyramid puzzle things they used to put on your table at the Cracker Barrel.  But I’ll give this a shot anyway.

Lots of people get upset about bandwidth caps that strike me as extraordinarily generous. Does anybody think the planet or the economy would be better off, companies better able to improve service or people given incentives to “do the right thing” if electricity, gasoline, water, natural gas or heating oil were sold on an “all you can eat” basis.

Which bandwidth caps are extraordinarily generous?  The 5GB cap on your wireless phone plan (or the one Frontier considered but discarded in light of the competitive advantage it now seeks in one Time Warner test market), the 40GB power user tier Time Warner started out with, the 150GB limit AT&T is playing with, or the 250GB cap Comcast has today?  The caps are all over the lot, with each company swearing on a stack of press releases their cap is the one most justified and required if a company can survive the Irwin Allen-like Exaflood future.

Second question: What exactly is “the right thing?”  Bowing to the cable television industry’s business plan opposing a-la-carte video packages in order to enjoy the revenue that comes from all you can watch television?  Is it the wrong thing for people to make their own decisions about what they do with their Internet connection?  We’ve been down the road of why the Internet is not the same thing as oil, gas, or even water for that matter.  StoptheCap! reader Brion perhaps had the best debunking of this analogy:

Other coverage you may enjoy:

1. So-Called “Expert Network” Guy Suggests “Do-Gooders” Made Bandwidth Providers Throw Caps On Customers
2. Damage Control Technique #1: Increase Speeds in San Antonio
3. Tip for Rational Thinking #1: Broadband is Not the Same as Your Gas & Electric Service
4. Lots of Great Ideas – Keep Them Coming!
5. Senator Chuck Schumer to Visit Rochester & Protest Usage Caps: Our View

Argh…  Lauren MacDonough, WROC Web Reporter, what were you thinking?  MacDonough adds to WROC’s highlighted coverage of the Time Warner service outage, with a follow-up explanation that belies belief.  She gets the first part of the explanation correct: a router failed in Syracuse which affected domain name servers, among other things.  That assured any connections made through the Syracuse Operations Center would end up getting no further if they were relying on Time Warner’s equipment to route the traffic properly.

But then MacDonough wades out into the deep end, and gets into trouble.  She posits the theory it could have been a “strain” on its network which caused the hardware to fail, and then quotes Time Warner’s earlier press release about “Internet brownouts could be on the horizon,” and then draws a line between the events on Sunday and Time Warner’s exaflood theory.  [Shudder]

Generally speaking, traffic on an electronic piece of equipment does not wear it out, leading to a failure.  Routers have failed since Road Runner began service.  It happens.  Sometimes it’s heat related, other times a power supply stops functioning properly.  A pesky spider spinning a web inside the case might be indictable.  There are lots of reasons.  Heavy traffic, on a Sunday morning yet, causing the thing to flame out is unlikely to be among the first theories I’d come up with.

Some readers have asked why I’ve been covering this story in the first place.  Today you know.  It’s not an intention to pile-on any negative bad news about Time Warner, but rather to be sure we are on guard against media misinterpretation of unrelated events which lead to any inappropriate tie-ins to Time Warner’s kooky theory of broadband management.

As you’ve just seen, that’s precisely what Lauren MacDonough did.  It’s likely unintentional on her part, but it doesn’t change the fact we will need to help correct the record and not allow debunked exaflood theories to be used as “evidence” for usage caps and rationing tier plans.

Other coverage you may enjoy:

1. WROC Rochester Covers Time Warner’s Pricing Change Plan
2. WROC Rochester Package on “Revised” Time Warner Plan – Check Out the “Loyalty Program”
3. WROC Rochester – The Broadband Internet Fairness Act
4. Affected by the Time Warner Outage? Get One Day Service Credit
5. Rochester Democrat & Chronicle Blisters Time Warner Over Internet Caps

Wallstrip condenses the entire bandwidth capping is a bad idea argument down to a few irreverent minutes and this:

Pretty soon we’ll all be over our 40GB limit.

Other coverage you may enjoy:

1. So-Called “Expert Network” Guy Suggests “Do-Gooders” Made Bandwidth Providers Throw Caps On Customers
2. Bandwidth Hog – Log Off Now!
3. DL.TV: It’s Not a Premium Service If You Have Caps – Feeling Your Bandwidth Capping Pain
4. Revisited: Laurel Lane Is The Central Front Of The War On Bandwidth Hogs
5. Breaking News: Frontier Modifies Their Position On Usage Caps… Again

[Update 3:20pm EDT: Corey writes back with some minor corrections:  "Standard Service is now 15Mbps down/2Mbps up; Turbo is 25Mbps(ish) down/2.5Mbps up" for him.  Don't forget Powerboost may play with your numbers on the download.]

You’ve just alienated the majority of your customer base with a harebrained scheme to Cap ‘n Tier people into the Internet circa 1990, and that didn’t work and a whole lot of people canceled.  So what do you do to placate the masses?

Increase their speed!

Before: Some of our heavy users (a/k/a Turbo tier customers I’ll bet) are using too much of our service and they are costing us too much.  We need to charge more and cap you to invest in better equipment.

Today: “As a valued (San Antonio) Time Warner Cable customer, we have automatically upgraded your download speed from Road Runner Turbo 10 Mbps to our new Road Runner Turbo 15 Mbps speed at no additional cost to you. More importantly, we’ve upgraded your upload speed from 1 Mbps to 2 Mbps for FREE.”

StoptheCap! reader Corey is confused:

“The ONLY thing that makes sense is that by increasing speeds and usage (especially upload speeds), they are trying to create congestion so that they get problems and complaints to base their “facts” on, so that they have ammunition to come back with at a later time.”

It could be that.  Or it could also be the fact the exaflood theory they based their earlier arguments on doesn’t hold a cup of water.  It does seem odd that they would increase speeds for the customers they claim were causing a lot of their “problems.”  Perhaps they also lost a whole bunch of those customers over this Cap ‘n Tier business and they want to get them back.

Other coverage you may enjoy:

1. WOAI San Antonio – Damage Control Redux – When Time Warner “Delayed” Tiers For The Summer
2. Time Warner Tosses Customers Powerboost Bone? Now Hit Your Usage Cap Faster Than Ever!
3. WOAI San Antonio – Time Warner Customers Learn of the New 1GB Granny Tier
4. Another Statement from Time Warner – Sit Down For This One
5. Turbocharging Profits: Road Runner Ration Plan Breakdown

Samuel Greenholtz, a retired manager from Verizon, offered this absolutely impenetrable thinking on why broadband providers needed to impose caps on customers and were forced to charge way too much for them:

While a tiered pricing structure may have been inevitable in the long run, if the corporate bashing horde stayed out of the way, the vast majority of users would have avoided paying more for additional capacity.  Time Warner Cable does give the politicians what they are looking for – more bandwidth availability for all of its subscribers.  Still, the lowest speed package is not going to be enough for most of the consumers – and so they will have to take the higher tier offerings — along with the new overage charges.  Had the MSOs been allowed to just cap excessive users, most of the subs would have continued to receive a reasonable amount of bandwidth at the same flat price.

Ironically, all of the illogic obsession with net neutrality will result in even more of a usage-based pricing scheme.  There will now be several layers of capping.  The anti-ISP crowd has actually created a more beneficial pricing system for these companies.  And there is certainly nothing unfair about this development.  But the clamoring for so-called equality resulted in an acceleration of the removal of the all-you-can-eat advantage for consumers.

What in the world is this man talking about, and why is he part of some so-called “expert network,” Gerson Lehrman Group?

Broadband Providers: How Low Can They Go?

The history of usage capping actually goes back into the earliest days of Internet service providers, providing both dial-up and broadband service in areas where network capacity simply didn’t allow customers to utilize unlimited bandwidth.  Some Time Warner customers in the midwest and central part of the country lived under “limits” for years, mostly due to lack of any viable competition.  The imposition of caps on customers has always been driven by the capacity argument, never by a more honest claim that lack of competition discourages significant upgrades, and allows a provider to limit usage to ensure a higher rate of return. Where competition exists offering similar types of service, caps and limits are much rarer, speeds are higher, and pricing is lower.  A provider that doesn’t regularly invest in upgrades to his network in a competitive marketplace will soon no longer be a part of that marketplace.

Today, a handful of major broadband providers are now colluding in a version of telecommunications limbo, with several watching each of the others “experiment,” to see how low a cap they can set before subscribers and public officials rebel.  Multichannel News columnist Todd Spangler literally wrote that “Time Warner is taking one for the team.”

The “corporate bashing horde” argument, which Greenholtz casually tosses out without any examples or proof, doesn’t hold water.  No group I am aware of has ever bashed the widespread deployment of broadband service from multiple providers.  Oh wait, there is one.  Those providers themselves when they attempt to squelch community cooperative broadband services or municipally-run wi-fi networks, run for the benefit of residents.

Greenholtz completely ignores the fact broadband service is almost entirely unregulated, and providers have always been free to set terms and prices.  Someone draw me a map where corporate critics have developed the leverage to force operators to impose usage caps and tiered pricing.

The net neutrality issue that comes into his argument stems from the Comcast controversy a few years ago, when the nation’s largest cable operator attempted to manage traffic on its network by “throttling,” or limiting the speed of customers using certain bandwidth intensive applications.  Comcast claimed they were primarily targeting peer-to-peer software, which allows users to exchange files with one another, during peak usage of their network.

But this came about at the same time several large corporate broadband providers were advocating for a new distribution system for the Internet, one that would potentially no longer provide an equal level of priority for data traveling across the Internet.  Opponents feared that broadband providers could discriminate or even throttle traffic that didn’t pay their asking price.  And then Comcast provided the net neutrality opponents with a real-world example of bandwidth throttling in action.

Comcast abandoned, at least for now, the bandwidth management approach that included throttling, and instead imposed a simple 250GB “limit” on residential accounts.  Those exceeding that amount of usage risked having service suspended.

Mr. Greenholtz fails to connect this event with any cogent argument or evidence that suggests multiple capped tiers were borne as a result of this controversy.  Indeed, until Time Warner “took one for the team,” other domestic broadband providers simply upgraded their networks to handle capacity issues and imposed no caps, or have simply asked residential users to limit their usage, mostly between 150-250GB per month.  Customers seeking more than that can purchase another account, move to a business plan, or switch to another provider, where available.  Curiously, the imposition and testing of lower limits has often been in areas where competitors either do not exist or cannot offer an equivalent level of service at the same price across an entire community.

But Greenholtz does say one thing that has been obvious to all of us: the Internet service provider is using this as an excuse to create a “more beneficial pricing system.”  Of course, it’s only beneficial to them, not to consumers.  The latter routinely object in overwhelming majorities to the concept of usage caps and the elimination of the existing flat rate pricing which has always been profitable for the broadband industry.  Any other connection, particularly with the absence of any evidence, is tenuous at best.

Other coverage you may enjoy:

1. “Internet Evangelist” Opposes Volume Caps, Limits; “They’re Not Very Useful”
2. NBC Plans to Stream NFL Football This Fall: A False Start Called for Capped Customers
3. Blocking or Metering: “A False Choice,” Concludes Advocacy Group
4. Tip for Rational Thinking #2: “Unless We Limit You To 5/40/150/250GB, We’ll Be Out Of Business?”
5. BREAKING NEWS: Frontier Officially Abandons Caps; Will Go On Marketing Attack to Sign New Customers

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

Other coverage you may enjoy:

1. Tip for Rational Thinking #1: Broadband is Not the Same as Your Gas & Electric Service
2. How to Blow Through Comcast’s 250GB Usage Cap In Five Hours
3. Comcast Announces 250GB Monthly Cap On Broadband Users Effective October 1st
4. ‘The Business Insider’ Predicts Capped Road Runner Customers Could See Monthly Bills “Over $200 for Internet Access”
5. The Daily Star (Oneonta, NY): Frontier To Limit Internet Usage

Comcast Implements 250GB Usage Cap Effective October 1, 2008.

Comcast CEO Brian Roberts likes his new high-tech toys, even if using them on his own cable system is now pointless.   At the January Consumer Electronics Show, Roberts demonstrated the next generation of broadband Comcast is poised to begin rolling out to consumers in the next several months.

Dubbed “wideband,” Roberts downloaded a High Definition copy of Batman Begins in less than four minutes.   Comcast’s DOCSIS 3.0 upgrade, which bonds multiple channels together to deliver broadband speeds up to  160 Megabits per second, will be able to bring Comcast customers the latest high bandwidth applications, particularly including very high quality video, in just a matter of minutes.

Designed to compete with Verizon’s FIOS fiber to the home network, Comcast’s “wideband” service will create a new paradigm for high quality video services entering the home.

Except for one thing.

A 250GB monthly usage cap.

Using Comcast’s wideband service, customers downloading movies could easily exceed the 250GB cap in less than five hours.

Even the cable industry’s trade publications like Multichannel News are now posing questions about how exactly Comcast can promote customers upgrading to wideband service when a cap of 250GB stops the fun in a matter of hours.   What MN didn’t add to the equation is the fact Verizon FIOS does not have a usage cap and has no current plans to implement one.

So exactly why would any consumer choose Comcast wideband, with a usage cap over Verizon FIOS, which leaves you alone and doesn’t threaten to terminate your service if you use more than the cable company deems appropriate?

Another issue MN touched on, but didn’t bother extending to the real issue – stifling competition:

Imagine if all your TV were delivered via the Internet. High-quality  1080i HD video at (conservatively) an average of  5 Mbps would chew up plenty of bandwidth: roughly 286 Gigabytes in a 30-day period, given that Americans watch an average of 127 hours and 15 minutes of TV per month, according to Nielsen.  Cap busted!

Imagine indeed.   Imagine virtual “cable companies” delivering cable networks and broadcast TV over the Internet.   Pay your monthly bill for data from the cable company, but watch your video programming from another provider.   A 250GB cap puts an end to that business plan quite nicely, thank you.

Click here to view the embedded video.

By the way, a quick note to Frontier, which still thinks 5GB a month is just plenty. Pay attention to the file sizes in this video and then get back to us about why you think your customers will never come close to using 5GB a month in the coming year or two.

Other coverage you may enjoy:

1. Comcast Announces 250GB Monthly Cap On Broadband Users Effective October 1st
2. NBC Plans to Stream NFL Football This Fall: A False Start Called for Capped Customers
3. Time-Warner Road Runner Service’s Usage Cap Test: 5-40GB Per Month
4. NBC Olympics: On the Go… Somewhere Else
5. Analysis: Comcast’s Cap Sounds Generous, But After You Learn the Facts, It’s Not

BREAKING NEWS: Frontier Communications has modified their position on the 5GB usage cap yet again.   Your pushback on this unjustified 5GB monthly usage cap has continued to make a real difference in getting company officials to listen to reason.

Frontier’s website has been changed again, now deleting the portions of their DSL sales pitch which used to reference “5GB” of included access per month.   Additional changes have been made to their terms and conditions pages.   Still present in Frontier’s Residential Acceptable Use Policy is the language which defines their usage cap at 5GB per month, although they don’t formally call it that.   Instead, they consider 5GB to be a “reasonable” amount of usage, and reserve the right to terminate accounts that exceed it.   However, some other language has been introduced as Frontier backs off from implementing their cap formally:

The Company has made no decision about potential charges for monthly usage in excess of 5GB.

Company officials have repeatedly said they will not penalize customers who exceed the 5GB “reasonable” level they define in their Acceptable Use Policy, which is to be commended.   But as Frontier Communications has been continually modifying their position on the cap issue in general, both in comments to reporters and on their website, customers have no guarantees what they insist today won’t be much different tomorrow.

StopTheCap! calls on Frontier to do the right thing and remove this entire “5GB” section of their Residential Acceptable Use Policy altogether.   It is this language upon which the entire 5GB usage cap debacle was built, and Frontier can show its good faith by eliminating it from their website  if they truly want to put customers at ease.

We have also learned that Frontier has taken another piece of our advice: to launch a campaign to better educate and inform their customers about how bandwidth is utilized, and ways they can reduce their usage voluntarily.

StopTheCap! strongly believes that consumers are willing to review what they are doing with their Internet connections and will reduce usage voluntarily if they understood how certain applications can consume bandwidth even if they don’t seem to be running.   And it’s a win-win for customers who wonder why their Internet connection seems so slow without realizing someone in the house is running a torrent server 24/7, or has a computer infected with a virus that is churning out millions of spam e-mails without the owner even realizing it.

Treating your customers right means allowing them to  take advantage of the myriad of new applications and features a broadband experience can provide, without a draconian limit on that usage.   And customers have a responsibility to better understand what they are running on their computers.

There are several additional developments about Frontier’s 5GB usage cap, and we’ll be publishing a roundup of the latest news, including your comments and what company representatives have been telling you, shortly.

This remains a developing story.

Other coverage you may enjoy:

1. FCC Commissioners “Discuss Frontier Usage Caps” At Hearing in Washington
2. Two Weeks In: Summing Up The Frontier Usage Cap Matter
3. Frontier Tells Customers “Not to Worry”; The Cap is a “Guideline”
4. Frontier CEO Tells Customers To Stay Home This Summer (But Stay Offline)
5. The Daily Star (Oneonta, NY): Frontier To Limit Internet Usage

Comcast’s announcement that it would implement a usage cap of 250GB per month comes on the heels of the company’s entanglements with the Federal Communications Commission, who spanked the nation’s largest cable operator for purposely interfering with Internet traffic  Comcast felt constituted a problem on its network – namely torrent traffic.

Cable operators face the evolution of cable modem service from something primarily valued by a minority of Internet enthusiasts into a “must-have” product for more and more Americans.   And with the spectacular growth of the Internet, new applications are being introduced daily that are specifically designed to take advantage of the speeds that broadband promises to provide.

Unparalleled greed means not being able to fit all of the cash we're going to make off you into just one briefcase!

Just 24 months ago, the “problem” was peer-to-peer traffic, such as file sharing networks and torrent applications.   Customers fired up their trading software and often let it run for hours on end as they attempted to grab the latest software, TV show, or movie.   File sharing software can consume an enormous amount of bandwidth, as users share  files with one another, uploading and downloading pieces of a favorite TV show or movie until a complete file is assembled.   Good etiquette dictates leaving the software running even longer to help make sure everyone else in the queue  can  complete their download as well.

The result was a lot  of traffic going in both directions.   Most networks in the United States are designed to handle people receiving more files than sending them, and file sharing software began to challenge that paradigm.

Soon enough, broadband providers began complaining that this kind of traffic was tying up their networks,  designed for what company officials thought  average customers  would do with their Internet connection.   People consuming a lot of bandwidth downloading music or movies required operators to spend more money to expand and enhance their networks.

Ironically, the same companies complaining about file sharing created their own “problem” by marketing cable modem service as the fastest way to… download movies and music!   DSL, they said, kept you waiting for your favorite show while cable modem service guarantees your show will be ready the moment the popcorn is popped.

The earliest theories of the artificial “bandwidth crisis” offered by companies annoyed with having to keep up with the demands of their customers, suggested that file sharing traffic would be the death of the Internet as we know it, as torrent traffic completely clogged the network, consuming any and all available bandwidth.   Godzilla’s destructive powers had nothing on file sharing, which could literally create a global Internet crisis.

Comcast decided it could address the torrent traffic problem by inspecting the bits and bytes of traffic running across its network and, at certain peak times, substantially slow down the delivery of that traffic.   Their theory suggested that this would protect other customers  from the neighbors eating up more than their fair share of bandwidth.   In practice, it essentially crippled the usefulness of running any torrent application.

Comcast paid people off the street to fill one FCC hearing room, keeping conscious members of the public out. (Courtesy: Free Press)

The FCC would have none of it, telling Comcast it cannot discriminate against the traffic being carried over its network.   The answer to the traffic problem was to build better roads to  manage the traffic.

Instead of simply agreeing to keep up with demand, Comcast has now approached this “bandwidth crisis” from a different angle.   It has simply put a limit on the amount of traffic each subscriber can utilize on its network during a 30 day period, regardless of what that traffic represents.

Comcast’s suggested limits on bandwidth gave a number of broadband providers the idea that they, too, could slap caps on their customers.   And since the usage cap question was first raised nationally earlier this year, the suggested caps have gotten lower and lower from each subsequent company testing or implementing them.

Cox has “informal” caps of up to 75GB  per month in some areas.   Time-Warner began testing caps of up to 40GB per month in Beaumont, Texas.   Frontier announced a forthcoming 5GB usage cap, which is among the lowest in the United States.    In Canada, companies have gone even lower with caps like Rogers’ 400MB monthly cap for their $60 wireless Internet plan for iPhone owners.   Canadians were so outraged by that cap, Rogers eventually had to relent and create a 6GB monthly service package for $30.

Usage capping cable and DSL providers  are in a race to  the bottom as they try to learn  how low they can  go without creating mass  defections among their customers.

Some Comcast customers have told Stop the Cap! they are relieved that at least they are on the top of the usage cap pile with  Comcast’s 250GB cap, which at first  glance appears generous.   In fact, only a small minority of their customers will currently exceed that kind of usage cap.

But regardless of how generous a usage cap appears, it still raises a lot of questions.

1. If informal efforts to control “bandwidth hogs” have been so successful, why bother with a cap at all?

For several years, Comcast has informally enforced its own internal interpretation of a usage cap with customers who consumed incredible amounts of bandwidth, usually as a result of running a home-based torrent/peer-to-peer file server, web server, or other application that runs contrary to the residential acceptable use policy.   Company officials send warnings to customers who consume hundreds of gigabytes of bandwidth every month.   Comcast’s own public statements indicate such warnings are usually successful.

“We know from experience the vast majority of customers we ask to curb usage do so voluntarily,” Comcast notes on their website.

So why bother the 99% of the rest of your customers with a formal usage cap if they don’t come anywhere close to exceeding it?   It’s awfully hard to convince people of a broadband bandwidth crisis if you also claim the overwhelming majority of your customers consume less than 5% of your proposed cap!

2. While most people won’t come close to 250GB of usage, unless they are backing up their files through an online backup service or are downloading a very large number of files, the usage cap that seems generous today is draconian tomorrow.

This little piggy says you've used enough Internet for this month!

The biggest problem usage caps bring to the table is the artificial drag they create on innovation.   In the global race to be leaders in the emerging Internet economy, the United States was in a strong position to lead the world in  high bandwidth next generation applications like streamed high definition video programming, store-and-forward video on demand and Tivo-like recording, storing TV shows online and delivering them to you on demand, online file backup services, high quality video teleconferencing,  new “cable-TV”-like services over broadband which compete with cable and satellite providers, and more applications  yet to be dreamed up.

Just ten years ago, when most cable modem service began to really get off the ground, the Internet of the late 1990s was very different from the Internet of today.    A usage cap based on what customers did then would likely be under one gigabyte  a month, as users satisfied themselves with low  bitrate RealAudio streams, slideshow-like online video, and  a  World  Wide Web considered primitive by today’s standards.

As broadband Internet became established in a growing number of consumers’ homes, the applications to take advantage of the increased bandwidth followed.    Voice Over IP telephone services, high quality streamed audio and video, and online file storage would never have been developed based on the Internet of the late 90s, and would never have gotten  off the ground in a world with usage caps.

High definition streaming video consumes  many gigabytes per hour.    It’s among the very first exciting applications being made available to consumers with broadband connections, but will die an early death if usage caps are the order of the day.

3. Usage caps are anti-competitive and convenient, particularly as those who mandate them have a direct interest in limiting the potential of competitors that exist today or cannot get start-up funding tomorrow.

Usage caps actually do nothing to solve the “bandwidth crisis”  the cable and DSL companies suggest are on the verge of killing the Internet.   They merely restrict the  natural growth of traffic, allowing companies to pocket higher profits and spend less on expanding and enhancing their networks.

Sky Angel, a "cable"-like system for Christian households, delivers more than 65 channels over broadband. How can they survive usage caps?

More importantly, cable companies conveniently put a stop  to plans to bring competing  multichannel video packages to consumers over the Internet.   The “cable company online” model exists today with providers like SkyAngel, which delivers Christian and secular “pro-family” programming to its customers over a set top box connected to the Internet.   More than 65 channels ranging from TBN to Animal Planet and The Weather Channel reach their customers over broadband for a monthly subscription fee.    SkyAngel’s service is in peril in a world with usage caps that will limit viewing to as little as  a few hours per month before exceeding usage caps.

Netflix and  some satellite dish companies offer video on demand programming utilizing the Internet to deliver the programming to subscribers.   In a world with usage caps, you will be stuck watching those programs only  from your cable company or local video rental store.

Future businesses that seek start-up funding to build the  high  bandwidth applications of the future will get a  guaranteed rejection once potential investors learn that consumers will be unable to  take advantage of those applications because they will exceed their usage caps and have their service shut off.

Of course, the convenient exception  to the usage cap world comes  from companies that partner with that cable or DSL company.

Frontier has already announced it  will exempt its partners from their 5GB usage cap.   ESPN360 and their online backup service preferred partner will enjoy the benefits of an uneven playing field in the marketplace because they aren’t subject to a usage cap.   Everyone else is.

What about  Time-Warner and Comcast?   Will their partner services  also enjoy exemptions from  usage caps while everyone else is forced out of business when customers discover that using them  puts them over their monthly limit?

What about Voice Over IP?    Cable companies are giving telephone companies a real headache by offering telephone service over cable lines at highly competitive pricing.   But  independent companies like Vonage and MagicJack don’t enjoy the benefit of being  exempted from  usage caps limiting the number of calls you can make or receive.   If you are owned or  are partnered with a cable or  DSL company, your service gets a free pass from the usage cap.   Everyone else is  potentially buried by it.

4. The punitive measures suggested  for those that violate  usage caps scare customers into using their connections even less, to the great benefit of the bottom line of the broadband provider.

What’s  the best way to make sure your customers use their connections as little as possible?   Impose outrageous penalties for exceeding usage caps.   Comcast proposes to send a warning letter first, but then potentially turn off a customer’s service for six months to an entire year if they dare to use their broadband service more than the company wants.

Other providers have discovered the tangible benefits of the “penalty rate.”   It guarantees striking fear into the hearts of your most hearty customers, when to exceed the cap means paying 50 cents per MEGABYTE for traffic above and beyond your capped limit, as Rogers charges Canadians right now.

Download that one hour episode of CSI: Miami, and pay up to $175 in penalties on your next bill.   Ouch!   Imagine the conversation at that family’s dinner table after your son or daughter downloaded a TV show before you had a chance to tell them you were at your monthly limit.   Horatio Caine can then come and solve the homicide at your house.

It all comes down to paying the same or more money for less service.   And if you are potentially going to have your service cut off or outrageous overage fees billed for exceeding that cap, you will make darn sure you don’t even come close to it out of fear of exceeding it.

Being in the “bandwidth shortage business” means more profits for you, less service for your customers.

The best part about imposing usage caps is that you get to invent word of a “bandwidth crisis” to justify penalizing your customers, provide absolutely no independent evidence to prove such a crisis exists, reduce your investment  in keeping your network up with the times, and help protect your product lines from pesky competition.  

After all, your cable modem or DSL service was among your most profitable products before usage caps were even proposed, but now you can make even more money.   And if a competitor ever does arrive without usage caps, you can just drop them and go back to making a decent profit instead of one that rivals the oil industry.

Other coverage you may enjoy:

1. “Internet Evangelist” Opposes Volume Caps, Limits; “They’re Not Very Useful”
2. Let’s Dialogue: Coping With Peer-2-Peer & Video Usage On Broadband Networks
3. Questioning The Coming Internet Clog – “No Reason To Fear Network Capacity Shortages”
4. Comcast Announces 250GB Monthly Cap On Broadband Users Effective October 1st
5. NBC Olympics: On the Go… Somewhere Else

Yesterday, Stop the Cap! raised the issue of how exactly Frontier Communications can offer access to the various “extras” the company offers to broadband customers all while limiting them to 5GB of consumption.

A number of readers have shared exactly the same concerns, not only with us, but the company as well.

It is interesting watching our concerns here get answered with shifting policies and vague promises over there, both on the Frontier website and  in replies to customer inquiries.   Unfortunately, they keep digging the hole they’ve gotten themselves into deeper and deeper with every passing day.

Intentionally or not, Frontier has now stepped on the landmine of the Net Neutrality debate.

Stop the Cap! reader William received a reply from Frontier that was  remarkable for its less-than-certain tone, and the latest company line:

I can certainly understand your frustration and confusion on who’s
statement’s to follow.

Unfortunately at the present all we know is what we have been told about the situation and that is that we (Frontier) are reserving the right to charge or terminate service for those that exceed the cap.

Currently feedback such as yours is being recorded and passed on to those that are in charge of this proposed change.

The email your received is correct, we are not currently enforcing this policy and we have been informed that, at the present, the plan is to start the enforcement part of the policy in December or January. Again that is the current time table we have been made aware of.

I do know that we have been made aware that certain activities such as carbonite backup and other services we offer can be excluded from the bandwidth usage. I wish I could offer more information with regards to the plan, unfortunately what was/is published is what there is to know at the present. We are passing all feedback to higher levels and it is possible the plan may change before it goes live so to speak.

I know the above does not answer all your questions, unfortunately since the plan is not finalized I can only offer what information I know to be accurate at the present.

There are several points raised in this reply.

First, it’s clear that those contacting Frontier’s support team should recognize the support personnel  are absolutely not responsible for the corporate policy decisions being made by management in Connecticut.   It is patently obvious to a lot of readers who have heard back from Frontier that there is no great enthusiasm for a usage cap  among a lot of folks working for the company.   We have always tried to draw a strong line between those responsible for these usage caps – upper management, and the employees who are stuck having to implement them.   We have nothing but good things to say about the support people who are in a tough position on this issue.

Second, our own sources have confirmed the timetable outlined in this reply from Frontier’s support personnel.   And again, that is entirely a management decision.

Frontier Steps on Net Neutrality Landmine As It Digs the PR Hole Deeper and Deeper Over a 5GB Usage Cap. (Slowpoke used by permission, copyright 2006, Jen Sorensen - Visit http://www.slowpokecomics.com.)

Third, Frontier’s newest acknowledgement that they are considering excluding their preferred partners from the usage cap now opens the can of worms over the Net Neutrality issue.

Certain telecommunications companies have been attempting to change the Internet as we know it today.   Currently, every online service has an equal shot on the network.   But some companies want to change the playing field, by offering selected partners “enhanced” access to customers, faster data networks, and more prominent placement, either by paying a higher fee or entering into a partnership with an Internet Service Provider (ISP).

A “preferred partner” quickly becomes the cream rising to the top, not based on their merits, but rather by their deep pockets and willingness to pay their way to  number one.   Better yet, such partnerships allow both companies to reap the  rewards  gained from driving  more  subscribers to the content they wish to promote, and enjoying the enhanced  advertising revenue which often accompanies such services.

More alarming are efforts to manipulate customers by penalizing them for accessing non-preferred content, and a  usage cap or bandwidth limitation on those services that lack  a  preferred partner  agreement is a great way to accomplish that.

This doesn’t just manipulate the playing field, it destroys it, giving enormous advantages to a select few.

Such agreements will  devastate a lot of start-up companies that have brought the most creative and revolutionary new services to the Net.   Virtually all of these companies would not exist without reaching out to  investors for initial financing.   In a world without Net Neutrality, inevitably one of the questions that will be asked is whether or not that start-up has any “preferred relationship” with a bandwidth provider.   If that company does not, questions will be raised about the viability of that venture, especially if usage caps and bandwidth limits are widespread.   And once an agreement is made, how does someone new break through?   Under these conditions, expect a number of investors to simply take a walk.

Stop the Cap! has  previously raised questions about ISP’s making an end run around Net Neutrality by imposing  caps but exempting content  or services accessed from that provider’s  web portal.   That has always been our  prediction, but until today, there has not been a real world example of that practice in action or imminent.

Now, Frontier Communications is poised to prove us right once again by potentially giving cap-free, preferential treatment to their partners, but sticking it to  every other video content provider or  online backup service where the 5GB cap will apply.

Ask yourself: Would you use an online service that consumed significant bandwidth that was subject to a usage cap or one that was exempted from it?   Is this what you are paying for every month – to be told what services and sites to visit and effectively penalizing you for choosing to make up your own mind?

It’s just one more reason why usage caps are an incredibly bad idea, and one that actually invites government scrutiny, if not direct oversight.   It’s an issue we intend to raise with our elected officials.   I’m certain Frontier Communications had no intention of being a poster child for the issue of Net Neutrality, but as we’ve seen time and time again in the short time Stop the Cap! has been online, there is a fundamental disconnect by upper management in understanding the implications and consequences of what they thought would simply be a great way to enhance profits and reduce “excessive usage.”

Other coverage you may enjoy:

1. Frontier CEO Tells Customers To Stay Home This Summer (But Stay Offline)
2. Frontier Tells Customers “Not to Worry”; The Cap is a “Guideline”
3. Management At Frontier Still Gung Ho For 5GB Cap… Just Not Until They Can Sell You On It
4. Frontier Usage Cap: “A Response to Illegal Resellers”
5. FCC Commissioners “Discuss Frontier Usage Caps” At Hearing in Washington