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

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

Talking Points

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

This bring several questions to the table:

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

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

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

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

Okay then, I guess that settles that!

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

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

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

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

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

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

It takes a company with a huge ego, a large amount of greed, and no concern for their customers to do what TWC is doing to the folks in these cities. The only way to fight something like that is to fight fire with fire. Here are some of the ways to do that: 1) Once the caps are implemented steal broadband from wireless routers. Wireless routers are not secure even when they are “secured”. There are programs available (if you look for them) that can get around these security measures. When TWC customers start getting huge overage charges for… Read more »

Brent
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Brent

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

Mike
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Mike

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

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

Xoky
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Xoky

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

Joe
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Joe

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

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