While researching some stories this afternoon, I spoke with an executive at one of the major broadband providers serving consumers with Internet service who told me the company was simply tearing its proverbial hair out over how much online video services like Hulu were costing them — at least $1-2 per gigabyte.  He also said it was putting serious strain on their broadband network.  He didn’t agree to go “on record” putting his name with his views because he was not authorized by company officials to do so, but he was well armed with talking points that said online video is such a problem, Canada, South Africa, Australia, and New Zealand couldn’t take it any longer and they adopted usage allowances to limit customers watching Hulu and other online video services “like from the BBC.”

These Amateur Hour talking points written at company headquarters will work with a bobblehead-like nodding reporter at a local station getting a 10 second unchallenged sound bite, but they don’t work here.

My industry friend didn’t agree to be on the record, so he’ll remain anonymous, but the points raised are on the record so here we go:

Myth: Hulu is costing broadband providers a ton of money – at least $1-2 per gigabyte.

Truth: Hulu, and other online video services like it, do generate a considerable amount of broadband traffic in the United States.  That online video has posed a potential threat to my provider friend, who faces the prospect of some consumers deciding to disconnect their cable TV service and stick solely with broadband for online video.  However, my friend ignores the fact his company has a way to solve this traffic issue by considering upgrades to DOCSIS 3 technology.  After all, his bosses are actively seeking a way into the online video marketplace themselves.

Dave Burstein, DSL Prime

His employer is testing an online video delivery platform that could easily dwarf Hulu.  Of course, they don’t happen to own or control Hulu, open to any American.  The establishment of an industry-controlled service, available exclusively only to “authenticated” subscribers, really blows the talking point about online video straining their broadband network out of the water.  If Hulu is threatening to do them in, what do they think will happen when their even bigger endeavor launches for millions of users?  Then again, as I told him, such online video drives new subscriptions and they could always take some of that money and invest it in network expansion.

Dave Burstein, a well regarded expert on broadband networks, who writes DSL Prime, obliterates the cost estimate inflation for online video in a short piece titled, HD Video Delivered: 5-8 U.S. cents per hour (SD – 2-4 cents):

Microsoft, Cachelogic and I demo’ed full 6 megabit HD video over the net at Web Video Summit, and the stars are now aligned for HD to become first practical and then common – unless the carriers succeed in taxing the net outrageously. That’s cheap enough that even HD TV over the net can be supported by ads, and it becomes a no-brainer for any movie service that charges to offer true HD.

Dan Rayburn, the guru of the streaming media world, reports “The lowest price I saw in Q1 was two and a half cents per GB delivered for over 500TB of traffic a month. When I questioned many of the major CDNs about this price, nearly all of them told me they don’t price delivery that low, but the contracts say otherwise. That price is not the norm as 500TB a month in delivery is a very large customer.” Repeat: This is not a typical price, even at that large volume. Dan reports more normal prices are 2-4 times this level. So U.S. cents 15-25 is more typical for full HD.

Hulu doesn’t even specialize in HD video programming, so the $1-2 per gigabyte estimate on that talking points handout apparently mistakes a dollar sign for a cents sign.

Myth: Online video is such a problem, Canada, South Africa, Australia, and New Zealand adopted usage allowances to limit customers watching Hulu and other online video services “like from the BBC.”

Truth: My industry friend is apparently unaware Hulu restricts access to the majority of its content outside of the United States.  If you are watching from Canada, Australia, or South Africa, you’re more likely to encounter an error message telling you this content is not licensed for your area.  I’m not sure how that is supposed to impact on overseas ISPs.  The BBC’s iPlayer not only doesn’t provide broadband video content outside of pre-authorized UK-based Internet Service Providers, it offers lower quality streams outside of the UK for what content is available.  It’s a very common complaint heard by the BBC, but they do not have the resources to offer high bandwidth streaming to the entire world.

Most broadband providers won’t use the word “limit” when it comes to controlling subscribers’ access, because that puts them right in the line of fire.  It’s always been our contention that this is about protecting business models and less about “costs.”

There are tremendous differences between online video content services in the United States versus Canada or other usage-capped countries.  In New Zealand, online video services have been shut down because of usage limits.  In Canada, Australia, and South Africa, they’ve never truly gotten off the ground because “bit caps” make them unsustainable.

South Africa this week celebrated the opening of a new underseas cable to bring additional global connectivity to the continent of Africa.  Broadband service in South Africa today has very little video content at all – usage caps are punishingly low across the region because unlike in the USA, international connectivity has traditionally been obscenely expensive.  Many South African ISPs distinguish themselves by placing heavier limits on sites hosted outside of the country than on those hosted domestically, a nod to the connectivity reality.

The truth is that some ISPs in the United States are looking for arguments to justify Internet Overcharging to maintain high profits and keep demand in check.  Consumers are not buying these industry talking points at any price.

Cogeco Cable, which serves customers in parts of Ontario and Quebec, today announced the launch of the “HSI Ultimate” broadband tier offering 50Mbps download speed and 1.5Mbps upload speed.

For customers in Burlington, Oakville, Milton, and Halton, Ontario, the HSI Ultimate package is available today for $144.95 a month with a cable or telephone bundle, $149.95 without, with a monthly allowance of 150GB, which equals $1/GB. The company throws in free cable modem rental and a security software suite.

Cogeco's Ultimate HSI Service Map - Service First in Communities Southwest of Toronto (click to enlarge)

Within five years, Cogeco expects to roll out the service throughout its service areas in Quebec and Ontario thanks to DOCSIS 3 upgrades, which permit cable operators to better manage bandwidth and create new tiers based on speed.

Company officials said in a statement that DOCSIS 3.0 is a technology of data compression that will allow a more efficient and economical bandwidth. Thus, Cogeco Cable will better meet the increasing bandwidth at a competitive cost; give access to a higher data rate, a better video configuration and an increased level of safety.

“This new internet package shows our constant concern to improve our network to satisfy our customers. They can benefit from a more efficient service. With technological advancement, we can offer better access to downstream and upstream Internet, which allows customers to take advantage of applications, available on Internet, more easily,” said Ron Perrotta, Vice President Marketing, Cogeco Cable.

Early customer reaction was negative, because of the pricing and the paltry usage allowance.

“Garbage. Cap is too low to make 50mbps useful,” said one Trenton reader on Broadband Reports’ Cogeco forum. “If my math is correct here you can blow through your 150gb cap in 6.83 hours. That’s a ridiculously short amount of time.”

“I know they are just following suit [with Rogers Cable], but $149.95/month is pretty expensive,” wrote one reader in St. Catharines.

Another questioned the mentality of Cogeco for offering an expensive, but highly limited broadband package: “Cogeco execs are disturbingly out of touch.”

[Update: July 14/12:27am — Our sharp eyed readers contested the accuracy of the speed chart shown below almost immediately after publication.  Eric, who pens for Photography Bay we linked to below, replied to my inquiry about the data.  His reply:  “The speed estimates come from Verizon. I was more concerned with the upload figures; however, now that you mention it, it looks like Verizon may have the 80% calculation on the wrong side of their equation for the download portion of the chart. The upload chart looks right with FiOS at 10x faster than cable; however, the download chart shows a 20% speed increase when it should show a 5x speed increase. Nice catch.” I suppose we should let Verizon know. Thanks to our readers who caught the math error.  Hopefully their billing is more accurate.]

With the announcement by Rogers that their particular implementation of DOCSIS 3 would bring speeds of 25-50Mbps for downloads, it was curious that the company elected to only make incremental increases in upload speed.  Maxing out at just 2Mbps for uploading, Rogers continues the mindset that broadband subscribers don’t care about upload speed — just download speed.

That may have been true in the past, but today’s broadband consumer is woefully underserved with slow upload speeds, which hamper uploading pictures, home movies, and other content to share with friends, family members, or like we do here, the rest of the connected world as a whole. With the rise of ai image generation, however, creating content has become easier, even without the need for large file uploads.

In Rochester and many other Time Warner Cable cities, upload speed has remain unchanged for standard service customers for more than a decade — just 384kbps.  Paying $10 more for Turbo service, if only to get 1Mbps (which isn’t exactly “blazing fast” these days either), is the only alternative.

Fiber to the home services like Verizon FiOS and some municipally run fiber systems are changing the paradigm for upload speeds, providing customers with substantially faster service — typically far more than telephone company DSL or broadband service from the local cable operator.  A “speed test” from New York from a FiOS customer illustrates the capability:

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For photographers, among many other net users, upload speed is critically important in managing their photograph collections.

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The Photography Bay blog compiled a chart illustrating the dramatic differences upload speeds can have on your time and patience:

Rogers Ultimate Speed Comes At The Ultimate Price of $150/month, Reportedly Capped At 150GB Of Usage

Rogers Cable today announced it was preparing to launch a DOCSIS 3-based upgrade to its cable modem service in parts of metropolitan Toronto this summer with a promotional router giveaway and the unveiling of a 50Mbps “Ultimate” Tier for $149.99 a month.

The first 50 customers who sign up for the company’s First 50 to 50 promotion will receive a wireless “N” router and be the first to get the Ultimate tier when it launches.

Unfortunately, company officials have confirmed there will be a usage cap on the service (all Rogers Cable broadband services are capped), but they have not officially announced the cap limit yet.  One of our Ontario readers contacted Rogers customer service and was told the cap was 150GB per month, which killed his interest in the service immediately.

“That’s $1 a gigabyte, which is completely ridiculous,” Jim Jensen wrote to us this afternoon.  “I currently subscribe to their 10Mbps service which has a ludicrous 95GB cap, and that costs me $50 a month,” he said.

“You’d think this greedy company would at least cough up three times my current cap for three times what they charge me now, but apparently not,” he said.

Jensen told Rogers he’s taking a pass.

“It’s bad enough I am stuck in a country that is in a race to offer us lower caps and throttled speeds for higher prices, but there is no darned way I am giving Rogers $150 a month for 50Mbps which could put me past the cap after two hours of usage a month,” Jensen said.

“What are these people smoking?” he added.

The Rogers representative did not not know what upload speed was provided with the Ultimate tier.

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.