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.

The Ovation Wireless Modem, used by Broadband2Go from Virgin Mobile

Virgin Mobile, a reseller of the Sprint network, will launch a new nationwide wireless internet service in late June, offering prepaid plans and a USB modem (the Novatel Ovation™ MC760) available for sale exclusively at Best Buy for an anticipated price of $149.99.

Broadband2Go will be marketed as a prepaid wireless mobile Internet service that is capable of supporting Sprint’s EVDO Rev. “A” network, and includes a built-in gauge that shows the amount of usage remaining.

Despite claims that Broadband2Go will provide “lightning fast” speed, it, like every other wireless data service, cannot compete with most wired providers on speed.  It can, however, provide convenient mobility for those who have limited access needs that don’t justify a $60 a month data plan from one of the four big carriers with a two year contract commitment.

Broadband2Go requires no contract or service commitment.  Want to walk away?  Just don’t purchase another refill card.

The cost of convenience is expensive, however.  The pricing for the service is very high, the usage limits low, and the expiration dates on refills short and annoying:

$10 buys you 100MB of access that expires 10 days after activation.
$20 buys you 250MB of access that expires 30 days after activation.
$40 buys you 600MB of access that expires 30 days after activation.
$60 buys you 1GB of access that expires 30 days after activation.
Use it or lose it.  Once the refill expires, your usage ends with it.

Obviously with these limits and prices, confining oneself to web browsing and e-mail is a good idea.  Watching two low resolution movies on the 1GB plan would cost you nearly $30 each.

Cricket provides a wireless data plan without a contract for $40 a month for up to 5GB of usage (they reserve the right to slow down your speed or terminate your account if you exceed that).  Cricket doesn’t have the reach Sprint’s network has, but charges a lower price for the modem and service, proving to be a viable alternative in cities with Cricket network coverage.

Even with the comparably more generous usage allowance Cricket offers, wireless broadband service is best reserved for users who require mobility or those who only require basic access to web pages and e-mail.

If cable operators intend to impose Internet Overcharging schemes to measure and cap residential broadband accounts, the Federal Communications Commission (FCC) must impose equal treatment on traditional video cable television packages to allow customers to subscribe to only the channels they want.

The Austin Broadband Interest Group, a not-for-profit broadband advocacy organization, calls out the cable television industry for advocating an end to flat rate broadband service at the same time they continue to resist a-la-carte pricing for cable television packages.

In a filing with the FCC as part of a nationwide broadband policy inquiry, the Texas group recites the history of Time Warner Cable’s recent proposed experiment curtailing current flat rate Internet service.  Time Warner Cable planned to expand its Internet Overcharging market test conducted in Beaumont, Texas into four additional cities: Austin and San Antonio in Texas, Rochester in western New York, and the Triad region of North Carolina.  Customers in the test would have faced the prospect of paying 300% more for an equivalent level of flat rate service, with bills increasing from $40-50 a month to a staggering $150 a month, with no increase in speed or immediate improvement in service.

The Austin group claims that such Internet Overcharging efforts are designed to protect Time Warner Cable’s video business model, which includes the packaging of flat rate video cable TV packages to customers across the country.  Time Warner Cable, among other cable providers, have grown increasingly concerned about free online video potentially discouraging customers from subscribing to a cable television package.  Industry executives fear that new generations of Internet users will dispense with traditional cable TV service, obtaining video entertainment online, instead.

The group advocates the FCC enforce a rule that any broadband provider that wants to implement limits or consumption-based service tiers must also offer the same pricing model for video programming.  Matthew A. Henry and Chip Rosenthal, authors of the filing, include other competing video providers in their comments.  Telephone companies, including AT&T and Verizon, have begun offering video services to customers in addition to broadband packages.  AT&T is testing an Internet Overcharging scheme to limit consumption in two cities — Beaumont, Texas and Reno, Nevada.

The cable industry has struggled with Congress and the Commission for years to prevent the imposition of a-la-carte video programming pricing, permitting customers to pay for only the channels they want to watch.  The industry claims it would destroy the business model of cable television, where cable programmers like CNN, The Weather Channel, A&E, and most others impose a subscription fee based on the number of “basic cable” subscribers that have access to those channels.  Most networks charge between 10-80 cents per subscriber, with some sports-related channels charging considerably more.  By dividing the costs among every subscriber, the industry argues, it can deliver a robust video package to everyone for the same price.

Unfortunately, cable programmers continually increase the rates they charge for their cable networks, often well above the rate of inflation, and many broadcast networks and stations also demand cable companies take on new networks they may not necessarily want, to obtain continued permission to carry local stations on the cable dial. The result: relentless annual rate increases for cable television packages.

The inequity of cable’s argument that it must be allowed to continue providing flat rate television programming packages (and disallow a-la-carte) while programming costs increase, while demanding an end to flat rate Internet pricing, despite a decrease in the costs to provide it, suggests “fairness” is not the motivation for proposing such Internet Overcharging schemes:

In May of 2009, Time Warner Chief Executive Officer Glenn Britt essentially admitted that the competitive threat of online video to traditional cable is the driving force behind the company’s capped and metered pricing model. Mr. Britt told investors, “If, at an extreme, you could get all of the programming you get over cable for free on the Internet, over time people will stop buying (TV).”  Unfortunately, Time Warner has chosen to protect its cable revenues through unfairly restricting usage of its broadband service. This clearly demonstrates the need regulatory ground rules aimed at dissuading such anti-consumer and anti-broadband business practices.

Rather than representing a “fair” method of billing, metered pricing plans and usage caps are a strategy intended to salvage diminishing cable revenues by forcing users to use less Internet. Users have been watching increasing amounts of video online, with some abandoning their cable service altogether in favor of broadband (an effect that has been sped by the struggling economy). This presents an obvious dilemma for broadband providers that also offer a cable product, like Time Warner: as online video watching goes up, the revenue-generating cable usage goes down. Online video is bad for business because a cable company directly profits from its cable content through advertising, pay-per-view and video-on-demand, but can’t profit off Internet content. The fact is that Time Warner is offering competing products and the company has a vested interest in cable video prevailing over Internet video. Time Warner introduced metered pricing and usage caps to make its customers turn off their computers and pick up the remote.

iAWFUL (which stands for Internet Advocates Watchlist for Ugly Laws) launched this week, calling attention to the “most reckless and misguided laws” impacting the Internet.

The site, a project of NetChoice, a Washington, DC eCommerce advocacy group, particularly opposes what they feel are “misguided” regulatory approaches to online problems by well meaning lawmakers, often on the state level. NetChoice claims to be a coalition of trade associations, eCommerce businesses, and online consumers, “all of whom share the goal of promoting convenience, choice and commerce on the Net.”

The inaugural list of the worst contains several state tax initiatives targeting Internet commerce, rules forcing websites to spend more time and effort enforcing their abuse of service policies, and an effort to regulate online ticket sales.  NetChoice also challenges efforts by lawmakers to incorporate certain standards, such as security and encryption, into law.

Presumably, the weight given to determining which are the “worst” laws is determined in part by the group’s members:

1-800-Contacts
America Online/Time Warner
American Vintners Association
Association for Competitive Technology
eBay
Electronic Retailing Association
IAC
Internet Alliance
NewsCorp
Oracle
Overstock.com
VeriSign
Yahoo!
The Wine Institute

One of the intended purposes of the iAWFUL list is to draft consumers into the fight against the targeted legislation.  While most of the inaugural list’s targets are anti-consumer, NetChoice doesn’t answer exclusively to those consumers.  They answer to the members who belong to the organization.  Often, the interests of consumers and business do merge, but not always.

Knee-jerk, overly prescriptive laws can destroy whole business models or stifle innovative new forms of communication before they have a chance to emerge. Too many laws are proposed without considering unintended harm they may cause to thousands of Internet companies and millions of Internet users.

NetChoice is dedicated to fighting these attacks on core Internet principles.

Destroying business models may not always be anti-consumer.  On our own issue of Internet Overcharging, could legislation designed to put an end to it be seen as a friend or foe to NetChoice?  A business model alone may be worthy of fighting to protect, but as Stop the Cap! readers understand, that isn’t always true.  Legislators are not the only ones capable of engaging in overreaching antics.  Some of NetChoice’s member companies have done that themselves.

Care must also be given to determine the exact definitions of “stifling” and “core Internet principles.”  The former may be a matter of perspective, the latter is not defined at all.

Perhaps iAWFUL will be a consistently positive asset for consumers and will not incorporate laws designed to protect consumers from anti-competitive behavior and Internet Overcharging onto their top 10 list.  Time will tell.  But consumers should always be wary about Internet organizations that claim to represent consumer interests, but rely on industry money to keep the lights on.  Some of those groups, particularly those in Washington, turn out to be astroturf organizations that claim to represent ordinary citizens, but really front for commercial interests, which often have a different agenda.

Gazing into our future, unless Internet Overcharging stops before it gets started (Photo: Sean McGrath)

Americans have a lot to learn.  Our neighbors to the north have been living our broadband future, and it’s time to start paying attention.

Broadband providers that want to implement their Internet Overcharging schemes often claim that this isn’t unprecedented.  People in Canada, Australia, New Zealand, and a few other countries already face a broadband service hobbled by arbitrary limits, and ‘you don’t hear them complaining.’

Except you do.

The Canadian broadband market is remarkably similar to our own.  A very comfortable duopoly of providers – one cable operator and one telephone company provide the vast majority of Canadians with their Internet service.  Several smaller independent providers, typically reselling access to Bell Canada’s network they’ve contracted to obtain at wholesale pricing, make up most of the rest.

Five years ago, those two providers clawed each other fighting for market share, and independent providers were popping up to provide more flexible broadband accounts for those looking for lower pricing or different speeds.  Canada rose to second place in broadband among the 30 nations that belong to the Organization for Economic Cooperation and Development (OECD).

Evidently, the price and service war ended with a truce in the last 24 months.  Then came the classic signs of Internet Overcharging: new restrictions and limits on usage, overlimit and penalty fees for exceeding those limits, a slowdown in competition to build better infrastructure offering higher speeds, and even “traffic shaping,” which in reality means artificially restricting selected services moving across a broadband network.

Rogers Internet Overcharging limbo dance reduces usage allowances on new customers. (click to enlarge)

Even more irritating for customers, rate increases accompanied all of these new restrictions.  Rogers Cable, which helped get the ball rolling on Internet Overcharging schemes, raised broadband rates March 1st and then announced a “free speed upgrade” this past month, bringing their broadband speed in Toronto to 10Mbps for $45.26US per month, before taxes, with a 60GB limit and “traffic shaping.”

Customers looking for cheaper broadband from Rogers have been subjected to a reduction in the usage allowance since the Internet Overcharging schemes began.  Now, customers looking for the least expensive plan pay $26.23US per month for 500kbps “broadband” with a usage limit of 2GB per month.  Exceed that, and your overlimit penalty fee is an enormous $5.00CAD per gigabyte.  When the first Internet Overcharging scheme was introduced, “lite” customers could use up to 60GB per month.  It’s just more evidence that when broadband companies are allowed to implement Internet Overcharging schemes like this, the broadband limbo dance begins, with customers facing smaller and smaller “allowances” at the whim of the provider.

Rogers competition, primarily from Bell Canada, did what can be expected in a lightly competitive marketplace — they announced Internet Overcharging schemes of their own, trapping many Canadians into restrictive broadband service from every provider around.

Canadians hate the schemes, despite broadband industry propaganda that suggests customers didn’t mind paying more for less.

“Broadband in this country has completely stalled,” Stop the Cap! reader Brent, living near Ottawa wrote to us.

For several years, everything was heading in the right direction in Canada.  Broadband service was extending from cities into smaller towns and communities, even in the Prairies, BC and Alberta, which have much more empty space between developed communities.  Here in Ontario, Rogers and Bell are the dominant companies.  It was bad enough when Rogers starting using traffic shaping to slow down things like peer to peer services, so you often find your speeds slowing down by half or more.  Internet video is not as common in Canada because services like Hulu see the usage allowances and don’t bother to come here, because people can’t afford to watch them.  But some independent producers do have online video, that they freely distribute using peer to peer.  It’s throttled by Rogers, though, so it takes forever to load.

Then their cap came.  We get 60GB per month on our service.  I have a wife and two teenage daughters.  Everyone is online here.  Between all of us, 60GB is never enough, and we have to constantly watch them because they like to have friends over to do things on the computer together.  We have to keep track of everything they do, and there are fights all of the time about who used what.  You can never relax when you are online anymore, because you have to always be worried about what something might cost you.

Even worse, Rogers interferes with your service when you reach 75% of your allowance by injecting a warning banner on your web browser to tell you that you are approaching your limit for the month.  That process forces their announcement onto web page after web page, and you’ll know it because half the time those pages with a warning banner take much longer to load, if they load properly at all.  It doesn’t matter what page you are looking at, or who runs it.  Rogers feels they can put their banner on it.

I spent two weeks in the States at a friend’s home who had Verizon FiOS and I couldn’t believe the difference.  Using Canadian broadband and comparing it to Verizon FiOS is like the difference between dial-up service and the broadband service we used to have in this country.

Bell is now going to force limits on wholesale accounts as well. All of the independent companies that don’t currently have caps and allowances will now have to impose them, cutting off the last competitive choices we had.  It’s a nice racket.

Reading the American papers, it’s all familiar to me.  It’s the same things we were told.

• There are “Internet hogs” using “too much service” so we have to charge them more.
• We have to use the extra money to build better networks.
• We need to traffic shape to make sure everyone can use our service.
• It’s about fairness for everyone.

No. It’s about getting more money from you and pocketing it.  The people they stereotype as “Internet hogs” turn out be ordinary families.  Just because we may not know about some of the Internet cutting edge services becoming available, our kids do.

Canada’s providers aren’t using the all the extra money to build better networks, they are just treating them as profits.  Our speeds are still slower than Americans get. They reduced the usage allowances on many people even further. They still traffic shape even on the networks they claim they were “improving.”  Everyone’s Internet bill went up.  Nobody is saving anything.  There is nothing fair about duopoly pricing.

Dr. Michael Geist

Brent’s point about Bell Canada imposing Internet Overcharging schemes on their wholesale business accounts rings familiar.  Earthlink wanted to sell its broadband Internet service that travels across Time Warner Cable’s lines at the current unlimited pricing they charge today.  Whether they would be allowed to do so under TWC’s original Internet Overcharging proposal was highly doubtful.

Independent providers in Canada are upset about Bell Canada’s attempt to impose new limitations on their wholesale accounts, because it threatens their existence.

Two weeks ago, Dr. Michael Geist appeared before the Standing Committee on Transport and Communications to discuss the state of telecommunications in Canada.

Geist, a law professor at the University of Ottawa and noted expert on the state of Canadian broadband, called the developing situation in Canada “a crisis.”

Limiting competition and throwing your duopoly weight around has been a hallmark of insufficient oversight and regulatory control in under-competitive markets and Geist brought examples of providers engaged in mischief:

• Telus blocked access to a union supporting website during a labour dispute, blocking more than 600 other sites in the process
• Shaw advertised a $10 premium surcharge for customers using Internet telephony services opening the door to creating a competitive advantage over third party services
• Rogers currently degrades the performance of certain applications such as BitTorrent, widely used by software developers and independent film makers to distribute their work
• Bell openly throttles BitTorrent traffic, a practice that has been challenged before the CRTC

Bill St. Arnaud

Competition can provide some answers, but not all.  It’s obvious new laws are required to put a stop to Internet Overcharging while real competition can develop.

As Stop the Cap! has documented, when fed-up municipalities reject their status as a “broadband backwater” and seek to deploy the advanced fiber networks that they need to spur economic growth and development, incumbent providers engage in lawsuits and delay tactics.  But in many communities, in the end, the threat of municipal competition finally forces those networks to commit to the upgrades they refused to provide earlier.

Bill St. Arnaud, Chief Research Officer for CANARIE, ponders Canada’s future as the country slips further and further behind in OECD rankings because of the broadband duopoly in the country.  Speaking with CBC Radio’s Nora Young, who hosts Spark, a twice-weekly radio program about technology and culture, he contemplates a solution to this problem that builds on the Obama Administration’s broadband stimulus program in the United States — by publicly funding an advanced “fiber to the home network” and then open it up to all providers to compete for customers.

Audio Clip: Bill St. Arnaud Appears on CBC Radio’s Spark – June 3, 2009 (11 minutes)
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