Cable companies want us used to metered internet

AT&T and Time Warner Cable are desperate to get us used to metered internet, dressing up their plans in what Om Malik describes as “legal mumbo-jumbo that no human can actually understand.”

AT&T Senior VP Robert Quinn got in front of the US regulators and said that the company would offer “non-overlapping tiers of broadband service, rather than its current offerings which go “up to” varying speeds of data transmission.” He went onto add that, “When we provide broadband services based on speed, we will do so in discrete tiers that are disclosed to our end-user customers.”

Translation: We are going to segment and meter the broadband service.

They’re already using complicated, cellular-style plans to trick customers into paying for overages in test markets. By offering high speeds with extremely low caps, customers are quickly and quietly forced to start paying $1 for every gig they download. The quintessential example? One trial plan offers a monthly cap of 20GB on a 7mbps plan: you’d exhaust that allowance in only eight hours of maxed-out use at the offered speed.

Here’s what I think is the clever part. Consumer activists want bandwidth treated like a utility, so metering it aligns well with a quid-pro-quo that networks might try to present: “You get some kind of net neutrality, but you pay for every single byte of it you get.”

However, internet provision is not utility-like in one respect: it’s a potentially unlimited resource that will become cheaper and cheaper as time goes by. It is to communications now as fusion power is to energy in science fiction. There is no serious long-term shortage of bandwidth, as internet service providers and their pet analysts assert. By getting us used to metered use now, your local cable monopoly will magic money out of air when “internet” is just a value added to the other services they pipe over the same data line.

AT&T, Time Warner Cable Up The Metered Internet Ante [GigaOm]

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17 Responses to Cable companies want us used to metered internet

  1. Dillenger69 says:

    I don’t think this will work in the long run.
    They may make some money, but other providers will come in with unmetered wireless services once WiMax matures.
    I have service at 12mb down with no cap to my knowledge at the moment. At least I’ve never gotten a nasty note from Comcast. If they put in a 20gig cap my family will certainly use that up within a month. We get our game updates delivered online, we watch video from online. The last city of heroes update was 3 gigs all by itself (times 3 computers). Combine that with 4 people downloading email, massive attachments my dad spams out, web rowsing and full length videos … you have a disaster in the making. oh yea … add in a new linux distro every few months. Those dvd ISOs aren’t small.

    I’d sooner go with a slower unmetered/uncapped service like ClearWire than a higher bandwidth metered/capped service.

  2. Aloisius says:

    Awesome. I get a worm on my machine and it decides to do extreme aggressive scanning + other evil activity driving my bandwidth usage up and I end up paying hundreds of dollars for it.

    Maybe that’s not such a bad thing. Eventually everyone will ditch Windows if they start getting $1500 bandwidth bills. Of course then worm authors will adapt and write them for Mac, but not before Microsoft gets hit hard.

  3. FoetusNail says:

    @#10 – You make a very well reasoned and informed argument, but the reality is 8Tbs is nothing.

    No matter what is said or done, no one is ever going to save money unless they disconnect. The demand of the average user is probably going to keep pace or exceed capacity for some number of years until everyone is getting everything they need or want. Additionally, with the death of the PC and cloud computing on the ehorizon who knows where this will end.

    Before this levels out the average user will easily be approaching 100’s of Gbs per month. Nothing is going to be stored at home, every photo and video shot will be uploaded, everything you read, watch, or hear will be downloaded, video conferencing is going to be as common as a phone call, and most offices that do not have customers visiting will be empty. The economy is going to require capacity in the 1000’s of Tbs in each market.

    If I was an ISP, I would want to start charging everyone right now too instead of those few who are eating up bandwidth today!

  4. James Holden says:

    @#12 – Yeah… capacity planning is a game that only Cisco win.

    @#11…

    Awesome. I get a leak in my plumbing and it decides to do extreme aggressive soaking + other evil activity driving my water usage up and I end up paying hundreds of dollars for it.

    Maybe that’s not such a bad thing. Eventually everyone will ditch crap plumbing if they start getting $1500 water bills. Of course then worm authors will adapt and write them for electricity, but not before Mario gets hit hard.

  5. strougly says:

    bandwidth is absolutely _not_ like fusion. its a limited resource that often gets overly consumed by a few. there is no reason why “pay as you go” billing schemes couldn’t reflect this.

    consider the person who spends 24/7 on pbay, soaking the pipe, both ways. that costs whoever is providing the fiber money and makes your, the moderate users, connection that much slower. or look at it the other way, you’re not paying for your own usage, but a share reflecting everyone elses usage, pr bpay’s included.

    as for me, i’d prefer whichever scheme costs me less for the same amount of usage, which, in theory, this should provide. which is not to say that this might not be a thinly veiled excuse to gouge customers, but thats a different matter.

  6. chus3r says:

    I agree to an extent. But what if you are not on pbay but on ABC.com or Hulu and that is how you watch network TV? Or you stream Netflix? So therefore what once was free over the air, will cost me more for my Internet connection and possibly subscriber fees to the media outlet.

    I’m starting the think this whole Internet thing is just a giant corporate cash cow at my expense. Maybe I should just unplug.

  7. FoetusNail says:

    For many users and most businesses, internet use is already a necessity. Anything that limits use is bad for the economy. The build out is not because some few are using large amounts of mythically scare bandwidth, but that internet use is now where electricity was in the 1920’s. There simply wasn’t anything to plug in, if you had told planners in 1940 the average home would be using 30 kWh per day in 65 years, their question would have been doing what. My house is quite old and there are only one or two outlets in each room, modern codes would require a minimum of four, some rooms would have six. We now use approximately 30 times as much electricity per day than they did in 1940. The problem for ISP’s is the change is taking place in ten or twenty years not 65. On the upside, the cable is already pretty much installed, they just need new pumps to fill the pipes.

  8. mdhatter says:

    What #3 said:

    It seems to me that where you see a marginal charge imposed for use of a good that has no associated marginal cost – that is a decent indicator that the market for that good is un-competitive.

  9. novakreo says:

    Welcome to life in the rest of the world, Americans.

  10. long-orange-arms says:

    @ Strougly: surely the point is that whilst there are set up and fixed maintenance costs both to supplying broadband and to tapping a hypothetical “free” source; there is no marginal cost associated with incremental use of either once the infrastructure is there.

    Un-metered connectivity has emmerged at least twice in my experience of connecting to the internet – first with dial up where Freeserve (in the UK) swept away the pay by minute operators in a matter of months, and later with broadband.

    It seems to me that where you see a marginal charge imposed for use of a good that has no associated marginal cost – that is a decent indicator that the market for that good is un-competitive.

    i.e. if the service provider is able to obtain additional fees without additional effort, someone else would be able profitably charge less for the same service. If the other player isn’t present, some anticompetitive barrier must be preventing them from being there.

  11. knodi says:

    Yeah, but I think you’re all missing a big point: part of the success of these sites like Hulu and YouTube is BECAUSE of unmetered access.

    What percentage of Youtube’s traffic do you think is being served up to the person who pays the bills in their household? If the heavy users get charged more than the light users, then the heavy users will get grounded the first time their parents see a scary bill. And please don’t say “I use youtube, and I pay my bills”- I just mean a critical percentage are dependent kids, not all.

    I don’t get why all you people who say “it’s a limited resource” feel free to add the patronizing “plain and simple”. Yeah, there’s only so much bandwidth to go around. But the reason there’s been so much explosive growth in internet use is BECAUSE it’s unmetered.

    If I knew that my streaming radio was streaming money directly out of my bank account, or if downloading a show off iTunes cost $2 for the show, and $1 for the bandwidth… it would completely change the dynamics of the internet. And not for the better.

  12. O_P says:

    If you want an example of what might happen just look at Australia. We don’t have any unlimited plans here any more because a few jerks ruined it for everyone.

    We do however have massive excesses charged on downloads that go over quota. It wasn’t unheard of for people to have to cough up thousands of dollars. Regulatory bodies have put a stop to such gouging tactics now though, thankfully, but one entire business was built on it. Dodo internet.

    And to whoever suggested unlimited wireless data, you have to be joking surely. Wirless excesses here run $10,000 a gigabyte on some of our Telcos if you bother to read the terms and conditions. Which most people don’t.

    I had hoped that Australia would one day move to the unlimited internet model, but it looks like everyone is moving to the way we’ve already gone. And at $10,000 a gig, why wouldn’t you?

  13. James Holden says:

    Connectivity is a finite resource, plain and simple, so it makes sense to meter it, just like electricity, gas or water.

    Your ADSL may sync at 4MB, 8MB or whatever, but that’s only your connection as far as the local exchange/office. For an exchange with a thousand 8Mb users on, there is definitely not an 8Gb connection from there onwards – you have to share.

    Once your connection has made it back to the ISPs offices, it’s useless without connections to the wider internet, again at a cost. An ISP with one million 8Mb users does not have 8Tb of peering.

    Just the same as everybody turning on their taps (US: faucets) would result in everyone getting a dribble, or everyone firing up tens of kW of electric heaters would bring the power grid to a halt, everyone trying to max their broadband connections simply will not work.

    Yes – granted, there’s been some really shady selling in terms of plans being marketed as “Unlimited”, but it’s really the same kind of “unlimited” as an all you can eat restaurant – bringing a wheelbarrow isn’t fair and would be rightly disallowed. [Oh, how I hate these sorts of analogies :-( ]

    I used to work for a major UK ISP, and one thing that will surprise most people with an interest in such things, is that the vast majority of customers downloaded less that 1GB per month, at least a couple of years ago before youtube made it big.

    There were a very small minority that used over 500GB per month, and these customers cost the company over 400 GBP per month, whilst paying around 30 GBP. Is it fair to continue to provide service to these customers at a loss of 4440 GBP per year?

    For ADSL lines provided (but possibly resold by some other ISP) BT in the UK, there are two stated levels of “contention” (deliberate overselling) – 1:20 (business products) and 1:50 (consumer products). This has never been a great secret, but hasn’t exactly been part of the sales collateral (not recently, anyway).

    8Mb isn’t AFAIK available as a business product, so the entire setup relies on an average monthly download of 50GB.

    Unfortunately, it doesn’t take many heavy users to make it unworkable, as speeds drop drastically for everyone.

    So, there’s two choices really, to ensure that everyone gets an acceptable experience for what they are prepared to pay:

    1) Prioritise real-time traffic, such as VoIP and browsing, at the expense of “bulk” traffic. This isn’t the same as a non-neutral network though, despite what many people think.

    OR

    2) Make users pay by the GB for what they actually use, and if lots of people are happy to pay large fees for large volumes of data, then the funds are there to build out the infrastructure.

    This really isn’t rocket science, it’s basic economics.

    If everyone paid by the GB, then the majority of customers would actually save money. The tables would turn, and the many would profit from the few, instead of the other way around.

    Consider this – although most of the UK is moving towards metered water, some customers are still on an all-you-can-eat (-drink?) plan. However, there are still contractual clauses in place to prevent you from filling your swimming pool if you are on such a contract. These sorts of clauses are considered obvious for water provision – after all, people with pools shouldn’t be able to use dozens of times more water than everyone else, but in the broadband world, all hell breaks lose when formal/informal “caps” like this are imposed.

    The very heavy broadband users, whilst being particularly vocal, are actually a tiny minority in the customer base, so it’s not much of a surprise that the ISPs don’t pay much attention to them – particularly given the fact that the ISPs are actually heavily subsidising their usage.

    The vast, vast majority of users either:

    1) Aren’t affected by caps, so don’t care.

    OR

    2) Would actually be better of paying by the GB

  14. Anonymous says:

    This already exists in Toronto, the two biggest telcoms are providing shoddy service and bandwidth caps. Which wouldn’t be a bad thing, except for the fact that there are very little options available to those who want to give them a big Fuck You by switching to some other ISP. When everything is a subsidiary of the big companies, and when you sign up for a service for a set amount of time ( I have to pay a fee to cancel my subscription for having it for less than the 12 months I agreed for) changing the service whenever you want is just scamming the customers plain and simple.

    I would love to see better regulations to allow for more small time ISPs to be able to compete with the giants

  15. FoetusNail says:

    There is no shortage of pipes. The infrastructure was overbuilt years ago because while they were adding capacity the throughput was increasing exponentially. Currently there is excess capacity, the buildout is now in neighborhoods. Throughput is going to continue to increase.

    At this rate, how long will it be before forgetting to turn off your TV before going on vacation will add hundreds to your cable bill? Why are these companies proposing to charge high volume users more when these are the same companies providing content? I am not going to view their content if I can not afford the charge. Will advertisers block this when it becomes more obvious they are losing viewers?

    From a 2006 article: As Internet traffic grows exponentially, so high-speed data transmission becomes crucial. Fraunhofer researchers are now using new technology that supports speeds of 2.56 terabits per second over fiber-optic cables – the equivalent of 60 DVDs.
    http://www.technologynewsdaily.com/node/2547

    I may be wrong, but current real world capacity is still less than 10gbs.

    From a 2008 article: And this year Lucent announced 80-channel technology, capable of sending 400 billion bits of information–the equivalent of more than 11,000 encyclopedia volumes–in one second, over one tiny pipeline of fiber. Thousand-channel technology is on the horizon.

    From the same article: “”Photons are only one piece of the puzzle,” says Bran Ferren, executive vice president for creative technology at Walt Disney Imagineering. Delays on the Web, for example, are only partly due to lack of bandwidth. “”The computer feeding the information can’t keep up with it fast enough. It is a server problem,” says Ferren.

    http://www.webhostdir.com/news/showNews.aspx?ID=26537

  16. Jabber says:

    @strougly

    The only problem with your theory is that P2P aren’t the cause of this supposed drain on this “limited resource.” From Gizmodo:

    “No, p2p is no longer the single biggest traffic whore, responsible for only 20 percent of total traffic. It’s streaming video, like YouTube and Hulu, which is now 50 percent of total traffic. During peak congestion—the times when Comcast will slow you down for hitting the pipe too hard—70 percent of it is http.”

  17. Anonymous says:

    I worked for Time Warner for some years; the idea of metered bandwidth has been something they are working on for years.

    Data provision is a good way to make money. You spend a huge pile of money to build out the physical plant, and then wait 2-3+ years for the monthly payments to erase any debt from that. Past that, your only cost is support calls, for which cable companies famously minimize effort. Everything else is profit.

    Data metering gives the company a way to charge extra money on top of a monthly fee. In a market where you _at best_ have a network duopoly between the phone and cable companies, they don’t have to worry about market share – just about extracting more money from individual customers.

    I’d end this with a call to FIGHT the POWER! … but there isn’t really a way to do that, other than perhaps talking to your local municipality to encourage giving a franchise to multiple providers.

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