Peer to peer traffic no longer represents the largest single source (by application) of broadband traffic on the Internet.  Cisco’s Visual Networking Study now finds online video streamed from websites like Hulu and Netflix to account for more than one-quarter of all broadband traffic, displacing file swapping from the number one position.

File sharing activity has routinely been used by providers dreaming of Internet Overcharging as an excuse to introduce usage limits and throttled speeds for their broadband customers.  Peer to peer software allows customers to exchange pieces of files back and forth until everyone manages to secure their own copy.  Cable operators, in particular, have complained this network traffic saturates their shared broadband lines because customers upload far more data than they would without this software.  Up to 44 percent of all upstream traffic from residential accounts comes from peer to peer traffic, according to Cisco.

Providers and their friends have started to give up on their scare stories of peer-to-peer “exafloods” and data tsunamis triggered from too many online users engaged in file swapping.  As we’ve argued for two years now, the glory days of growth in peer to peer are behind us for a variety of reasons:

1. Downloading copies of TV shows and movies, always popular on file sharing networks, has declined now that content producers are finally serving the growing market for on-demand video programming;
2. The growing popularity of downstream delivery direct to consumers has reduced wait times for downloading to near nothing — to the point where some users are abandoning peer-to-peer altogether;
3. An increasing amount of fake files filled with viruses and spyware has made peer to peer-sourced files from underground websites more risky;
4. Copyright enforcement and other legal actions have made file trading less palatable for some.

While peer-to-peer traffic is still growing along with other online usage, online video is growing far faster.

Now some want to move the goal post — blaming online video for “forcing their hand” to implement overcharging schemes.

Broadband Traffic by Application Category, 3rd Quarter – 2010

• The marked categories contain video.

Karl Bode at Broadband Reports writes that he found Sanford Bernstein analyst and cable stock fluffer Craig Moffett telling CNET that if customers cut the cord, cable broadband companies will simply turn around and begin metering broadband customers’ bandwidth. In fact, Karl adds, Moffett goes so far as to insist ISPs will have “no choice” in the matter as streaming services like Netflix gain popularity.

Instead of simply raising prices on cable broadband, Moffett said it’s more likely that cable operators would move toward usage-based pricing. That way consumers who use more bandwidth to stream movies and TV shows end up paying more per month for service than people who may be getting their video from the traditional cable TV network. Time Warner has tested usage-based billing, but the company faced a huge backlash from consumers. Still, Moffett said that broadband service providers may have no choice as bandwidth-intensive video streaming services like Netflix become more popular.

CNET’s Marguerite Reardon calls that scenario a “heads we win; tails we win” situation, especially for cable companies.

Would you tell this man you are dropping your Comcast video package to watch everything online for free? (Neil Smit, president - Comcast's cable division)

Last quarter, some companies saw the number of subscribers actually drop for the first time ever.  Now Comcast reports in its latest earnings call the same thing is happening to them — losing 56,000 TV package subscribers during the third quarter.  Comcast surveyed some of their customers calling to fire their cable company.  Most of them are not switching to a pay TV competitor, said Neil Smit, president of Comcast’s cable division.  Comcast characterized them as “going to over the air free TV,” but would you tell your cable company you are dropping their video package to watch everything on their broadband service for free?  For a lot of cable customers, that would be tantamount to calling them up and saying you are now getting free HBO on your TV.

Both companies are still denying online video is cutting into their cable TV package business, but it’s an argument some stock analysts have begun to make as they watch cable profits struggling to hit targets.  Watching extra fat profits bleed away because “broadband piggies are watching all of their TV online for free” just won’t do for folks like Mr. Moffett, who will be among those leading the call to slap limits on broadband usage to protect industry profits.  Why leave good money on the table?

But before Moffett encourages cable companies to install coin slots and credit card readers on cable modems, he has another idea: jack up the prices of broadband higher than ever while cutting video pricing, making it pointless for customers to jump ship:

“Cable’s broadband dominance opens the door for renewed share gains in the adjacent video market,” Moffett said in his report. “Cable companies could simply increase their a la carte broadband prices (since in most markets, households have no other choice for sufficiently fast broadband) and simultaneously drop their video pricing, leaving the price of the bundle unchanged, to recapture video share.”

He pointed to an example of this in Albany, N.Y., where Time Warner Cable raised its broadband price by 10 percent for its Internet-only customers to a rate just $2 below its promotional bundled rate for both services. The Internet-only price increased to $54.95 from $49.95. The 12-month promotional rate for video and data was $56.95.

Of course, Albany has Verizon FiOS breathing down Time Warner’s neck.  In late October, Verizon announced it was launching its video FiOS service in Scotia, just outside of nearby Schenectady. Bethlehem, Colonie, Schenectady and Guilderland already have FiOS phone and Internet services available, so getting a TV franchise to deliver competition to Time Warner Cable isn’t a big leap.

In Rochester (where Frontier Communications idea of video is a satellite dish), a similar promotional package from Time Warner runs $84.90 a month.

Highlights of the Cisco Report

• The average broadband connection generates 14.9 GB of Internet traffic per month, up from 11.4 GB per month last year, an increase of 31 percent;
• “Busy hour” traffic grew at a faster pace than average traffic, growing 41 percent since last year. Peak-hour Internet traffic is 72 percent higher than Internet traffic during an average hour. The ratio of the busy hour to the average hour increased from 1.59 to 1.72, globally;
• Peer-to-peer (P2P) file sharing is now 25 percent of global broadband traffic, down from 38 percent last year, a decrease of 34 percent. While still growing in absolute terms, P2P is growing more slowly than visual networking and other advanced applications;
• Peer-to-peer has been surpassed by online video as the largest category. The subset of video that includes streaming video, flash, and Internet TV represents 26 percent, compared to 25 percent for P2P;
• Over one-third of the top 50 sites by volume are video sites. There is a high degree of diversity among the video sites in the top 50, including video viewed on gaming consoles, Internet TV, short-form user-generated video, commercial video downloads, and video distributed via content delivery networks (CDNs). Video sites appeared more frequently than any other type of site in the top 50.

With continued inaction at the Federal Communications Commission, some stakeholders in the Net Neutrality debate continue to file comments with the Commission trying to find a “third way” to bring about guarantees for online free speech and access while softening opposition to “network management” technology that allows providers to manipulate broadband traffic.

Among such filers is the Communications Workers of America, which seeks a “middle-ground approach” to protecting a free and open Internet.

The CWA has always maintained its feet in two camps — with consumers looking for improved broadband and with the communications companies that employee large numbers of the union’s members, who will build out those networks and provide service.

The union shares our annoyance with FCC Chairman Julius Genachowski for his complete inaction on broadband policy thus far.  In short, the Commission keeps stalling from taking direct action to reclassify broadband as a telecommunications service, restoring its ability to oversee broadband policy lost in a federal appeals court decision earlier this year.

The CWA used a piece by David Honig from the Minority Media and Telecommunications Council (MMTC) to echo its own position:

MMTC isn’t alone in being frustrated with the FCC’s disappointing attitude toward real action this past year. In a recent interview with the Wall Street Journal, FCC Chairman Julius Genachowski expressed impatience with the glacial pace of policymaking at his Commission. Although he mentioned that the FCC, under his direction, has implemented some notable reforms, he conceded that “there is still a lot to do.”

Unfortunately, regardless of how earnest the Chairman is in his desire to move forward with the business of policymaking, his actions speak much louder than his words. Indeed, his yearlong pursuit of network neutrality rules — first via a traditional rulemaking proceeding and, most recently, via an effort to reclassify broadband as a telecommunications service — has cast a long and almost suffocating pall over many of the items that the Chairman wishes to act upon. His inaction on civil rights issues — especially EEO enforcement — is just one example of how paralyzed the agency has become.

Recent news that Congress will not move forward to address the regulatory questions that currently vex the Commission (e.g., whether the FCC has authority to regulate broadband service providers) could embolden the Chairman to adopt the sweeping regulatory changes for broadband that he proposed earlier this year. Doing so in the absence of Congressional action would only invite immediate legal challenges that would mire the FCC in litigation, appeals, and remands for years to come.

To put it plainly, the FCC is stuck. Although it recently adopted some promising orders related to broadband (e.g., new rules for accessing new portions of wireless spectrum called “white spaces” and for enhancing access in schools and libraries), the Commission has failed to move forward with implementing core provisions of its monumental National Broadband Plan.

The union last week also submitted its latest round of comments requested by the Commission, this time to broaden its position on a proposed compromise.  We’ve delineated which of the proposals we believe are primarily pro-consumer (in green), pro-provider (red), and which fall straight down the middle (blue):

• First, wireline broadband Internet access providers (“broadband providers”) should not block lawful content, applications, or services, or prohibit the use of non-harmful devices on the Internet.
• Second, wireline and wireless broadband providers should be transparent regarding price, performance (including reporting actual speed) and network management practices.
• Third wireline broadband providers should not engage in unjust or unreasonable discrimination in transmitting lawful traffic.
• Fourth, broadband providers must be able to reasonably manage their networks through appropriate and tailored mechanisms, recognizing the technical and operational characteristics of the broadband Internet access platform.
• Fifth, the Commission should take a case-by-case adjudication approach to protect an open Internet rather than promulgating detailed, prescriptive rules.

The first and third principles are strongly pro-consumer, although as we’ve seen, providers have a tendency to want to define for themselves what is “harmful,” “unjust,” or “unreasonable” and impose it on their customers.  We’ve seen provider-backed front groups argue that the concept of Net Neutrality itself is all three of these things.  Any rules must be clearly defined by the Commission, not left to open interpretation by providers.

The second principle cuts right down the middle.  Consumers deserve an honest representation of broadband speeds marketed by providers (not the usual over-optimistic speeds promised in marketing materials), and transparency in price — especially with gotchas like term contracts, early cancellation penalties, overlimit fees, etc.  But providers can also go to town with abusive network management they’ll market as advantageous and fair, even when it is neither.  Just ask customers of Clear who recently found their “unlimited” wireless broadband service, marketed as having no speed throttles, reduced in speed to barely above dial-up when they used the service “too much.”  Clear says the speed throttles are good news and represent fairness.  Customers think otherwise, and disclosure has been lacking.

The fourth and fifth principles benefit providers enormously.  Network management itself is neither benevolent or malicious.  The people who set the parameters for that management are a different story.  A traffic-agnostic engineer might use such technology to improve the quality of services like streamed video and Voice Over IP by helping to keep the packets carrying such traffic running smoothly, without noticeably reducing speeds and quality of service for other users on that network.  There is nothing wrong with these kinds of practices. There is also nothing wrong with providing on-demand speed boosts on a pay-per-use basis, so long as the network is not oversubscribed.

But since providers are spending less to upgrade their networks, providers may seek to exploit these technologies in a more malicious way — too stall needed upgrades and save money by delivering a throttled broadband experience for some or all of their customers.  If customers can be effectively punished for using high bandwidth applications, they’ll reduce their usage of them as well.  That’s good for providers but not for customers who are paying increasing broadband bills for a declining level of service.

Some examples:

• Customers using high bandwidth peer-to-peer applications can have their speeds throttled, sometimes dramatically, when using those applications;
• Internet Overcharging schemes like usage caps, overlimit fees, and “fair access” policies can discourage consumers from using services like online video, file transfer services, and new multimedia-rich online gaming platforms like OnLive, which can consume considerable bandwidth;
• Preferred content can be “network managed” to arrive at the fastest possible speeds, at the cost of other traffic which consequently must be reduced in speed, meaning your non-preferred traffic travels on the slow lane;
• Providers can redefine levels of broadband service based on intended use, relegating existing packages to “web browsing and e-mail” while marketing new, extra-cost add-ons for services that take the speed controls off services like file transfer and online video, or changes usage limits.

The CWA runs the Speed Matters website, promoting broadband improvements.

It is remarkable the CWA seeks to allow today’s indecisive Commission to individually adjudicate specific disputes, instead of simply laying down some clear principles that would not leave a host of loopholes open for providers to exploit.

Big players like Comcast, AT&T, and Verizon have plenty of money at their disposal to attract and influence friends in high places.  If the Commission thought Big Telecom’s friends in Congress were breathing down its neck about telecom policy now, imagine the load it will be forced to carry when these companies seek to test the Commission’s resolve.

Opponents of Net Neutrality claim broadband reclassification will leave providers saddled with Ma Bell-era regulation.  But in truth, the FCC can make their rules plain and simple.  Here are a few of our own proposals:

1. Network management must be content-agnostic.  “Preferred partner” content must travel with the same priority as “non-preferred content;”
2. Providers can use network management to ensure best possible results for customers, but not at the expense of other users with speed throttles and other overcharging schemes;
3. Providers can market and develop new products that deliver enhanced speed services on-demand, but not if those products require a reduction in the level of service provided to other customers;
4. Customers should have the right to opt out of network management or at least participate in deciding what traffic they choose to prioritize;
5. Providers may not block or impede legal content of any kind;

In short, nobody objects to providers developing innovative new applications and services, but they must be willing to commit to necessary upgrades to broaden the pipeline on which they wish to deliver these services.  Otherwise, providers will simply make room for these enhanced revenue services at your expense, by forcing a reduction in your usage or reducing the speed and quality of service to make room for their premium offerings.

The industry itself illustrates this can be done using today’s technology.

The cable industry managed to accomplish benevolent network management with products like “Speed Boost” which delivers enhanced, short bursts of speed to broadband customers based on the current demand on the network.  Those speed enhancements depend entirely on network capacity and do not harm other users’ speeds.

Groups like the CWA need to remember that compromise only works if the terms and conditions are laid out as specifically as possible.  Otherwise, the player with the deepest pockets and closest relationships in Washington will be able to define the terms of the compromise as they see fit.

And that’s no compromise at all.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/CWA Larry Cohen on the Open Internet Jobs and the Digital Divide 9-14-10.flv[/flv]

Communications Workers of America president Larry Cohen outlined the union’s position on Net Neutrality before the Congressional Black Caucus Institute on Sept. 14, 2010.  (2 minutes)

Stop the Cap! reader Kevin dropped us a note again this evening to let us know Clear users are still being throttled even without running peer-to-peer software, and that those throttled experiences run into days, not the 15-minute increments a company official claimed yesterday.  Perhaps Clear’s definition of “minutes” differs from the acceptable norm.  Regardless of the reason, it’s an unpleasant experience at best to pay a generous fee every month for service that effectively tops out at 250kbps (that’s 0.250Mbps) when the punishment throttle is active.

But even more ironic, Clear’s annoyance with a purported flood of customers running peer-to-peer applications on their network could have been tempered had the company avoided advertising the service in 2009 on the very notorious Pirate Bay:

Ahoy mateys: Clear's 2009 advertisement on The Pirate Bay, as captured by one of our readers. (click to enlarge)

Although we enjoy the irony ourselves, it is fair to mention Clear probably didn’t intentionally target the world’s largest torrent tracker website, but was instead mass advertising on a range of websites targeting users thought to be “early adopters.”  But every advertising network we’re aware of allows advertisers to opt-out of specific websites, and Clear hadn’t bothered when our reader captured this image.

That makes Clear’s apparent battle with peer to peer traffic partly one of their own making.

Clear made itself unclear about its speed throttle.

Clear, the 4G wireless broadband service backed by Sprint, Comcast, and Time Warner Cable is under fire for selling customers an unlimited use/”no speed limit” service plan that is heavily throttled to as low as 250kbps once customers are deemed “heavy users” by the provider.

Stop the Cap! reader Kevin in Rochester dropped us a note to share his frustration at Clear’s bait and switch marketing that promises one thing and delivers another.

It’s becoming common knowledge – but not common enough – that Clear is throttling their in-home broadband subscribers. For $30 a month, Clear delivers “unlimited 3Mbps” download speed, but after 8-10GB of usage in a month, they cut your speed to 250kbps as a punishment.

Scores of customers share Kevin’s problems, with complaints pouring in on broadband forums and on Clear’s customer support website (which crashed earlier today).  It is not known whether these usage limitations are also imposed on Comcast and Time Warner Cable’s branded 4G wireless services, which are also delivered by Clear’s network.

Remarkably, Clear’s website has marketed its broadband service as free from classic Internet Overcharging schemes like usage caps and speed throttles/network management:

Clear's own marketing promises unlimited usage with no speed reductions, unlike those "other" providers, which now also includes Clear itself. (Courtesy: Michael46)

Despite the marketing, Clear’s Rob Lenderman today admitted the company implemented a speed throttle system on Wednesday, Sept. 29 and placed the blame for doing so on peer-to-peer torrent traffic:

Last Wednesday we deployed a new automated algorithm that tries to even the playing field for all users. Essentially we tried to take users that were downloading large amounts of data over a week’s period of time and limit their top speeds during periods of high tower utilization. This system is based on a tower’s current utilization, GB’s downloaded in the past 7 days and current download speeds in the past 15 minutes. it recalculates your max D/L speed every 15 minutes based on these factors. All in there are 48 buckets of max D/L speeds based on these factors.

The expected results of these changes was that a small percentage of users would be slowed down for short periods of time but only during high utilization times on the tower.

Theoretically the very slow speeds would only last for 15 minutes and then readjust based on tower usage and the last 15 minutes of slower speeds.

The reality is that a very small percentage of users are being set at very low D/L speeds for hours at a time.

We are gathering more data as I write this and we are looking at adjustments to the policy so that the connection becomes more usable. Expect further details this week.

One thing I want to stress is that this algorithm does not apply to towers that have a low utilization which is a large percentage of the towers. Since high utilization is usually at night most users that are seeing slower speeds at night would see increases at other times of the day. We realize this is not ideal but using the system for large downloads outside normal usage hours(evening) will allow you to get higher speeds. This rule applies even if you are not being slowed. Fewer users = Higher speeds.

Expect more details in the next few days as we drill into the details and let you know what changes we will be making to make the experience better.

In the short term you can increase the speeds of your experience by reducing the number of GB sized downloads that take place. Our data shows that running a torrent is one of the reasons that people start to experience slower speeds.

[…]I use the word limit when talking about D/L speeds. Not in terms of amount of data you can download. I can assure you this is being handled at a very high level in the organization as some of the experiences some of you are having is not in the spirit of the program. As for using a P2P you will improve speeds if you run them at off peak hours. As tower utilization drops during those hours the algorithm will release more bandwidth and the apps will pick up speed. In addition fewer users will also yield an increase since the algorithm does not affect low utilization tower at all. So you get a double benefit from using off peak hours for large downloads.

We are looking at how to set the speed limits to ensure things like web browsing and youtube are useful even though large downloads may be limited in terms of speed during peak hours.

We are meeting every day to go over new data and determine a longer term solution instead of just throwing new solutions out there without putting some thought into them.

We apologize for this but we need to get it right and not just change for the sake of change.

RobL

Of course, customers promised repeatedly they would receive lightning-fast, unlimited wireless broadband from the company were unimpressed with the company’s argument that artificially slowing their speeds after as little as 20 minutes viewing Hulu or Netflix to 250kbps for several days qualified as ensuring the subscriber experience.  Many customers report Clear’s throttling is hardly limited only to peer to peer torrent traffic.  Online video streaming, in particular, routinely triggers the speed throttle for customers, something Lenderman admitted might be an issue:

We are looking at the impact of the new policy as we speak and will be reevaluating it shortly to determine what changes might need to be made.

The algorithm we use is complicated and is not intended to shut down users that use the service in a normal manner. It was intended to slow down usage from users that have bit torrents, etc running all day long.

For some of the customers that have complained we have researched it in detail and they were not being slowed by the algorithm. We have to make sure that everything is running properly as it makes no sense for us to limit users so much that the service becomes unusable.

We should have more info on what we plan to change in the next few days as we evaluate the data.

Clear becomes just the latest provider poster child for Net Neutrality in the United States.  While there may be reasonable capacity issues at stake on wireless networks not designed to accommodate 24/7 peer to peer traffic, throttling online video is another matter entirely — it’s one of the services Clear has promoted as possible using their higher speed network.  Artificially slowing a network the company sells as not being hampered by such traffic control measures is a classic case of false advertising.

One vocal Clear customer created this avatar

Customers have noticed and have attacked the company for dishonest business practices, bait and switch marketing, and violating their own internal policies.

Stop the Cap! has not seen any reports of company officials attempting to enforce early termination fees for those exiting contracts early.  Kevin noted his service was turned off as he was on the phone with a representative to process the disconnect request.  The representative also demanded Kevin return his modem.

Most who are dropping service are resuming service with their old providers, mostly cable broadband and telephone company DSL providers.  If online forum posts and Twitter tweets are to be believed, the company is losing hundreds of customers per day over their Internet Overcharging scheme.

Most likely, Clear has turned to vendors like Sandvine for “usage management” equipment that can automatically slow service for those who actually utilize the service they pay to receive.

“It is no longer about the broadband-connected home but about the broadband-connected individual,” said Tom Donnelly, EVP marketing and sales, Sandvine. “Service providers worldwide are looking for tools that enable their subscribers to stay within their service plans regardless of when, where or how they connect to the network.”

Sandvine’s products detect network conditions that trigger policies within the network to help service providers control subscribers’ Internet experience.  The latest version integrates with 3G and 4G networks to throttle speeds based on time of use or volume of data transferred.  A provider sets the parameters and the “network management” solution does the rest, automatically.

Stop the Cap! intends to monitor this situation carefully over the coming days to learn what the company intends to do with its network management scheme.  If they continue to use it, we will do our part and file a formal complaint against Clear with New York State Attorney General Andrew Cuomo for false advertising and misleading business practices.

It is only a matter of time before a law firm begins a class action against the company for similar reasons.  Stop the Cap! encourages Clear customers to use the company’s forum to vocally demand an end to all Internet Overcharging schemes or else you will take your business elsewhere.  You should also demand full credit for the days you experience artificially slowed speeds, and please let us know if you are asked to pay any early termination fee for exiting a Clear term contract.

Heaney

While Federal Communications Chairman Julius Genachowski continues his indecisive dawdling over whether to enforce Net Neutrality in the United States, the United Kingdom’s two largest Internet Service Providers have openly admitted without such protections they would openly discriminate against content providers’ traffic.  In fact, discriminating against providers based on who paid and who didn’t would be a perfectly normal business practice for any ISP, they declared.

Senior executives of both BT and TalkTalk let the truth spill from their lips at a Westminster eForum on Net Neutrality, something companies like Verizon, Comcast, and AT&T surely wish they hadn’t done.

The surprisingly open dialogue was covered in detail by PCPro, and sent on to us by our reader “PreventCAPS”:

Asked specifically if TalkTalk would afford more bandwidth to YouTube than the BBC’s iPlayer if Google was prepared to pay, the company’s executive director of strategy and regulation, Andrew Heaney, argued it would be “perfectly normal business practice to discriminate between them”.

“We would do a deal and look at YouTube and look at the BBC, and decide,” he added.

When asked the same question, BT’s director of group industry policy, Simon Milner, replied: “We absolutely could see a situation when content or app providers may want to pay BT for quality of service above best efforts,” although he added BT had never received such an approach.

TalkTalk’s Heaney declared Net Neutrality a mythical concept, saying they already discriminate against traffic now that they have their foot in the door with “traffic management” policies.

“It’s a myth we have Net Neutrality today – we don’t,” he said. “There are huge levels of discrimination over traffic type. We prioritize voice traffic over our network. We shape peer-to-peer traffic and de-prioritize it during the busy hour.”

If British ISP’s are willing to discriminate against non-paying traffic on its networks, are American ISP’s going to act any differently?