"This is not a rate increase, this is about fair pricing for everyone, seriously."

It’s always awful when you wake up with a bad taste in your mouth.  That’s the flavor of industry hacks and sock puppets who spent a good part of yesterday and last night on the attack against Rep. Eric Massa and your consumer interests.  Part of this battle is about engaging those who claim to represent consumers, but actually turn out to be paid by a lobbyist firm or “think tank,” usually located either in or near Washington, DC.  They are typically unwilling to disclose that involvement.  I’m not.  When called out, the typical response ranges from silence to ‘I would be saying the same things even if I didn’t get paid by them.’

Sure they would.

Consumers need to be particularly vigilant about the Say for Pay crowd of sock puppets that arrive in quotations in articles that attack common sense pro-consumer positions, or in the comments  below an online article.

Now you may be asking what in the world is a “sock puppet.”  Craig Aaron at Free Press explains:

Sock puppets, for those unfamiliar with the creatures commonly found inside the Beltway, are mouthpieces who rent out their academic or political credentials to argue pro-industry positions. These pay-to-sway professionals issue white papers, file comments with key agencies, and present themselves to the press as independent analysts. But their views have a funny way of shifting depending on who’s writing the checks. (To be clear, at Free Press we take no industry money.)

Sock puppets and astroturf groups go hand in hand.  If you remember, we’ve exposed a number of these groups that claim they are standing up for consumers, but in reality are paid to sit down and absorb their industry backer’s talking points.  The snowjob that typically follows claims that if you do the pro-consumer common sense thing, such as not allowing Internet Overcharging schemes to rip people off, you’ll destroy the Internet, America, and maybe even freedom itself.  Besides, just look at the “expert credentials” of our guy telling you that.

When you boil it all down, sock puppets are people who feel morally fine with taking money for being willing to assume any position you want them to take.  It’s vaguely familiar to another profession that’s been around for a very long time.  One just has better office space than the other, and better business cards, too.

If you want to explore a perfect example of sock puppetry at work, with a group trying to get public taxpayer money to benefit big telephone and cable companies with few strings attached, check out Craig Aaron’s article on the subject this past January.

In Stop the Cap!‘s history, we’ve debated a representative from Nemertes Research who refuses to disclose who pays for their industry research reports that conveniently say exactly what the telecommunications industry’s positions are on the broadband issues of the day.  We’ve questioned a group that claims that “openness” or “neutrality” of the Internet is irrelevant, and called out the American Consumer Institute Center for Citizen Research (you gotta love the name — it’s a delicious consumery-sounding word salad… with special interest croutons sprinkled all over the top), who applauded Internet Overcharging as a great thing for customers, except they were packed with lobbyists to really satisfy big telecom interests.

Readers of this site should be well-qualified to engage industry propaganda and consumer misconceptions about the fairness of Internet Overcharging schemes.  You’ve gotten the information you need to effectively educate consumers and expose the sock puppetry.  The entire reason this group exists is because we realized the fight is not over, and we’d need an army prepared to combat the Re-education campaign we were promised back in April.  The battle is fully engaged now, and I’ve been happy to see many of you joining conversations on other sites where misconceptions and sock puppets prevail, and helping to educate consumers with facts, not focus group-tested propaganda.

We need many more of you to do likewise.  If your local newspaper runs an article on Rep. Massa’s bill, or our issues, take a look at the article online and look at the comments being left by readers.  Encounter misconceptions?  Help educate people.  Discover a sock puppet browbeating consumers for standing up for common sense reform of the broadband industry?  Defend the consumer’s point of view and don’t allow anyone to berate you with smug, fact-free answers.  Most are unprepared to respond with actual evidence to back their views, just a load of industry rhetoric and evidence-free claims they have expertise you don’t.

I encountered this myself last evening, when an industry sock puppet alternated between allusions that people who oppose Internet Overcharging were content thieves and pirates or were a “special interest group” that wanted someone else to pay more for their usage.  A few minutes of basic research revealed a fact he failed to disclose — he’s employed by a Washington, DC-based think tank, appropriately located on K Street in Washington.  The same group that tangled with Free Press’ Aaron, who rightfully objected to their proposal to hand $30 billion in taxpayer money over to big telecom for, essentially, anything they want.  They don’t call them “K Street” lobbyists for nothing. Stop the Cap! reader Michael was there as well, also asking for the evidence he couldn’t produce.

Here comes the Astroturf

After a few rounds, the debate ended over his insistence his employer wasn’t located on K Street at all.  Wow.

Moving forward to industry hackery, which is more or less the same thing, only more direct, the opposition was predictable and transparent.

The American Cable Association, which is made up primarily of smaller, independent providers who likely are too small to even face scrutiny by this bill told Multichannel News:

“Consumption-based billing plans will give consumers the ultimate control over how much they spend each month for their Internet access. Rep. Massa’s bill would have a chilling effect on broadband operators offering these types of consumer-friendly options,” said ACA president Matthew Polka in a statement. “During his Senate confirmation Tuesday, Federal Communications Commission member Robert McDowell noted that Americans today are watching a staggering 17 billion online videos each month, a use of the Internet that he said is growing at 16% per month. With these increases coming, Internet usage payment models will allow broadband providers to better manage their networks by imposing higher costs on the heaviest users who often are the ones responsible for slowing speeds for all users on the Internet.”

ACA represents small and medium-sized cable operators. At its convention last month, ACA members made clear to reporters that consumption-based billing was definitely in their future.

Of course, when consumers empower themselves to verify these claims, we discover the manufactured “panic attack” over broadband growth and the “consumer-friendly” choice of overcharging people for their accounts, is not borne out by the staggering profits earned by the industry based on the current pricing model, especially as bandwidth costs continue their rapid decline (along with the investments many companies make to ‘better manage their networks.’)

As we’ve learned, this is much more about managing high profits and investor return, and controlling the threat of online video from eating into the cable industry’s cable TV package business.

At least the ACA is consistent.  They always leave the consumer out in the cold.

Broadband Reports, which has been around far longer than most, has years of experience in identifying what’s fact and what’s fiction.  They pick up on AT&T’s response:

AT&T, who’s conducting metered billing trials in both Beaumont Texas and Reno, Nevada, was quick to respond when asked for comment. “The Free Press Solution advocates for a radical and unprecedented government mandate that will demand that consumers have only one all-you-can-eat pricing model for Internet services,” says the carrier. “Free Press prefers that grandma – who simply wants to download their grandchildren’s online photos a few times a month – to pay for the heavy-using teenager who is downloading HD movies.”

The argument that light users (grandma) “cross subsidizes” heavier users is a familiar — and incorrect — talking point. Taken to its logical conclusion, “grandma” should be paying $3 a month for bandwidth — a service tier you’ll surely never see AT&T offer. Likewise, if AT&T was truly only interested in managing heavy users, they could target them specifically by migrating them to business class tiers or by instituting a high cap only those users would hit. Instead, these metered billing efforts are aimed at impacting all users.

Again, regardless of the ocean of carrier rhetoric on this front, the push toward metered billing isn’t about the users of today, it’s about nickel and diming the Internet video users of tomorrow. Should users begin getting TV content online and find that subscribing to AT&T U-Verse wasn’t necessary, AT&T then has a way to ensure that they can offset this lost revenue with bandwidth surcharges.

The push is primarily focused on pleasing investors, who likewise see the protectionist aspect, but also adore the idea of consumers paying more money for the same product — a product that’s getting incrementally cheaper to supply. There’s a huge push for this coming from the investment community, and as we predicted, the industry’s giants are going to spend millions on farmed data, lobbyists and public relations in order to get their way.

When weighing who actually represents consumers more fairly, Free Press or AT&T, it’s a debate that ends before it gets started.  Free Press doesn’t take a penny of industry money and advocates for consumers and wants faster, cheaper, and more competitive broadband.  AT&T -IS- industry money, which it gives to astroturf groups, wants to accept government money to construct broadband networks and, hopefully, impose Internet Overcharging schemes on them, and has a track record of opposing Net Neutrality and competition, as several communities working towards municipal broadband have come to learn.

Grandma’s wallet is safer with the Free Press.  AT&T wants to take out all of the cash for her own ‘best interests’ and then hand it back, empty.

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Beaumont & Golden Triangle, Texas residents were the first to face Time Warner Cable Internet Overcharging experiments.

For awhile there, it seemed like nobody in the Golden Triangle on the Gulf Coast of Texas was paying attention to the fact their region was the nation’s guinea pig for Internet Overcharging schemes.  How wrong we were.

Stop the Cap! reader Mark, who lives just north of Beaumont in the city of Silsbee, had been fighting a one man battle against not one, but two providers serving his community of 7,400 — Time Warner Cable and AT&T.  Mark may exemplify the average consumer in the Golden Triangle, unaware that their broadband service had been subjected to Internet Overcharging experiments until the bill arrived in the mail.  Both providers have a track record of not always disclosing such schemes to their customers when trying to sign them up for service in southeastern Texas.

Both providers have used the area for pricing experiments, providing paltry usage allowances and charging steep overlimit fees for exceeding them.

Mark’s problems began when he unknowingly set himself up to be overcharged later.  Originally a Time Warner Cable customer, Mark decided to give AT&T’s Elite DSL package a try, primarily because it was less expensive than Road Runner service and supposedly faster as well.  AT&T claims their Elite DSL service in Silsbee provides up to 6Mbps down/768kbps up speed for $35 a month, compared with Time Warner Cable’s Golden Triangle Road Runner, providing (at the time) 5Mbps down/384kbps up speed for $44.95 a month.

“After DSL was installed, we discovered we were too far from the [phone company facilities] to get Elite speed, and instead of informing us about the problem, they switched us to Basic service speed, which is up to 768kbps down/384kbps up, and never bothered to tell us,” Mark writes.

The bill Stop the Cap! reader Mark received showing $73 in Internet Overcharging penalties (click to enlarge)

After Mark’s family felt AT&T was too slow to meet their needs, they ventured back to Time Warner Cable for Road Runner service.  The salesperson offered a “welcome back” discount, and mentioned nothing about the fact Time Warner Cable had implemented an Internet Overcharging scheme on the residents of the Golden Triangle region.  Instead of his old service priced at $44.95 a month for unlimited use, his new standard service was priced at $54.95 a month, and was limited to 20GB of usage per month before a $1/GB overlimit penalty kicked in.

When the first bill arrived showing his family exceeded that amount, it was quite a shock.  In addition to the $54.95 charge for “Roadrunner Residential”, there was a $73.00 fee entitled, “Road Runner Select Plan Additional Usage.”  (They also nickle and dimed him $0.99 for a “Paper Invoice Fee.”)

This was the first time Mark had encountered an “additional usage” overlimit fee, so he called Time Warner Cable to investigate.  Despite what the salesperson had sold him on, and online promotions were still selling to attract new customers, Mark learned for the first time Time Warner Cable changed pricing.  The Golden Triangle Division of Time Warner Cable implemented an Internet Overcharging scheme in June 2008, but only applied it to new customers.  Had Mark never left Time Warner Cable for AT&T, he would have never been an unwilling participant in the experiment to extract an extra $73 from his wallet.

Because he returned to Time Warner Cable after the “experiment” commenced, he was stuck.

Mark was angry.  He contacted the Better Business Bureau (BBB), the Federal Trade Commission, and the Federal Communications Commission to complain about unfair business practices, improper disclosure of the Internet Overcharging scheme, and abusive pricing.

Time Warner Cable's 4/7/09 letter in response to a Better Business Bureau complaint regarding Internet Overcharging schemes implemented in the Golden Triangle, Texas (click to enlarge)

The most productive response came from Time Warner Cable, responding to the BBB complaint Mark had filed.  In addition to giving the standard talking points about Internet Overcharging schemes, Alberto Morales, Southwest Division Customer Advocate for Time Warner Cable, suggested the company would do a better job of training salespeople to disclose “the disclaimer regarding the consumption based billing when processing a new Roadrunner order.”  Morales also issued a one time credit for the $73 in overlimit fees charged to Mark’s account.

Mark recognized the language of the letter for what it was — propaganda from a cable broadband provider looking to cash in at the expense of their customers.  Among the dubious reasons given in the letter:

It’s also recognized that the Internet was not designed to handle the mass amounts of video that are now being consumed, therefore there is a risk that service speeds could slow down dramatically.  Video over the internet is an interesting and growing phenomenon.

So are Internet Overcharging schemes, but few would call them “interesting.”  Using the company’s own logic, Time Warner Cable should not be placing video on their own customer website, much less embark on a grand experiment called TV Everywhere to stream enormous amounts of video at broadband speeds to their customers.  Now that is interesting.  The “Internet brownout” theory of slowdowns and outages can occur when a provider chooses to pocket profits instead of keeping up with required investments to maintain their broadband network.  Time Warner Cable CEO Glenn Britt disputes there is a problem with Time Warner Cable’s network as-is, telling a conference sponsored by Sanford Bernstein in May that, “I’m very comfortable with our plant… I don’t see a need for a massive upgrade.”

By implementing the Roadrunner Select Plan (where a customer can choose the level of speed they desire for their internet use), each level has its own cap of bandwidth consumption allowance per month.

Of course, customers cannot choose the one plan that has been an outstanding success for Time Warner Cable since its inception – the one they have right now (or had in the Golden Triangle prior to the “experiment”), unless they were willing to pony up 300% more for the same level of service, based on the last proposal Time Warner Cable introduced before temporarily “shelving the plan” due to customer outrage.

In the Golden Triangle, the maximum amount of usage was 40GB per month, followed by “the sky is the limit” $1/GB overlimit penalties.

Morales claimed that only “5% of users actually exceed their limit.”  But 100% of the Golden Triangle’s customers were left waiting for the arrival of a “gas gauge” measuring their usage, something they would now be required to check daily if they wanted to be sure not to exceed the paltry level of “bandwidth allowance” they were granted.

Time Warner Cable's follow-up letter of 4/29/09, in response to Mark's complaints that he was never told about the Internet Overcharging plan which subjected him to a 20GB monthly limit and $73 in overlimit penalties. (We assume the June 6, 2009 reference is a typo and should have read 2008) (click to enlarge)

Mark wasn’t sold by any of the arguments Morales was making.  That’s because he read Time Warner Cable’s own shareholder documents, as he had been accustomed to doing since he bought shares himself.  They told a very different story — one he shared in a letter to Morales:

“In 2007, Time Warner made $3,730 million dollars on high speed data alone, and then had to turn around and spend $164 million to support the cost of the network,” Mark writes. “In 2007, total profit on high speed data was $3.566 BILLION dollars.”

He adds, “in 2008, Time Warner made $4,159 million dollars on high speed data alone, and then spent just $146 million to support the cost of the network, a decline from the year past.  Total profit in 2008 on high speed data: $4.013 BILLION dollars.”

Mark realized “it cost Time Warner 11% less money to keep their network running in 2008 than in 2007.”

He also knew Time Warner Cable’s experiment in his city was done where the only alternative was his AT&T DSL service, which hardly offered comparable competition.

In a follow-up letter responding to Mark in late April (after the four city experiment was shelved), Time Warner Cable made it very clear their position was firmly planted in the ground:

“There are no plans to deviate from the consumption based billing plan.”

The company also elected to blame the customer for not understanding that an Internet Overcharging scheme had been introduced in the first place.

“When a customer goes online at www.roadrunneroffers.com, a disclaimer appears on the page with the first sentence including the following, “Subject to change without notice.  Some restrictions may apply.  Installation fees may apply.” This information is in view for anyone to read before proceeding with an order entry.

The fact this kind of disclaimer is, in the company’s view, sufficient notice for implementing Internet Overcharging schemes, is hardly adequate.

“We eventually dropped them again,” Mark writes. “We thought a usable slower Internet was better than a faster one we were not going to use.”

Mark realized Time Warner Cable’s business practices and models aren’t a good fit for the way he feels companies should treat their customers, and he dumped his Time Warner Cable stock and did what so many customers have also chosen to do: use the one word Time Warner Cable did seem to understand during their Internet Overcharging experiment:  C A N C E L.

As long as broadband providers continue to believe that Internet Overcharging schemes are the best way to protect their business models and leverage even more profits from their broadband division, action on every front, from legislative to direct consumer protest and refusal to do business with such companies remain the best course of action.

Stop the Cap! will continue to help deliver that action, along with a consumer education campaign that doesn’t require focus group testing to sell, because it’s based on common sense and not dollars.

Still to Come: Mark takes his battle to AT&T and gets an upper level AT&T retention agent to mark his account “exempt” from Internet Overcharging fees and penalties.  Perhaps you can, too!

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When otherwise intelligent writers get sucked into industry propaganda and advocate against their own readers’ best interests, the blowback can become substantial.

VentureBeat is about to learn that principle firsthand as it bungled a piece about wireless carrier mobile data growth into a confusing article claiming “Net Neutrality” will be used by AT&T and Verizon to “drive Sprint and T-Mobile into the ground.”

What?

Authors Tim Chang and Matt Marshall then journey across the landscape of mobile data networks in the United States, regularly stopping to hammer home the requirement for limits on usage, blaming it mostly on online video.  The factual potholes litter the landscape, unfortunately:

What that means is the country’s major wireless carriers — Verizon, AT&T, Sprint and T-Mobile — are going to have to abort the all-you-can-eat mobile data plans most of us take for granted. It’s just getting too costly for them to give us the service on their networks for the pricing they offer today.

Video 'is the big problem' justifying Internet Overcharging for wireless mobile data, yet one of the nation's largest providers sees no problem providing its own video service on its network.

Actually, none of these carriers provide unlimited all-you-can-eat mobile data plans.  They either explicitly or implicitly (buried in the fine print) limit consumption, usually to 5GB of usage per month.  What happens beyond that does vary by carrier.  The big four impose overlimit penalties at punishing prices.  Some smaller carriers, like Cricket, simply throttle your connection or suspend service on a case-by-case basis.

The reasons for these limits:

• Limited spectrum (the frequencies the provider operates on) may not sustain demand using currently available technology and network design. Could additional spectrum, new technology standards, and more localized delivery of data reduce network congestion?
• Lack of competition.  The two primary carriers, AT&T and Verizon, have essentially provided nearly-equivalent pricing.  Their robust coverage areas make either a natural choice for most users who travel.  Sprint and T-Mobile have larger gaps in coverage.  Spectrum auctions, which is how carriers obtain new blocks of frequencies, raise huge sums for the government, but those costs inevitably do get passed down to customers.
• Psychological: Consumers accustomed to limited wireless broadband from the outset are less likely to complain if it is taken away later.
• Economical: Data packages with low limits produce profitable results, with the future possibility of earning even higher profits from subscribers who routinely exceed them and pay penalties and fees, or for carriers to create and market “additional usage packs.”

Jon Metzler, an industry consultant who has conducted research for the CTIA, says he’s heard estimates that a YouTube video of 3-5 minutes costs $1 for a carrier to handle. At this rate, a carrier would be killed when a typical user streams a mere two videos a day. That day is coming soon, because of the race by the smartphones to offer these cool video services.

Of course Metzler works for the CTIA-The Wireless Association, an industry trade and lobbying group.  They have a vested interest in pushing the “bandwidth flood” theory to preserve carrier pricing models.  The factual basis for this YouTube assertion has been challenged as well, once even by a VentureBeat reader.

Verizon doesn’t see wireless mobile video as the harbinger of doom — it sees it as a feature it can rake profits from, charging $13-25 a month extra for access to VCAST Mobile TV, a Verizon Wireless portal filled with video clips and streams.

It’s always ironic when carriers complain about the impact of services like video, while also heavily marketing their own services that, by their nature, impact their network.  YouTube bad, VCAST good.

So far, it hasn’t really been enforced, or hasn’t mattered much because very few users have hit that ceiling yet. But the carriers charge extra if you want to use more. “Net neutrality,” the concept that governs access the Web, whereby anyone anywhere can access any Web site anytime, won’t have a chance in wireless.

It has been enforced.  Horror stories of wireless bills running well into the tens of thousands of dollars are becoming more common, as customers end up reading marketing copy that claims usage is “unlimited” and then defines it in a sea of fine print as really amounting to 5GB of usage.  Many customers have no idea what a gigabyte represents, either.  The keyword in VentureBeat’s quote is “yet.”  As bandwidth usage continues to increase because of the growing size and scope of online services (video among them, but not exclusively so), more and more customers will find themselves paying penalty overlimit fees for using “too much.”

Net Neutrality has nothing to do with this discussion except if/when carriers impede access to content or exempt their own services (like VCAST) from any usage limitations or allowances.

But conveniently, it does give them a nice way to drive Sprint and T-Mobile into the ground. Those two carriers have weaker financial resources, and so won’t be able to withstand the costs of subsidizing all-you-can-eat data plans as long.

Neither carrier offers all-you-can-eat data plans, so the argument is moot.  The more likely scenario, should providers continue under the “barely regulated” principles of oversight we’ve had for at least the last decade, is that there will be additional mergers in the marketplace.  T-Mobile uses the same wireless network standard AT&T does, and Sprint would be a natural fit with Verizon Wireless, both using the CDMA standard.  Regulators looking the other way could easily reduce competition further with additional mergers.

It’s clear net neutrality won’t last. Think of it this way: Wireless bandwidth is becoming as valuable and critical as basic electricity or gas utilities to our home. Yet nobody expects to get all you-can-eat electricity or gas. Why should broadband be any different in the long-run?

More nonsense.  Net Neutrality doesn’t belong in this topic at all.  The old power and gas chestnut is back again.  The one service that is most comparable to this subject, and the one the propaganda/Re-education campaign never addresses, is the telephone business.  Telephone calls travel across both wired and wireless networks as data packets, just like Internet services do.  Wired telephone companies have provided local flat rate calling for decades, and both wired and wireless carriers are moving into flat rate calling for local and long distance calling.  The authors advocate the direct opposite direction for Internet service.  The reason, of course, is that carriers are trying to exert new revenue streams from their broadband services with Internet Overcharging schemes.

But take wired broadband as a proxy, because it has been studied more. The marginal cost of delivering wired broadband is projected to decrease roughly 10 percent a year, in terms of total costs per GB, according to a study by Stuart Taylor, leader of the North American Mobile segment within the Cisco Systems Internet Business Solutions Group (IBSG). This figure factors in the additional investment needed to keep networks growing (capital expenditure and operating costs). Broadband revenues per GB are declining in the order of 15 percent per year, however. When you combine the cost and revenues in broadband, you get a breaking point in the next 5 years or so, Taylor predicts.

This was outright disingenuous.  The authors admit that the costs for both the delivery of bandwidth and the bandwidth itself are declining, but that somehow the “capital expenditures and operating costs” are going to cause a breaking point?  Exactly how this article never explains, and the link provided to back up an assertion about wired broadband ostensibly made by Taylor never appears in the article being linked.

The truth can be found in the financial reports of most wired broadband providers — profits are up, costs are down, and life is good.

For mobile data, “killer apps” often end up meaning “bandwidth-killer” and “profit-killer”: namely, mobile streaming video today, and soon online multiplayer mobile gaming. Not to mention always-connected social apps like Facebook mobile, Twitterberry and SocialScope, which will often have users receiving background updates from hundreds if not thousands of contacts.

One can rapidly lose confidence in the assertions of an article filled with this many factual errors.  Mobile video certainly isn’t killing the profits of Verizon Wireless when they are marketing VCAST subscriptions and pocketing much of that revenue.  One would think if these concerns were true, Verizon Wireless would be in a hurry to exit the business.  Multiplayer mobile gaming typically relies on very compact “control data” to indicate player movements and actions over a network that is already slower than wired provider networks.  The smaller the amount of data, the faster it can reach other players. The amount of data actually consumed by many of these games is much smaller than many people think.

Twitter moves individual messages so limited in size, they rival text messaging, a mobile phone product so front-loaded with extra fat profits, especially for those with no “texting” service plan, the neighborhood loan shark wouldn’t think of charging those kinds of rates.  The amount of bandwidth consumed by most of these kinds of applications carries far less impact than the authors want you to believe.

In some industries, even pricing is hard to change. The Internet has created a giant tidal-wave of market value destruction in several industries: print, movie, and music. Billions of dollars of value from companies in these industries have been shed, and it will never come back. This is great for consumers, but not great for the content providers. The providers of wireless bandwidth don’t want this to go the same way. If they stick to low pricing, they’ll surely ask themselves: “What the hell are we doing?”

“Blame it on the Internet” is the new Blame it on the Bossa Nova.  The authors ignore the run up in valuation of many of these companies as part of the enormous stock market bubble and accompanying merger mania that this country experienced over the past decade.  Large corporate media became larger, with higher and higher values assigned to companies, and more and more debt carried to acquire them.  Broadband providers are not comparable to content providers here.  Content providers create and distribute the content that drives consumers to do business with the broadband providers in the first place.  Without that synergy, we could all live happily ever after with dial-up or low speed broadband.  Quality broadband content drives subscriptions to broadband service providers.

What broadband providers are really arguing for in all of this is a justification for them to be paid twice — once by consumers subscribing to their service and then a second time by content providers who deliver their content to those consumers.  It’s the equivalent of making you pay for making a long distance call -and- the person called also has to pay.

The million dollar answer to this dilemma is simple.  Broadband providers can improve their networks and market extra speeds to consumers looking for a faster online experience.  They can individually license content that doesn’t exist online and provide it to subscribers and split the revenue with the content owner.  They can market support services to help consumers use their service, and they can create customized bundles of services which promote loyalty for a consumer’s online, telephone, and cable TV business.

The shining beacons for the wireless industry are the cable companies: They’ve long offered differentiated pricing plans, packs like ‘basic,’ ’silver’ and ‘gold.’ If you talk with content company MTV, you’ll find out they are insanely jealous of a cable company like Comcast.

There is not a shred of evidence to back this up either.  MTV doesn’t believe in differentiated pricing plans, particularly on the cable side.  Their contracts with cable operators routinely demand the operator place their owned networks on the standard basic tier.  They have no patience for a-la-carte pricing of their various networks, where consumers can pick and choose the ones they wish to receive.  The only “silver” and “gold” they care about is in the money they collect from every cable and satellite subscriber who is forced into paying for their networks whether they watch them or not.

After everything was said and done, readers had an opportunity to share their views, and many did not like what they saw.

• “You lost me when you compared wireless network bandwidth with electricity and gas.”
• “There is no analogy to the utility world: it’d be like paying a higher price for drinking water and a lower one for shower water out of the same pipe; just because drinking water delivers more value per liter.”
• “You clearly don’t understand what “net neutrality” means.”
  
• “Hint: pricing is born of what the market will bear.”
• “Since it wasn’t mentioned in the narrow scope of this article, how do the insane profit margins from ever-so-popular text messaging play into supporting wireless data networks?”
• “It pains me when techies mix half baked economics into an analysis that is predisposed against a carriers. Oh the headaches.”

We don’t either.

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The United Kingdom is the latest country to face the downside of arrogant Internet service providers throwing hissyfits when people actually use their broadband connections.  When broadband service providers entice investors with promises of fat returns, assuming most people won’t actually use those high speed connections for anything except web page browsing and e-mail, they get mighty upset when they catch their users watching online video instead.

One of the benefits of broadband is that it provides fast speeds to let people do more than what they used to with dial-up access.  That happens to also be one of the major selling points to get customers to part with a significant sum of money each month for the service.

They just don’t want you to use it.

British Telecom (BT) is the latest ISP to complain that the BBC’s iPlayer, which allows British residents to stream TV and radio programming on demand, and YouTube are using their broadband pipelines, but not paying them anything to do so.

That conveniently ignores the fact that their customers throughout the UK are paying them to deliver that connectivity, providing them with a handsome return.

Internet Service Providers not content with earning money from one side, now increasingly want a piece of the action on the other.  It’s the equivalent of making a long distance call, but asking both the person calling -and- the person called to pay a fee.

Since the companies providing the content consider the payment demands ridiculous, ISPs have started singling out certain types of traffic on their network and slowing it down, ruining picture quality and annoying their customers trying to access the content.

BT implemented a “Fair Use” policy for one of their broadband packages which lets them cut the speed of online video from the normal 8Mbps down to 896kbps between 5pm-12am each day.  BT claims that’s enough to watch online videos, but that very claim would negate any benefit from slowing down the connection.  How many TV shows do people stream at the same time on the same connection?

In fact, BT’s policy does impact on the quality of the video streamed to the viewer.  The iPlayer is capable of sensing your broadband speed and reducing the quality of the stream to match the speed you have available.

Of course, should the BBC agree to pay BT some sort of transport fee, they might find their way clear to take the speed bumps out of their way.

A founding principle of Net Neutrality is to treat online content equally when transporting it.  Your stream from the BBC should not be hampered while a stream from someone else is not, just because they paid extra.  Are bandwidth costs increasing?  No, they are decreasing.  There is no compelling argument to prevent providers from keeping up with demand.  If they want to earn money from content, they can produce their own and provide it to subscribers on equal terms.

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Cisco is back with their latest report about the “coming exaflood” set to alarmist headlines in the press.

In the spring, the prevailing theory of one “research group” was that bottlenecks would ruin the net’s usefulness by 2011.  That was the one adopted by Time Warner Cable’s unsuccessful efforts to convince residents in four cities that Internet Overcharging was a good idea.  Last month, Australian breakfast television viewers were dropping muffins back on their plates when they were told the Internet was going to be subjected to a massive traffic jam by 2012.  The date of the potential online apocalypse has been pushed forward to 2013 this month, the last year Cisco covers in their data model.

Of course, all such “exafloods” can be mitigated to some degree by purchasing Cisco products and services to handle the tsunami of traffic.

Companies that have a vested interest in doing such studies, in this case to help spur upgrades, always casts suspicion over the results.

The results of those studies are often sold to advocacy organizations (if not quietly funded by them outright) to integrate into lobbying campaigns.  In the push for “exaflood” panic, some of the lobbying groups seek government investment in broadband infrastructure on behalf of their clients, others want to use the Internet growth argument to prove there is a need to engage in Internet Overcharging to finance construction of improved networks (even at a time when some of those companies enjoy billions in profits and have systematically reduced investment in maintaining and expanding those networks).  Cisco’s interests may be closer to home — generating revenue for themselves.

One man who doesn’t have anything to gain from the results is Andrew M. Odlyzko, who runs Minnesota Internet Traffic Studies at the University of Minnesota, an ongoing project to soberly analyze Internet growth.  Unlike others who have repeatedly warned about Internet brownouts, crashes, and slowdowns, Odlyzko doesn’t have a “dog in this fight.”  Once you strip away the self-interests many others have in promoting an “exaflood” agenda, the simple fact remains: with growth in demand also comes growth in new technology and capacity to meet it.  Odlyzko continues to point towards slowing growth.

“In spite of continuing stories about a flood of video overwhelming the Internet, global wireline traffic shows no sign of moving up from its approximately 50 to 60% per year growth rate. If anything, the trend lines point down, not up,” according to the results posted on his website.  Cisco had to echo Odlyzko’s predictions during this past year, but the company blamed the global economic downturn in their report for the decline in the growth curve.

The Economist also debunks the panic attacks:

Talk of exafloods is nothing less than scaremongering and has no bearing on reality, even though video traffic is increasing substantially, says Grant van Rooyen of Level 3, a company based in Broomfield, Colorado. It operates network backbones that carry around a quarter of the world’s internet traffic. “We estimate that 50-60% of traffic today is video, but it’s been that way for the last three to four years,” he says. “We really don’t think we’re going to see a massive failing of the infrastructure.”

Level 3 has been regularly upgrading its capacity, and will continue to do so, says Mr van Rooyen. “This isn’t like building a toll-road with an inflexible infrastructure,” he says. “In the network world, we are able to scale infrastructure and capacity in real time.” When bunches of optical fibres are laid in the ground or on the seabed, for example, not all of them are immediately used, or “lit”. So the capacity of a link can be increased by lighting more fibres. Even when all the fibres are lit, capacity can be further increased by upgrading the equipment at each end of the fibre. Technological progress means the amount of information that can be squeezed down each fibre is steadily increasing.

Back in 1995 Bob Metcalfe, an internet guru and the founder of 3Com, a network-equipment maker, predicted in a magazine article that the internet would suffer “gigalapses” and grind to a halt by the end of 1996. He promised to eat his words if it did not. His gloomy prediction was proved wrong, and in 1997 he duly put the offending article in a blender with some water at an industry conference, and ate the resulting pulp with a spoon.

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Marcel Boyer

Marcel Boyer penned an opinion piece for Canada’s Financial Post this week attacking the virtues of Net Neutrality as short-sighted and potentially devastating to the Internet if codified into law.

Boyer, in a piece called “Don’t Throttle the Net,” advocates precisely that, applauding broadband providers for traffic shaping, which artificially slows non-preferred Internet traffic delivered over broadband networks.

There are many facets to the net-neutrality issue, including pricing and broadband allocation, which are central. Proponents of net-neutrality call for government intervention and regulation to prevent broadband providers from prioritizing or interfering with the data that flows in their networks. On the other hand, broadband providers are arguing that even though they continue to invest in their networks, their customers would still be affected by congestion during peak periods in the absence of traffic management measures. Other large networks face the same type of issues. New applications (video streaming and VoIP, among others) require a high quality of service assurance, making a more reliable network necessary.

Boyer delivers the usual talking points about bandwidth pricing and competition that Stop the Cap! readers are all too familiar with:

Making it illegal for broadband companies to offer a diversity of choices would destroy incentives to invest continually in improved Internet bandwidth, quality and security. Net-neutrality legislation would unnecessarily regulate a free and competitive market when there is no real evidence of consumer harm.

Let network owners and operators as well as service providers differentiate their offerings and price them the way they choose. Customers would benefit from more diversified offers by selecting the ones best suited to their needs. In such a competitive context, network operators and service providers would routinely aim to satisfy demand for Internet services most effectively while simultaneously aiming to manage the growth in peak demand.

It is to the advantage of consumers to allow competing vendors to experiment with various price and service combinations. From this discovery process, a portfolio of winning offerings will emerge. As long as competition is present and sufficiently intense, and assuming the level of information available and provided to consumers enables them to make informed choices between the various offerings, regulation of price schemes is neither necessary nor desirable as it would stifle innovation and obscure the best offerings and pricing schemes.

From an economic point of view, policies that would restrict the ability of broadband providers to manage their networks are likely to do more harm than good. Regulation of prices and offerings, products and services, has generally resulted in higher costs and lower benefits, especially when competition is present. The complexity of market dynamics poses particular problems in emerging industries. Instead of adopting regulations that could induce unwanted harmful effects, it is preferable to mandate the Canadian Competition Bureau to investigate when there is evidence of abuse or unlawful actions from broadband providers.

The impetus for the opinion piece was this week’s news highlighting Canada’s rapid decline in standing among top industrial nations’ broadband services.  The original report specifically called out the impact of draconian usage caps and throttles which reduce usage, limit innovative high bandwidth services’ entry into the Canadian market or bypass it entirely, and the potential economic and competitive impact on Canada’s economy as a whole.

Boyer’s premise presupposes there is a healthy competitive marketplace for broadband in Canada, a conclusion ridiculed by many.  Most Canadian cities have two primary choices for broadband, a usage capping phone company or a usage capping cable company.  Smaller independent providers typically resell bandwidth obtained from Bell or other similar entities at wholesale rates.

Despite pricing more than $15 a month higher in Canada than in the United States, and healthy financial returns among most of Canada’s providers for their broadband divisions, the “continual investments” in bandwidth Boyer claims are hardly eye popping.  Incremental speed increases, usually accompanied by rate hikes, and the imposition of often paltry usage caps has artificially reduced consumption, which also reduces the need to improve infrastructure.  Indeed, while fiber optics deployment is becoming increasingly common in the United States, it is not nearly as common in Canada.

Canadians find little diversity in pricing and service levels in a marketplace that nearly always imposes limits on consumption, doesn’t provide robust access in rural communities, and typically delivers slower speeds than their counterparts in the United States are providing customers today.  East York (near Toronto) residents, for example, can obtain “blistering fast” 10Mbps service from Rogers for about $60US per month, limited to 95GB of consumption.  Overlimit fees are $1.50/additional GB.  Bell offers “speed of light” Internet access at “up to 16Mbps” for $82.95 a month (100GB usage cap – $1.00/additional GB, billed in increments of 100MB, $30 monthly maximum applies.)

Head across Lake Ontario south to Rochester, NY and Time Warner Cable provides “Turbo” service offering 15Mbps, currently without any usage cap, for $50.00 a month.  Verizon FiOS pricing provides 20Mbps service with no cap for $54.99 a month.

In the absence of significant competition, duopoly-style pricing usually results, and that’s precisely what has happened in Canada.  Allowing the “wild west — hands off” approach Boyer advocates merely guarantees more of the same.  Providers in the United States, already enjoying phenomenal returns, would love to adopt the Canadian approach.  They’ve already been increasing rates, decreasing investment in their network infrastructure as a percentage of revenue, and enjoying the benefits of reduced bandwidth expenses.  The only components left are usage caps and throttling broadband applications they don’t own, control, or partner with.  Experiments are being attempted on some of these fronts now.

The end result: even higher profits and locking broadband into a rationed, expensive, and slow backwater.

Boyer should know that wired broadband competition beyond the aforementioned duopolies in most Canadian markets comes only from independent ISPs typically reselling wholesale bandwidth (which is now also being capped) and a few independent providers who may wire limited areas in large cities.  There will never be a free market paradise in cable television – the traditional one company per city approach is well rooted throughout North America.  Wireless is even more heavily capped and expensive than wired service.  And telephone companies, outside of Verizon in the United States, are loathe to aggressively deploy fiber optics unless required by local market conditions.

Broadband throttling and capping, particularly to discourage online video consumption, comes aggressively when companies have a vested interest in preventing erosion of their traditional video programming business model.  Both Rogers and Bell are in the business of delivering television entertainment to Canadians.  Should a sufficient amount of that entertainment be available online, some consumers may dispense with the video package and rely exclusively on the Internet.

Speaking of vested interests,  the Financial Press had plenty of space to print Boyer’s article, and even concluded it by noting his title:

Marcel Boyer is vice-president and chief economist of the Montreal Economic Institute.

Apparently things got throttled at that point, because they forgot to include one additional affiliation Boyer holds: Bell Canada Professor of industrial economics at the Université de Montréal.  How ironic.

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If you’re a broadband provider throwing a money party by charging top dollar for usage based Cap ‘n Tier rationing plans, why not spread some of that money around?  One company that wants a piece of the action is Highdeal, a German owned company that wants to sell providers the billing system to extract pay-per-byte-bucks from customer wallets.

Highdeal’s chief technology officer, Fergus O’Reilly talked to Telephony Online about how they’re going to market their products for usage based billing.

On moving beyond flat-rate broadband: Operators are realizing that the flat-rate model we had for broadband is no longer tenable. It’s hard to roll out [usage-based models] when subscribers don’t know how much a gigabyte is or what the term bandwidth means. Some [providers] have done better than others. In the Canadian market, for example, it’s getting to be accepted. Rogers has done a good job informing customers about their usage and charging them for overage with cap-and-overage-type schemes. In the US, it’s been a little more difficult. Time Warner Cable let slip that they were doing something and got negative press for it. It became difficult for them to roll that out — one step forward, two steps back. But overall throughout the market, pretty much everyone is equipping themselves with the policy management systems they need to measure and qualify bandwidth usage. The flat-rate model for broadband will change, and we will pay depending on usage, whether that’s measured in [quality of service], absolute bandwidth or a number of those factors.

The system that exists today (that is already very profitable) is always defined as ‘yesterday’ and something ‘we need to move beyond,’ while the highway robbery of overpriced tiers and overlimit fees is the ‘only tenable way forward.’  Not really, of course.  But this is an example of a company with a vested interest in that outcome — namely, a product/solution to sell that would not exist without these kinds of billing schemes.  They garner favor in industry circles by helping to throw the ball around, hopefully establishing the premise that usage based billing is conventional wisdom.

It’s tougher to sell cap-and-overage schemes. Unfortunately many of the charging systems operators have in place are relatively simplistic. And moving to these more sophisticated schemes — time-shifting and proposing a bandwidth boost — many times the blocking factor is, ‘Well, I don’t know how to do that.’ So we propose a very flexible charging system that makes that easy so you can have these dynamic business models that will make more sense for the consumer.

Actually, developing a billing system that pilfers the wallets of consumers, no matter how complex or simple, will not make any sense for customers.  What Highdeal proposes is a billing system that allows providers to rob customers in a sophisticated way, instead of the street mugging wallet extraction approach.  But whether it’s the Bernie Madoff system of billing, or the guy with the bat in the dark alley, consumers are still going to be victimized, and they’ll know it every time they get the bill.

Is Highdeal a raw deal entirely?  No.  Some of their models might actually represent some real world solutions to network congestion, particularly one that could communicate with bandwidth providers and software to schedule bandwidth intensive, but non-critical applications during off-peak usage times.  One such proposal would signal an online backup program to launch when network congestion is reported low by a provider.  Another model might allow consumers to pay more for faster connections to complete individual tasks.  Paying reasonable prices for reasonably faster speeds is not an issue for Stop the Cap!

But companies that buy into industry theories and claims in order to help score a sale have a considerable conflict of interest in being considered a credible source on what consumption and billing models are workable and which are not.

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Cisco, a networking equipment and service provider, has announced a joint effort with Flash Networks to provide a new Intelligent Traffic Management “solution” to “maximize data revenues, network utilization, and subscriber satisfaction.”

The “solution” is being sold primarily to wireless bandwidth providers to help manage the “explosion of mobile data traffic” expected in the next five years.

“Our successful partnership with Flash Networks enables operators to meet the challenge of maximizing revenues while protecting network assets by providing tiered services that ensure fair bandwidth usage and protect the network from traffic congestion,” said Sergey Belonozhko, Area Sales Manager for SP at Cisco.

The Intelligent Traffic Management solution supports personalized data plans where service providers can notify subscribers when they are near usage quotas, provide a temporary bandwidth boost, offer data plan extension to support additional IP services, or enable subscribers to set personalized usage caps that can be updated in real-time based on personal financial limits. This same solution is used to both insert targeted advertising based on subscriber browsing patterns, and to block inappropriate content for safe browsing.

It is being touted by Cisco as a way for operators to implement service tiers to maximize revenue while at the same time reducing traffic load on networks, reducing the capital investments required to grow them with demand.  Customers end up with “gauges” and warnings to get them to reduce their usage, or give the operator an incentive to up-sell the customer to another tier of service (or make the customer purchase additional bandwidth.)

A nice tidy arrangement for all concerned, except the customer, of course.  Cisco has been one of the more active “exaflood” promoters, with their talking points even turning up on Australian breakfast television.  They promote the “Internet is over-flooded and will brownout” scare tactics to establish that premise in the minds of consumers, sell the “solution” to help manage the traffic growth, give operators the tools to help them raise prices, limit usage, and provide gauges to customers to get them to be paranoid about their usage, and then take their earnings to the bank.

Consumers get notification that their access has been capped, are told to recall the mainstream media stories about Internet congestion, and go along with the plan.

It’s part of the grand scheme for uninformed customers to simply accept higher prices and service quotas and limits, all while companies providing the bandwidth earn higher revenue than ever.

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The nabobs of negativism, the panic-stricken shrieks about the Internet becoming full, the fear-mongering about broadband pipes becoming clogged because the kid down the street is running torrents again.  We’ve heard it all before, and as we’ve always said, technological advancement always seems to find a way to resolve the “crisis in bandwidth” before big businesses resolve it themselves by rationing, capping, or overcharging for access.

And so it has again.

AT&T, in association with Corning and NEC today smashed all prior records of fiber optic transmission capacity by successfully transmitting data at 114 Gigabits per second over a single strand of fiber for up to 580 kilometers over an optically amplified link.  The standard fiber optic cable AT&T used for the test contains 320 separate optical channels, meaning through the use of just a single optical cable, it is possible to sustain a transmission rate of 36480 Gigabits per second!

That exceeds by 25% the last record setting transmission rate test and effectively doubles the distance the cable can maintain data transmission rates without unacceptable loss.

AT&T announced the results as part of their technological solution for broadband growth — deploying 100 Gigabit networks across the country to accommodate growing demand for the Internet.

From an AT&T news release:

“IP traffic on the AT&T network is growing at about 45 percent year over year, so groundbreaking research efforts like this are critical to our ongoing efforts to stay ahead of our customers’ rapidly evolving and expanding needs” said Peter Magill, executive director of optical systems research, AT&T Labs. “In setting this new bandwidth capacity record, we used a transmission method that enables better management of the interference that can result from operating 320 wavelengths over a single fiber-optic link. To do so, we used a new way to generate such signals and a new signal-processing algorithm to receive them again. We’re looking forward to further testing of these techniques and the additional bandwidth advances that may come from it”

The laboratory link was composed of seven spans, each containing a single-stage Erbium-doped fiber amplifier (EDFA) for both the C- and L-band and a section of Corning® SMF-28® ULL fiber, an ITU G.652 compliant ultra-low-loss optical fiber.

“NEC has been relentless in pushing forward-looking research and development of advanced optical networking technology to help carriers meet the growth in network traffic” said Ting Wang, department head, Optical Networking, NEC Labs America. “This exciting achievement demonstrates the feasibility of packing 320 channels on one fiber with 25GHz spacing”

“There are still several challenges, including maturity and cost efficiency, to overcome before the deployment of such a high transmission rate over a single fiber, but we are definitely closer” added Milorad Cvijetic, vice president and chief technology strategist, Optical Network Systems Division, NEC Corporation of America.

“As the foundation of telecommunications networks, optical fiber innovation can help enable carriers to cost effectively keep up with ever-growing traffic demands”, said Barry Linchuck, director of marketing, Corning Optical Fiber, Corning Incorporated. “Corning’s recent innovation of ultra low-loss, high-performance fiber enables network operators to achieve higher capacities per fiber at the operating distances they need”

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Todd Spangler, who we seem to spar with on a semi-regular basis here, has another blog entry up expanding on his views of why Time Warner Cable’s metered pricing experiment failed.  Of course, completely missing from the list is the fact most customers do not want it.  That’s dangerous to say in a cable industry trade publication like Multichannel News, however.

Todd still thinks it’s all about how they did it, not the fact they did it in the first place that created what even he admits was a “category five” storm of backlash.

Clearly, the company’s idea — given that these were trials — was to have the flexibility to tweak pricing, adjust specific cap levels, etc., and not have these things set in stone. But the ad-hoc communications on the usage trials was perhaps the biggest reason this blew up.

The only “trial” here was on the customer, and the jury was stacked with Time Warner Cable executives who already found themselves innocent of extortionist pricing and market abuse.  The “tweak” most customers wanted was none at all.  What was set in stone, until the groundswell finally achieved temporary results, was that the caps were coming no matter what customers had to say.  Just ask people in Beaumont, Texas.

Keep it simple! At most there should be three: low, medium and high (unlimited) usage plans.

Low usage plans with credit card like overlimit fees, medium usage plans that demand customers ration their Internet allotment for the month or face those same outrageous overlimit fees, or the “high” unlimited usage plan that everyone now has for around $40-50 a month that was soon to be priced at $150 a month.  A 300% rate increase.  What’s not to love there?

Customers haven’t had to care before, and suddenly they’re being asked to pick from a (complicated) menu of options lacking this critical information. The cable operator has promised to release a bandwidth “gas gauge” to subscribers but it still isn’t available.

This industry’s out of touch-ness is complete when they miss the fact that the very presence of the “gas gauge” is the problem, not that there isn’t one there now.  It’s the equivalent of ExxonMobil complaining that consumers don’t yet have an ATM machine in their home to withdraw all of the cash they need to give to them when they feel a massive increase in gas prices is justified.

As I’ve written before, TWC — as the first major U.S. mover on this front — is bearing the brunt of the challenges in moving to consumption-based billing, which, again, is the only fair and reasonable option as Internet bandwidth consumption continues to skyrocket.

It wasn’t any more accurate the first time you said it.  Time Warner Cable deserves everything they got, and will get, from attempting to generate massive new profits for a product that is already a major profit producer for them under the current price formula.  Fair and reasonable is making a healthy profit, as they are doing right now.  Unfair and unreasonable is to claim that “exafloods” and their costs demand consumers face up to a 300% rate increase for the exact same product, as the same company tells investors it is making a very healthy profit as-is, doesn’t have a capacity problem that requires any fast deployment of DOCSIS 3 upgrades, and reports their bandwidth costs are declining (along with the percentage of investment they are willing to spend to naturally grow their own network).

I don’t necessarily buy into the theory that Time Warner’s trial was all about stopping Internet video — it’s always more about maximizing their profits, using any excuse they can find to justify it, factual or not.  But this industry has a history of underestimating consumer anger about monopolistic or market abusive pricing, and legislators’ willingness to move to the regulatory route to rein it in.  Cable does so at their peril.  I’ve seen this before back in the early 1990s just prior to the 1992 reregulation legislation that would become the only bill to overcome President George H.W. Bush’s veto pen and become law.  We’re headed down the exact same road all over again.

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The same old fundamental misunderstandings about the Internet that got former Sen. Stevens into so much trouble with his pronouncement that the Internet was a “series of tubes” that were being filled up by commercial providers, which is somehow why we cannot be for net neutrality, comes back time and time again with alarmist rhetoric about exafloods, brownouts, global data slowdowns, and the risk of the collapse of the Internet itself.

Just you wait and see.

And folks have been waiting and seeing since 1996:

• 1996: Full Capacity
• 1997: Overheated demand
• 2002: Soon be a shortage
• 2002: Shortages could start appearing later this year
• 2007: Internet could run out of capacity in two years
• 2008: Internet to hit capacity in two years

How can we be saved from the broadband collapse, drowning in exaflood tidal waves and zetaflood cataclysms when the funeral service was held more than a decade ago?

Using fear to advance a corporate or marketing agenda is hardly a new concept.  Unless we do “x,” “y” will happen and ruin your life has been used along with alarmist rhetoric to justify virtually everything.  For broadband usage capping and metered service, it’s front and center.  In fact, wherever service is lousy with limitations and someone has their hand out looking for more of your money, you can be sure the “clogged tubes” argument is going to be a big part of the snowjob.

Snow isn’t a big problem in Australia, but that doesn’t stop the blizzard of nonsense from showing up down under, where the Internet is a particularly lousy experience for Aussies forced to endure draconian caps from monopolistic providers.  Exceed your caps there and your connection slows to near-dial-up speeds.  Never trust a guy in a ludicrously loud shirt, nor someone who channels Sen. Stevens in calling the whole thing a series of “pipes.”  Maybe Pete Blasina got the shirt from Cisco, who he also conveniently notes is supplying switches to save us from impending doom.  They also happened to supply him with a lot of his talking points.  The bit about YouTube traffic in one month equaling Internet consumption in 2000 came from them.

Duncan Riley (who was the source for the history lesson on exaflood threats) does a fine job debunking the same nonsense we have to endure in North America.

The story is nearly always the same: telcos and infrastructure companies fund research that finds that the latest trend online at the time (audio, video, HD video, P2P, Sykpe and social networking are some previously used) is too much for the Internet to handle. The reasons behind the studies are usually variations on a theme: Government regulation or Government financial support. Which is where we start our story on how Sunrise played a role in the latest outbreak of industry astroturfing.

But how did a primarily American focused astroturfing campaign end up be served to Australians on breakfast television?

The outbreak of “Internet is full” stories this time was remarkably subdued. The last research paper was released in November 2008, which might account for part of the silence, although Sunrise says there’s a new report coming (the contents year to year ultimately deliver nearly the same doom and gloom message.) Given strong coverage of the 2007 outbreak as being an astroturfing campaign, news rooms may have been a little wiser this time round.

Duncan doesn’t realize the Internet is Full Crisis ’09 started last week with the latest Nemertes report we debunked a few days ago as a whole lot of industry-sponsored nonsense.  But it’s remarkable the astroturf campaigns have enough industry cash behind them to push this stuff worldwide.  Duncan’s piece links some other outbreaks of astroturfing so check it out.

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StoptheCap! must organize a Truth Squad of volunteers willing to confront sloppy journalism, lazy reporters, and Kool-Aid drinking consumers hoodwinked into actually believing that metered pricing is about saving them money instead of fattening broadband provider profits.

Your job: To find press accounts that might as well have been rewritten industry press releases, those that adopt the premise that the provider is pushing, and exposing industry talking points that go unchallenged in the media.  Then the call to action goes out to bombard the reporter with protest e-mail, confront the bias in the reporting in letters to the editor, and pro-consumer pushback in comment sections where the public can learn some facts for a change.

The Kansas City Star utterly failed in its report on Saturday, lapping up industry talking points and presenting them in a myopic view of the future of broadband.  Reporter Scott Canon quoted opposition from one public statement on the Free Press website, one sentence from a group called Knowledge Ecology International, and a sentence from a press release from Rep. Eric Massa (D-NY).  After that, he paddled around the pool with one industry talking point after another.

Experts say that changes in the way people use the Internet — and the way some gorge on its endless cache of data — mean current pricing systems could go the way of your dial-up modem.

A metered pricing system has been in effect in Lawrence for four years. While Sunflower Broadband has heard some complaints, for most Web surfers it has kept monthly charges flat. Some users have seen steep cuts in their bills, while relatively few have had to pony up extra bucks to devour gigabytes.

In the end, said the CEO of the Internet service provider in Lawrence, “it’s a matter of fairness.”

Fairness is a foreign concept in this piece.  What Canon couldn’t be bothered to point out was the CEO of Sunflower Broadband also happens to be the president of the American Cable Association, an industry trade organization and lobbying group with a vested interest in this subject.  What he also omits is that Sunflower Broadband is an actual example of what happens when a community ends up in a broadband backwater, where competition does not provoke a better level of service.  Lawrence residents have not been thrilled with the competition in their community, pointing out DSL is not an option for many people who live too far away from the central office.  Service and restrictions have been so bad, a non-profit organization, the Lawrence Freenet, was established to try and provide wi-fi broadband at more reasonable pricing to city residents with limited success.

The take away message from Lawrence is that the competitive situation on the ground isn’t about fairness.  It’s about delivering maximum profits to the only viable provider many residents have, and charging outrageous prices for those unwilling to accept a tightly rationed Internet.  Overlimit fees start at $1/GB if you plan on going over in advance (who does?).

So four years ago he imposed new rules for what now governs about 25,000 customers in and around Lawrence. Instead of the old flat rate of about $30 a month, customers had a choice.

They could stick with existing rates if they held their activity to about 10 gigabytes a month. That’s plenty of data to cater to routine Internet use and downloading a few full-length movies a month.

Or they could pay less, about $18 a month, and skip the movies but expect a quick connection for anything else they wanted. Finally, if they wanted to download movies by the dozens, they could pay about $50 for what Knorr called “probably the fastest in the country for the price.”

The only choice customers had was accepting they had no choice.  Limiting usage of the Internet, which even Time Warner Cable claims is growing among average subscribers by 40% a year, is a losing proposition for consumers and their wallets.  It assures the Internet in Lawrence, Kansas remains the domain for e-mail warriors and web page readers.  Those “few full length movies” better be ultra low resolution if Canon’s reporting is to be believed.  Just two from Netflix will leave you less than two gigabytes for everything else you do that month.  Does the Kansas City Star bother to ask any residents of Lawrence if they’re happy with an Internet stuck in time unless they want to pony up more dollars for a few more gigabytes to their ration?  Of course not.  Why be bothered when there are more quotes to be had from company officials and other interested parties!

“Probably the fastest in the country for the price.”  Now most reporters worth a dime will seize on the word “probably” and note that is a classic weasel word.  They might want to do their job and check it out.  Since more and more, we are the media on this issue, I figured I’d take, oh, about 45 seconds and do just that. Cablevision’s Optimum Online Boost offers 30Mbps service for around that price when taking a bundled service package.  Even broken out, their service is much faster and there are no download limits, like Sunflower’s 50GB a month.  And if you don’t want to pay that much, you can have a slower speed tier at similar prices with no overlimit fees at all.

As readers here have commented repeatedly, faster speeds don’t mean much when you are stuck with a paltry download cap, with $2/GB overlimit fees.

“You can raise prices to all consumers to reflect the increase in bandwidth, or you can target a relatively small number of users, less than 5 percent, who use the majority of bandwidth,” said Craig Moffett of Sanford C. Bernstein & Co.

The problem, Moffett said, “is that you’ve got a user community that has been trained to expect unlimited usage.”

No, actually the problem is that consumers have gotten educated, informed, and active in recognizing an unjustified Money Party when they see one.  The Kansas City Star reporter guy can’t figure out Craig Moffett also has a vested interest in this issue, having been a long time Wall Street proponent of cable stocks and pooh-pooher of the competition.  Moffett is so involved in this industry, he testified against net neutrality in a Senate hearing in 2006, saying cable would take investments in their systems out of the sandbox and go home if they were stuck with having to live with a level broadband playing field.

Do you think the residents and readers of the Star would want to know these pertinent facts about Mr. Moffett?

For starters, we download far more today than ever before. Search gurus at Google recently estimated that traffic generated by YouTube alone exceeded all Internet activity in 2000.

“The Internet Grew Since 2000 — Film at 11.”  Wow, there’s a surprise.  The Internet is growing.  Apparently the exaflood folks didn’t get a chance to get their two cents in Canon’s piece before it was printed.  Of course, Google’s technology guru Vint Cerf has reflected on the issue of broadband growth repeatedly as part of the Google Public Policy Blog, and he is opposed to consumption based billing, another fact the Star‘s intrepid reporter completely missed.

Gradually it seemed to many consumers as if the Internet was slowing down. In truth, it just got busier.

How did this claim out of nowhere get past editors over there?  Who are these “many consumers?”  Is there perhaps a different explanation for broadband slowdowns, such as a company making enormous profits on their broadband products while at the same time reducing their investment in those networks?  That’s just one.  Equipment failure, a bad coaxial cable, a poorer performing provider of wholesale bandwidth for backbone access, or any number of other reasons can explain this “out of thin air” claim, before allowing your report to be used as a justification for enormous rate hikes and rationing plans.

“Even with bigger pipes, if everybody in an apartment building showered at the same time, you’d have unhappy people,” said Richard Doherty, the research director for Envisioneering Group, a technology consulting firm. “It’s the same thing if a lot of people are downloading movies.”

Yes, which is why cable companies are being asked to spend a portion of their fat profits to implement DOCSIS 3.0, a win-win upgrade for consumers and cable operators themselves, which permits a pipe that can change size as needed to accommodate traffic.  Is this is a justification for where Canon’s piece seems headed?  Watch in amazement as the man Canon quotes debunks the reporter’s premise in an article for another newspaper:

These plans to charge for above-average Internet use “are unjustifiable for almost everywhere in the country except for rural America,” Richard F. Doherty, the research director of the Envisioneering Group, a consulting firm that studies cable technology.

That is from the New York Times just over 10 days ago.

The only thing useful out of this entire endeavor is this warning which we’ll be sure to put away in our pocket for use once Time Warner’s Re-Education campaign leads to a return of the Cap ‘n Tier nonsense:

Common factors showed why some rates were so high: Viruses had made “bots” of their computers, relaying spam on someone else’s behalf; someone in the house, most often a teenager, was swapping large numbers of movies; or neighbors had tapped into a wireless router and were piggybacking on the user’s service.

“It’s sort of like the neighbor was watering his lawn and running his fountain using your connection,” Knorr said. “Your water pressure drops, and you’re paying his bill.”

Actually, it’s more like a bonanza of cash for the cable broadband provider who really doesn’t care how the person racked up the usage, as long as they get the check to pay for it at the end of the month.  And to think critics of this site called us alarmist for suggesting spam and viruses would consume a lot of bandwidth, or that a neighbor had hacked a router and decided to hop on someone’s account before their ration was used up for the month.  Yet here it is, represented as “common factors” by Sunflower’s own CEO.

As we’ve advocated all along, perhaps a smarter idea is to try and serve Lawrence with a bandwidth pipe bigger than a garden hose and stop artificially limiting demand for a product people want and are willing to pay a reasonable price for.

Knorr said the little-noticed rules and throttling reflect the industry’s concern about the cost of unchecked downloads.

“Offering a truly unlimited service is not a sustainable business model.”

Time Warner Cable’s own results from the first quarter of this year, as well as in its annual report for 2008 dispute that assertion.  They made billions in profits, grew their subscriber base, all while their bandwidth costs continued to decline.

Cablevision, a company larger than Sunflower, is raking in profits offering unchecked downloads and the faster speeds consumers are willing to pay for.

What is the difference?  One company cares about making their customers happy with charging a reasonable price for a great product.  Another company cares about making their numbers and exploiting the lack of equivalent competition on the ground to extract the highest possible return while forcing subscribers to limit their usage.

It’s a truth people across the country have come to learn, but not one at all apparent to at least one reporter at the Kansas City Star.  Time to get out of the pool.

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One of the nation’s top authorities on global Internet traffic growth says his latest data show no reason to fear network capacity shortages, as traffic growth may even be slightly decelerating.

An article published Tuesday in Telephony Online carries new evidence that the so-called “bandwidth crisis” may be based more on fear than reality.

Professor Andrew Odlyzko, director of the University of Minnesota’s Interdisciplinary Digital Technology Center, released a report last week charting the growth in Internet traffic.   Odlyzko concluded that growth continues at predicted levels between 50-60% per year, which is unchanged for at least the past three years.

Odlyzko introduced his research remarking that the “threatened deluge that was supposed to clog the Internet” still has not made any appearance.   In fact, he said, bandwidth rates may in fact be trending downwards.

Proponents of the Network Bandwidth Congestion Crisis theory usually argue that the apocalyptic end of the Internet as we know it will occur either from capacity shortages on the Internet backbone, or because of congestion at the local “last mile” level, between the broadband provider and your home.

But the raw data suggests neither is an impending threat, particularly assuming that broadband providers do not attempt to shortchange stable investment in their networks to meet the demands of their growing customer base.

Broadband providers could engineer a self-fulfilling prophecy of a bandwidth crisis if they reduce their investment in their networks, preferring to take additional profits from the broadband business while cutting costs in order to prop up shareholder return or profitability.   But such moves, which are often uncovered by carefully reviewing required public filings made for shareholder review, would quickly expose the fallacy of the position taken by several bandwidth providers that usage caps are necessary to reduce demand, which could have been met by responsible company practices to maintain and expand their networks to the same historic degree they have done for the last several years.

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Vint Cerf, “Chief Internet Evangelist” for Google’s Public Policy Blog, raised objections and concerns about the broadband industry’s efforts to impose “consumption-based billing” on customers.

Cerf noted plans by several cable operators to test usage caps in an effort to manage their Internet traffic.

“At least one proposal  has surfaced that would charge users by the byte after a certain amount of data has been transmitted during a given period, [...] a kind of volume cap, which I do not  find to be a very useful practice,  ” said Cerf.

“Given an arbitrary amount of time, one can transfer arbitrarily large amounts of information,” he said.

Excerpt: “Network management also should be narrowly tailored, with bandwidth constraints aimed essentially at times of actual congestion. In the middle of the night, available capacity may be entirely sufficient, and thus moderating users’ traffic may be unnecessary. Some have suggested metered pricing — charging by the megabyte rather than flat fee plans — as a solution to congestion, and prices could be adjusted at non-peak periods. These kinds of pricing plans, depending on how they are devised or implemented, could end up creating the wrong incentives for consumers to scale back their use of Internet applications over broadband networks.”

To date, the two largest cable broadband providers, Comcast & Time-Warner are already considering moving to a consumption-based billing system, but with no decrease in existing rates.   Instead, customers exceeding those usage caps will find overage charges on their monthly bills.

Several DSL providers, most notably Frontier Communications, have already imposed even more draconian usage caps on their customers; Frontier now limits DSL customers to just 5GB of traffic per month.

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NBC has announced plans to stream its National Football League games live online this fall, with exclusive access to extra camera angles and multiple video streams, in near high definition broadband bitrates.   Viewers will also have access to live blogging from NBC sports announcers and game highlights and live statistics.

NBC & The National Football League plan to stream pro football this fall, but those with usage capped broadband will probably have to stick with old fashioned TV to watch.

Unfortunately, broadband customers on usage capped services need not apply – the video quality will consume too much bandwidth and will drive many customers well over their monthly caps before the season comes to an end.   So while Verizon FiOS customers will be able to sit back, popcorn in hand, Frontier DSL customers will need to stick to the live blogging, text based web pages,  and hope their favorite game is on local television.

NBC has also warned metered broadband customers to avoid the 2,200 live hours of Olympics coverage starting in the next few days.   It will simply be untenable for a usage capped customer to spend time viewing live coverage without quickly exceeding their usage cap.

It’s just another example of the impact usage caps bring to Americans trying to take advantage of the latest benefits the broadband platform can provide.   Virtually every day, customers will find another application they simply cannot afford to access, all because of unjustified bandwidth limitations.

The NBC logo is a registered trademark of NBC/Universal.   NFL and the NFL shield design are registered trademarks of the National Football League.   Their use does not constitute approval of the content herein.

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Viewers may have to stick with TV to watch the Olympics for free.

While the rest of the wired world gets ready to sit back and enjoy Olympics coverage from China, Americans are being told you can have the Olympics online, but you better not have metered broadband access.

When NBC partnered with TVTonic to provide NBC Olympics On The Go,  it had to specifically warn viewers with metered broadband access not to bother.   Streaming high quality video feeds can consume a significant amount of bandwidth, and can easily allow unassuming viewers to win the the gold in the Biggest Bandwidth Overlimit Fee competition.

TVTonic's warning to broadband users to not use the service if they are using a broadband provider with usage caps.

Content providers are starting to wake up to the real threat of the imposition of usage caps across the United States, limiting cable and DSL broadband customers from accessing content that was developed specifically for the broadband platform.

TVTonic is just one of several online services that could effectively be shut out of doing business in the United States because of broadband usage caps.   The company provides access to over 100 broadband Internet TV feeds, many transmitted in “high definition” quality, all of which would bring viewers ever closer to hitting their monthly limit.

Other providers such as Hulu and Joost provide legal access to hundreds of TV series, movies and specials at no charge to viewers.   But with bandwidth usage caps, will you be willing to spend your limited bandwidth watching?

Suspiciously, the “bandwidth crisis” that the industry continues to blame for the imposition of unreasonable usage caps stops at the water’s edge.   Customers in Japan and Korea enjoy broadband connections often a hundred times faster than what is available in the United States, at much lower prices and no restrictive caps.   In fact, outside of North America, nobody has heard of a bandwidth crisis.

While many broadband providers continue to reap handsome profits from their broadband services, demands for higher shareholder returns and struggling quarterly results from their other product lines in a stagnant economy have led many to decide investing in a lobbying scare campaign is a better use of their money.   It’s easier to try and convince Americans they are the problem, and limit service accordingly.

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It’s good to know that I can order up video on demand from the comfort of my own living room (transmitted over the woefully over-congested cable system’s network if you believe them).   It’s not comforting to watch  FCC Commissioner Robert M. McDowell parrot the broadband industry’s propaganda talking points on demand, and in a voluntary guest column in Monday’s Washington Post yet:

Robert M. McDowell, FCC Commissioner

Today, a new challenge is upon us. Pipes are filling rapidly with “peer-to-peer” (“P2P”) file-sharing applications that crowd out other content and slow speeds for millions. Just as Napster  produced an explosion of shared (largely pirated) music files in 1999, today’s P2P applications allow consumers to share movies. P2P providers store movies on users’ home and office computers to avoid building huge “server farms” of giant computers for this bandwidth-intensive data. When consumers download these videos, they call on thousands of computers across the Web to upload each of their small pieces. As a result, some consumers’ “last-mile” connections, especially connections over cable and wireless networks, get clogged. These electronic traffic jams slow the Internet for most consumers, a majority of whom do not use P2P software to watch videos or surf the Web.

At peak times, 5 percent of Internet consumers are using 90 percent of the available bandwidth because of the P2P explosion. This flood of data has created a tyranny by a minority. Slower speeds degrade the quality of the service that consumers have paid for and ultimately diminish America’s competitiveness globally.

While we at the Federal Communications Commission are trying to spur more competitive build-out of vital “last mile” facilities, especially fiber and wireless platforms, this congestion will not be resolved merely by building fatter and faster pipes.

Peer-to-peer traffic has been an issue for the Internet long before the industry decided to call it a “bandwidth crisis.”   And despite McDowell’s pleas for “cooperation,” putting engineers to work  solving these problems instead of  regulation,  the broadband industry that appears before him with regularity has decided that cooperation really means a coordinated public relations campaign, with  the delivery of identical talking points about a bandwidth crisis, a sky is falling plea to Washington to use taxpayer funds to improve the infrastructure formerly developed with private funds, and the imposition of egregious usage caps no matter what else happens to control the bandwidth piggies.

Judicial action by the entertainment industry trade associations have actually reduced a lot of the illegal file trading and peer-to-peer usage.   And just as the company behind BitTorrent launches a whole menu of new, completely legal services, the cable and DSL providers come by and lay waste to such services, as consumers become reluctant to waste their bandwidth allotment on perfectly legitimate content.

Bandwidth saturation is not a problem only seen by the bandwidth providers.   Software developers, professional and otherwise, are constantly refining their applications and protocols to reduce the effects of bandwidth saturation, when your Internet connection effectively freezes up.   More importantly, the boneheads in the entertainment industry have finally realized that the best way to stop illegal distribution of your content is to offer that content yourself, legally with advertiser support.   New services like Hulu and Joost give people exactly what they want – TV shows with limited and tolerable commercial interruptions without the need to fire up Pirate Bay and their favorite torrent application.   It’s also cheaper than suing the very people consuming your content!   That McDowell misses the forest for the trees is not a surprise – he was an early advocate and supporter of Digital Rights Management (DRM), a concept so despised by consumers, its days are numbered on most of the services that embraced it.

McDowell repeats the commonly heard “5%” refrain usually seen near  the top of the industry press releases on the impending “bandwidth crisis.”   But the rest of us are still waiting for independent verification of this claim, and an explanation as to whether or not this traffic is legitimate access to the “unlimited” service every provider has advertised to consumers, or some form of “abuse” already dealt with in existing acceptable use policies, which can be quietly enforced without hiring bandwidth management consultant Count Dracula to suck the life force out of the Internet for everyone else with usage caps.

I’m also hard-pressed to understand exactly how that 5% of traffic poses a major threat to  America’s competitiveness globally, while a 5GB usage cap applied to 100% of one’s customers is shrugged off, if even acknowledged.   One need only ask the  CEO of Netflix: Is the erection of a Berlin Wall of usage caps a positive development for your business plan to deliver legal, high quality video content to subscriber televisions over broadband?

In McDowell’s world view, those consuming large amounts of bandwidth on perfectly legal products will shamefully achieve membership in the “Tyranny of the 5% Club,” abusing the rights of Bob down the street who has a computer to check his Yahoo! e-mail and little else, but now he has to wait because you insisted on watching Harry Potter.   Shame on you.   It’s all your fault.

Is McDowell unaware his doctrine of “cooperation” and “putting engineers on it” already has a solution to the “last mile congestion” problem, itself a logical lapse in the argument arsenal this industry uses to hoodwink us into believing the Internet is on the verge of crashing and burning.

DOCSIS 3.0, an improvement over existing data delivery technology still in place at most cable companies, can  go a long way towards  resolving any neighborhood congestion issues  with  channel bonding, which allows multiple channels to be devoted to upstream and downstream data.   If Time Warner or Comcast doesn’t want to implement the new standard, that’s hardly the fault of the Harry Potter fan down the street.

At the same time they decry the collapse of online modern civilization, somehow these same companies   find plenty of bandwidth to roll out more  video channels you never asked for (but will be used as an excuse for next year’s rate hike),  dozens of video on demand options, Voice Over IP telephone service,  and the increasing number of digital HD channels and switched digital video, which transmits a TV channel to your neighborhood only when someone  chooses to watch.   Data is data.   If there is a bandwidth crisis for cable modems, where is the plea to stop  using too much television,  stop ordering too much pay per view, and get off the phone because we’re out of bandwidth.   I haven’t heard those panic buttons pushed, have you?

If the FCC wants to help spur America’s leadership role in the new Internet economy, it can begin by recognizing America is falling further and further behind other nations, because corporate greed is devolving Internet access domestically into a highly expensive, relatively slow, and usage capped nightmare.   While American website operators will be redeveloping content to get rid of graphics or anything else that might eat too much data, the rest of the world moves forward with innovative broadband applications and content, all made available only to the wealthiest Americans who can afford the price.    For the rest of us, time to get reacquainted with Gopher.

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Taking a moment to return to the bandwidth battles of days gone by, here’s another commercial from Pacific Bell about how cable is rationing their bandwidth.   Today, it’s a whole new battle with a fictional war based on a whole different kind of fictional intelligence: “a bandwidth crisis” that will lead to America running completely out of Internet bandwidth if we don’t cap everyone today.   No independent verification.   No independent evidence.   Just a lobbying firm in Washington, a bunch of equipment manufacturers who stand to make a pile of cash selling the equipment to keep everyone on a bandwidth diet, and happy shareholders who don’t have to worry about telecommunications companies making practical investments to keep their networks on track to grow with the rest of the Internet.   It’s quicker and easier to call you a bandwidth hog – log off now!

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The cable industry used to face the wrath of DSL companies who ran very effective advertising telling people that cable modem users were all sharing the same bandwidth and slowing down the network for everyone.   They’ve used enough Internet – log off now!   The cable industry’s proposal to start capping usage opened a unique opportunity for DSL providers to finally get some competitive advantage.   Hampered by an aging network, slower speeds, and less ability to rapidly increase speeds, DSL has tried to compete on price.   Imagine if the telephone companies saw cable caps and tailored ads like this to their cable competitors, telling families they’ve used too much Internet and they’d better log off or else.

But telephone companies always take the opportunity to miss a great opportunity and, in the case of Frontier, have elected to one-up them with a cap so low that dial-up users could consume more bandwidth.

So let’s take a look back to the good old days, when the Internet was our friend, and DSL was a noble competitor in the broadband marketplace.

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