Planning for the future

I’m a Comcast internet access customer, and I don’t have a television here in Ann Arbor.  There, I’ve said it.  I remember thinking when other people used to say they didn’t have televisions that they were just being sanctimonious cranks.  I swear I’m not being a sanctimonious crank.

With a good internet connection, and a big/friendly enough monitor, you don’t need to subscribe to cable content any more.  I was thoroughly content watching the convention this week on C-SPAN.  But I was watching C-SPAN.org – and I was also following the Twitter feeds of thousands of people.  Plus I was watching the comments on DailyKos.  It was the most convivial, richest way to watch a major speech that I have ever experienced.

Having cut all of those cords (no landline phone either), I’m worried about a future in which Comcast gets to say that I’ve used “too much” bandwidth and have to be cut off. :  That future is coming on October 1, when Comcast will implement a 250 GB monthly cap.  (Hat tip: Karl Bode.)

Comcast sees a future in which people use the internet to send a few emails or look at a few web pages.  They don’t want people watching HD content from other sources online, because that doesn’t fit their business model.  So rather than increase capacity, they’d rather lower expectations. 250GB/month is about 50-60 HD movies a month, but we’re not necessarily going to be watching movies.  Maybe we’ll be doing constant HD video sessions with other freelancers, or interacting with big groups all over the world in real-time.  Who knows what we’ll be doing – it’s all in the future.

But rather than build towards a user-powered future, Comcast wants to shape that future — in advance — in its own image.  The company is not offering additional bandwidth packages to people who want more.  They just want to be able to shut service off at a particular point – a point of bandwidth use that most people aren’t using right now, so that they won’t be unhappy.  By the time we all want to be doing everything online, Comcast users (the company hopes) won’t expect anything better.

Here’s a comment that makes the competitive picture clear:

Q.  How does this factor in with users of your Digital Voice service? On average how much bandwidth does that service take up?
Bill G. [Comcast]: Digital voice has no affect [sic] on this, the 250 gig cap is allotted for just downloads

So Comcast’s own services won’t be limited, just downloads of other peoples’ services and material.  And don’t get us started on those asymmetric uploads.

Comcast’s cap is being widely discussed, which is a good sign.  Building in an assumption of scarcity rather than building out better access – that’s strange.

What business doesn’t want to build capacity to serve the future?:  I’ll tell you — listen, now — a business that’s confident it can plan for the future it wants.  A business whose plans don’t include serving as a neutral transport platform for other peoples’ material.  A business that is focused on maintaining scarcity.

Comments

  1. Josh Hudner says:

    Comcast is also being clever and trying to slip this in early with a high cap to avoid much in the way of consumer and regulatory blowback.

    They are correct in pointing out that most users aren’t using that. An average skype call doesn’t use a full gigabyte if you leave it on all day, and a gig gives you around 5 hours of low-res video chat, at least in theory.

    Of course, Comcat would need to explain how this cap will function with uploads, since that would have a sharper impact on all of the new and exciting distributed and cloud applications.

    The big issue is that this cap would need to double every 18 months or so to keep up with new storage and media demands. I still remember never thinking I could possibly fill my first 1 GB disc.

    The other interesting comparison note here is that Comcast is essentially claiming that we should value one gig of transfer at 20 cents (assuming around $50/month for a 250-gig capped data plan). That means they are claiming that, because of some perceived scarcity in the fiber infrastructure, you should be paying them an 80 cent surcharge for every single layer DVD (4 gigs) you download. $1.60 for every full dual layer disc. $5.00 for every bluray disc and a full $10.00 surcharge for every dual layer bluray disc you download.

    By comparison, sending any of these discs through the mail costs 42 cents. At the least, this “scarcity” will safeguard Netflix’s business model for another few years.

  2. Susan,

    What would you have the government do? Sure, regulators could help set fair prices for metered bandwidth, but you can’t possibly suggest that people shouldn’t pay for what they use? Metering is not only both fair and neutral– it is the foundation on which our economy is built. In a capitalist economy, metering is the rule, not an exception. In America, consumers pay based on how much they consume. For example, the gas station charges you by the gallon, the electric company charges by the kilowatt, the grocery store charges you based on how many groceries you buy, etc, etc. If the government says people are entitled to unlimited broadband, why are they not entitled to unlimited gas, electricity, or groceries?

    You can certainly lament the death of unlimited broadband, but don’t expect the government to step in and reject the basic tenets of fair market capitalism. You are suggesting that we should restructure our economy so that every citizen pays one flat fee for every good and service, and then takes from the pot according to their needs. Isn’t that communism?

  3. barry payne says:

    it’s ridiculous to compare the price of gas, groceries or electricity to the price of metered gegabytes as equivalent measures of “paying for what is used” … in competitive markets, price is driven to short run cost, and the short run cost of a gegabyte is near zero while the short run cost of gas, groceries and electricity is substantially above zero …

    except in peak periods on a congested network, when the additional gegabyte becomes equivalent to the additional gigabyte-per-second of bandwidth capacity for which some users obtain at the expense of other users …

    the cost of an additional gegabyte-per-second manifests either as congestion or expanded bandwidth capacity to avoid the congestion, and if competition drives price to cost, the question is why a firm would choose to experience the cost of congestion over the cost of adding bandwidth to avoid congestion …

    for powerful monopolies-duopolies, because price is not driven to short run cost and remains substantially above it – exacerbated by the high fixed-cost/low marginal-cost nature of the business – “all you can eat” pricing made profit-max sense in the beginning to grow low-gegabyte-use suscribership with promises of high temporary burst rates of bandwidth on an uncongested network …

    in this model, large gegabyte users don’t generate more revenue, and when those gegabytes cause congestion in peak periods, they interfere with adding more revenue-generating lower-use subscribers at fixed monthly rates without having to add bandwidth capacity …

    and even absent congestion, large users of gegabytes, as explained by Susan, raise serious threats of competitive entry, revenue erosion and various forms of cannibalism for which metered gegabytes is the obvious solution available to those with sufficient market power to impose them …

    contrary to the nonsense from the Godwin’s-law crowd, it is exactly capped/metered gegabtyes price above incremental cost caused – and therefore do not represent an outcome of competition – that one could expect from a centralized government comand and control regime – or a monopolist

  4. …in this model, large gegabyte users don’t generate more revenue, and when those gegabytes cause congestion in peak periods, they interfere with adding more revenue-generating lower-use subscribers at fixed monthly rates without having to add bandwidth capacity …

    This all suggests congestion pricing–with a premium for gigabytes during times of peak usage. But that’s not what Comcast is proposing.

    Bit torrent use, for example, peaks at about 4 am–because most bit-torrent users set up their clients to use max bandwidth at times of minimum usage.

    Question: Sue, what options do you have? All those who scream let the market sort this out seem to assmue that there is a functioning market in ISP’s–but I doubt that there is…

  5. Here’s my proposal. Municipalities should invest in and own dark fiber. That dark fiber must be open for anyone to light. So then anyone can light it and install their own electronics. Including cable companies. We’ll have great competition for ISPs.

    You’re right, we don’t have a functioning market for ISPs. Meanwhile, the world is routing around the US.

    Susan

  6. So connectivity would be treated as a public utility? I like the idea and have always thought Internet access should be publicly owned. However, the paramount issue I can see with this approach is the cost to municipalities. Especially now.

    Routing around is not necessarily a bad idea. Maybe it will free up some bandwidth so I can reach my 15Mbps download speed. :)

    Cheers

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