Harold Feld talked about Time Warner Cable’s money grab earlier. He notes the bogosity of their excuses of needing the money to keep up with users’ expanding bandwidth needs. But, more importantly, he noted that Time Warner Cable claimed that their users were “fine with usage caps.”
Except they weren’t fine. Users tore up the company in phone and ether-print and, late yesterday, the company responded with a more convoluted tale.
Don’t let that link go by without reading it.
First, users are still fine with caps, it’s just that the “premature” press “did not tell the full story.”
Second, and this is BIG NEWS, “With the ever-increasing flood of content on the Internet, bandwidth consumption is growing exponentially.” Get your hard-hats, folks, we’re going to be crushed by all this traffic!
Actually, every study on the subject shows that growth this decade has been slowing slightly over previous decades. The growth rate which used to be between 80% and 100% one year to the next slowed to around 50% years ago and has pretty much stayed there. Last year, in fact, it grew even more slowly — ISP traffic being a lazy 30-40% higher than the year previously. Excuses, excuses, the Roadrunner’s pants are on fire.
Back under its hardhat, the Roadrunner continues, “For good reason. Internet demand is rising at a rate that could outpace capacity within a few years. According to industry analysts, the infrastructure may not be able to accommodate the explosion of online content by 2012. This could result in Internet brownouts.”
Where did they find that one, some old press release by Enron? The Internet is fine, thank you very much. There is no Internet brownout on the horizon. The Exaflood is a myth.
There’s much more to the Roadrunner’s “Long Reply” and I really do encourage you to read it. One thing that made me laugh, though, is that they created a new tier, saying, “To accommodate lighter Internet users and those who need a lower priced option, we are introducing a 1 GB per month tier offering speeds of 768 KB/128 KB for $15 per month. Overage charges will be $2 per GB per month. Our usage data show that about 30% of our customers use less than 1 GB per month.”
Oh really? So basically, “30% of our users are paying about $50 a month and really we only want $15 from them from now on.” That ought to help customers like the plan, but it won’t help investors to like TWC’s revenue! It’s a lousy plan, though, with both unreasonable limits on one end (1 GB is about 3% of the capacity of a dial-up account) and unreasonable charges on the other ($2 / GB is highway robbery).
If this was intended to sooth TWC’s customers, it’s likely to backfire. This was a bad idea, inventing reasons to explain it is just another bad idea.
Lobbyists behaving badly:
Lobbyists behaving badly: Robb speaks, makes it worse.
Robb, first you railed against transparent bandwidth limiting and throttling, which allows users to continue to pay a flat rate rather than being surprised by overage charges. Now, after the FCC quoted your false assertions in an order banning this consumer-friendly practice (a ruling which was illegal and will likely be voided in court this summer), you are condemning ISPs for pursuing the only other option to contain costs and keep prices reasonable: caps and metering. In short, you are lobbying against any pricing or management scheme which might possibly allow ISPs to maintain their quality of service, offer attractive prices, or even stay solvent. Bottom line: you are demonstrating that you are not pro-consumer — just anti-ISP.
Robb I love your snarky
Robb I love your snarky comments. What I’m wondering is why the market does not provide enough choice? Shouldn’t there be more ISPs out there competing for people’s attention? The reason consumers get fleeced is because there isn’t enough competition among the services.
ISP, I can always count on
ISP,
I can always count on your comments for the other perspective (which btw if vitally important and adds a lot of value to this blog) but I think in some ways we are looking for the same thing. An internet which can be profitable for all. Where both the ISP’s (large and small) and the consumers feel like they are receiving a fair compensations for their contribution.
I ask, “Would you not rally alongside us for fair access to trunk lines (excuse any terminology mistakes please) such as the backbone access you pay so much for?” You, like us, probably feel like the system is unfair (Ref: http://www.brettglass.com/FCC/remarks.html <— Site was down so couldn’t verify but I think this is the presentation with the $ signs.) In that regard a mandatory line sharing clause might significantly help your ability to get access to the backbone networks. I believe this is an issue that PK supports as your type of ISP is exactly what we are trying to encourage (aka competition).
I do have to stand counter to your claims of “transparent bandwidth limiting and throttling.” I believe what was rallied against is DISCRIMINATORY limiting and throttling. Most users would have no problem with proper traffic management throttling that obeys things like TCP/IP flags and does not base its decision on the content of the material throttled. If I want to spend my bandwidth watching youtube videos, downloading files, using P2P programs, IRC hosting or running mailing lists I should be treated just like the guy that does websurfing at the same volume. Make it so that I get X bandwidth at speed y and then get throttled without telling me how to spend it.
On point to this topic specifically…
You claim that broadband maps would hurt you rather than help… I would ask: “Wouldn’t it help you compete for customers just as easily as it would help others compete for yours?”
As I have said, I really like your comments and know I can count on them in a majority of blog entries. They give me perspectives I wouldn’t otherwise have which is really important. But if you think about it making a market in which people can easily compete only ensures that the best products and services are offered to consumers. If you are doing the best you can to provide a worthwhile product at a decent price I can only imagine your business taking off… not shrinking as a result.
Closing question: Would you consider it a good or bad thing if everyone your service could reach could compare your services to others they have access to?
No, Brent, I didn’t rail
No, Brent, I didn’t rail against “transparent bandwidth limiting and throttling,” I railed against secret interference. I am not “condemning ISPs,” I’m criticizing a dumb plan and false rationale. I’m also not “lobbying,” I’m posting in a blog.
I could support a pay-for-usage scenario which is fair. TWC’s plan is video filtering in disguise.
Robb Topolski
“I could support a
“I could support a pay-for-usage scenario which is fair.”
I doubt it, Robb. If you follow PK’s line of argument, there is no pay-for-usage scenario that could ever be fair, under any circumstance. Wouldn’t you just turn around and say that anything but unlimited flat-rate pricing is an anticompetitive attempt to shut down providers of Internet video?
Don’t pretend like you’re willing to compromise if it’s simply not true.
I don’t know what PK
I don’t know what PK “line of argument” you’re talking about. I also am not willing to compromise on “fair.”
$1/GB is not fair, it’s an innovation-punishing video filter. The same plan, with overages at $0.01/GB, is a bargain. Reasonable rates are probably somewhere in the neighborhood of $0.05 and $0.15, in my estimate. Can someone show me numbers to the contrary?
Robb Topolski
Pay-for-usage is inherently
Pay-for-usage is inherently “fair,” regardless of price. The customer knows how much they’re going to pay up front, and can choose to use less, or not buy at all. You can argue that it’s bad news that customers should be forced to make this choice, but how is it unfair or deceptive?
For instance, it doesn’t matter whether gasoline costs $3/gallon or $3000/gallon, how can you argue that the gas station is being unfair when they post a giant placard with the price clearly marked? Did they have hidden fees I didn’t know about? Did they force me to buy their gasoline? I always have the option to drive less, or support alternative fuels.
Ultimately, customers decide what price is fair. It’s what they’re willing to pay.
With respect, I disagree.
With respect, I disagree. The unfairness of quintupling the prices of bread or gasoline when a hurricane is imminent is similar to the unfairness of the monopoly broadband company setting artificially low caps and then charges an arm and a leg for overages. Plus, the second case is aggravated, since consumption is so hard to measure.
Pay-for-usage is inherently
Notice and consent alone, do not make a contractual relationship fair, especially when the parties are in such unequal bargaining positions. For example, if the gas station has no competition for 500 miles and it’s leveraging its monopoly to charge $3000/gallon, then that price is most certainly unfair. If there is robust competition present and $3000/gallon is the market price, then it would be fair. As we’ve seen with courts invalidating mandatory arbitration clauses, just because users consent to certain ISP practices, doesn’t mean that those practices are fair and permissible.
Matthew—I do respect what
Matthew—I do respect what you’re saying, though I disagree. When you’re talking about fairness in the context of a business practice, this term has real meaning at the FTC. The fact is, if you have conspicuous notice and informed consent, it would be extremely difficult to prove that the business was engaging in unfair or deceptive practices.
You seem to be making some sort of antitrust argument here, but it just doesn’t apply. If you study our antitrust laws carefully, you’ll find that they are intended to prevent businesses from unfairly excluding competitors from the marketplace (we can have a separate discussion about how effective they’ve been in this regard). Even if that gas station has no competitors for 1000 miles, the question that antitrust poses is not whether $3000/gallon is a reasonable price, but whether that price prevents competitors from opening a competing station. The answer here is clearly no. As long as that company does not interfere with my ability to enter the market and provide competition, there is no antitrust violation. I can provide lots of case law where courts have explicitly stated that antitrust is not a tool for telling companies what they can and can’t charge for their products.
You could certainly make an antitrust argument around the high barrier to entry for broadband, but groups like PK aren’t going this route. If they felt that they could make this case, I would expect them to file an antitrust suit against TWC. Perhaps they cannot prove unfairness using the proper antitrust pathways, so we are fighting this battle in the court of public opinion.
DB: The state of
DB:
The state of competition in the market is certainly an important consideration for consumer protection laws because it speaks to the disparate bargaining positions of the contracting parties. When one party is in a clearly superior position and imposing contract terms on a take-it-or-leave-it basis, it raises serious fairness issues. In these situations, courts have found many consumer contracts and business practices to be unconscionable or in violation of public policy. One such example is the mandatory arbitration clauses that I mentioned above. Another would be class action waivers. This is quite different than an anti-trust claim.