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Former FCC Boss: Data Caps Not About Network Congestion

Soulskill posted about 2 years ago | from the imagine-that dept.

Network 238

An anonymous reader writes "Broadcasting Cable reports on comments from Former FCC chairman Michael Powell (now president of the U.S. cable industry's trade association) confirming what many have long suspected: data caps on internet service aren't just about network congestion, but rather about 'pricing fairness.' 'Asked by MMTC president David Honig to weigh in on data caps, Powell said that while a lot of people had tried to label the cable industry's interest in the issue as about congestion management. "That's wrong," he said. "Our principal purpose is how to fairly monetize a high fixed cost." He said bandwidth management was part of it, though a more serious issue with wireless.' Powell went on to say that ISPs had huge up-front costs which had to be allocated out to consumers, and those consumers were familiar with usage-based fees from paying their power bill or buying food. He was part of a panel with three other former FCC chairs. Dick Wiley agreed with his cost argument, adding that the marketplace was responding better than new legislation could. Michael Copps thought the FCC could question data caps a bit more, but wasn't opposed in principle. Reed Hundt said he wants the FCC to focus on getting better, faster, cheaper internet to 100% of the population."

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Large company trying to be "fair"? (5, Insightful)

Anonymous Coward | about 2 years ago | (#42633465)

Yeah, sure. All the ISP wants to do is be "fair" to its customers.

When a large company says it's trying to be "fair", you should hold on to your wallet tightly!!

Re:Large company trying to be "fair"? (2, Insightful)

Anonymous Coward | about 2 years ago | (#42633505)

Fair means they'll leave the customer with some money for other corporations to fleece.

I don't think it means even that (4, Insightful)

Moraelin (679338) | about 2 years ago | (#42633601)

Fair means they'll leave the customer with some money for other corporations to fleece.

I don't think it means even that. In fact, I don't think "fair" was ever meant to mean "for you".

From my subjective experience just means "we want more money". The idea is that what they're already getting is so incredibly unfair, when they could be getting more with just a little PR, disinformation and maybe a little collusion. Why, the CEO is probably still driving a Mercedes, while his neighbour is driving a Bugatti Veyron. Can you imagine how unfair that is?

Sarcasm aside... Not that it's necessarily a bad thing or evil. They're expected, and indeed the system is such that they have a legal obligation, to make as much money as possible for the investors. Not fleecing you as hard as physically possible, would be a breach of that obligation. Whether you have some money left after that, is more of a side-effect, than intended. Indeed, it would be a breach of trust if they actually intended to take less money for fairness sake.

I suppose the system just works. Might as well enjoy it. But the corollary is that whenever some large company is talking about something being for your own good in any way, better bring your own lube, they want to shaft you. They're supposed to, after all. Some just are more subtle than others.

Re:I don't think it means even that (5, Insightful)

tqk (413719) | about 2 years ago | (#42633927)

I suppose the system just works.

I'd allow that it functions, yes.

I remember the days when corps constantly worked at lowering their prices and increasing efficiency, all in order to compete for customers. Now, NorthAm telecoms is Balkanized into a few monolithic corps who don't need to care about competing; in many markets they have no competition to speak of. In Canada we have Bell, Telus, Shaw, Rogers, and they only tokenly try to appear to compete in each other's market area (territory). USA has AT&T, Verizon, Sprint, T-Mobile, and I've read lots of stories from people saying that in their area they have only one of them to pick from. Whole cities have tried to roll out their own municipal networks to fill the gap, and they end up in lawsuits attempting to prevent them from doing it. The Google GBit rollout has proved how possible it is. That's not the game the telecom monoliths want to play. They want to milk us for every penny they can get, not maximize fair service for a fair price in competition.

Compare Euro telecoms access and rates to NorthAm's, and it's pretty easy to say it's a rigged game. Our regulators have been helping them do it, not forcing them to compete on level playing fields.

Re:Large company trying to be "fair"? (0)

Anonymous Coward | about 2 years ago | (#42633663)

Fair means they'll leave the customer with some money for other corporations to fleece.

Fucking please. Only time that happens is when "they" own both corporations involved. NO business is in the business of leaving even a dollar on the table.

If it is, it's not a business, it's a charity.

Re:Large company trying to be "fair"? (1)

Hentes (2461350) | about 2 years ago | (#42633575)

Corporations are not good or evil, they only want profit. And in this case, a fair pricing [wikipedia.org] is also more profitable.

Re:Large company trying to be "fair"? (0)

Anonymous Coward | about 2 years ago | (#42633613)

Corporations are also completely devoid of morals, conscience and effective legal oversight. They are single-minded in their focus on profit and will do anything to get it.

Re:Large company trying to be "fair"? (1)

Anonymous Coward | about 2 years ago | (#42633701)

Corporations are not good or evil, they only want profit.

That puts them squarely in the evil camp. After all money is the root of all evil. Greed is a deadly sin. How can unquenching thirst for money be consider neither good nor evil. You can only say it by sterilizing the words and arguing that good and evil are abstract. However, if you give those words any meaning at all, corporations are evil.

Re:Large company trying to be "fair"? (1, Informative)

reboot246 (623534) | about 2 years ago | (#42633851)

After all money is the root of all evil.

Actually, it goes like this: "For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."

So you could say that the love of money placed before the love of God is the root of all kinds of evil. Money itself is neither evil or good, but keep it in perspective.

Re:Large company trying to be "fair"? (0)

Anonymous Coward | about 2 years ago | (#42634289)

It says "root of all evil", not "all kinds". Isn't adding words a terrible sin or something? And I guess they must have had a lot of money to love in the Garden of Eden, since it's the root of all evil.

Re:Large company trying to be "fair"? (2, Interesting)

KiloByte (825081) | about 2 years ago | (#42634299)

love of money placed before the love of God

I'd say "love of God" comes pretty high on my list of evils.

Christianity: murder count [truthbeknown.com] that makes Godwin cry, depriving billions of people of joys of life, robbing them blind of wordly possessions, setting back science and culture by ~1.5k years; being less evil recently not because of good will but because of the Western civilization shedding religion quickly.
Islam: denying the right to live to infidels (some religions being merely dhimmied), doing everything of the above.

Christianity went on their rampage as soon as they seized power (Constantine the "Great", Theodosius the "Great"); Islam, after Muhammad's warlordy rule, had a benign era until around 12th century, then became murderous closed-minded barbarians they are to this day.

Then we have communism, which is a religion in everything but name (prophets, scripture, clergy, portraits of deities/saints, rituals, fighting heretics and unbelievers, their own "science" (dialectical materialism [wikipedia.org] , Lysenkoism [wikipedia.org] , etc).

Ordinary greed is nowhere as vile as the above organizations.

Re:Large company trying to be "fair"? (0)

Anonymous Coward | about 2 years ago | (#42634415)

this has nothing to do with faith or, if you like, many corporations faithfully worship at the altar of their god, profit.

money is not evil in theory. it evolved as a benign medium of exchange. however, in practice, its evil is shown
in greed and it's use as a tool to manipulate a lot of seemingly non-monetary things.

Re:Large company trying to be "fair"? (1)

AmazingRuss (555076) | about 2 years ago | (#42634219)

Don't like it? Don't deal with that company.

Re:Large company trying to be "fair"? (0)

Anonymous Coward | about 2 years ago | (#42634279)

"Don't like it? Don't deal with that company." Wish I had that option with the government.

"When a large company says it's trying to be "fair", you should hold on to your wallet tightly!!" Change "large company" to "government", and the statement is even more true.

Just sayin'...

Who has data caps in the USA? (3, Informative)

alen (225700) | about 2 years ago | (#42633467)

I have Tim Warner cable and have unlimited
Fios is unlimited too

And how much data is it to get past the cap? I stream all my TV. Only have Internet. And I use less than 200gb per month. So far I'm at just over 50 for this month

Re:Who has data caps in the USA? (4, Funny)

Sponge Bath (413667) | about 2 years ago | (#42633487)

I have Tim Warner cable...

Do you watch it on your Magnetbox TV?

Re:Who has data caps in the USA? (3, Funny)

Cowclops (630818) | about 2 years ago | (#42633563)

I've got all the top brands... Magnetbox, Sorny, Panaphonics!

Re:Who has data caps in the USA? (2)

alen (225700) | about 2 years ago | (#42633595)

/. and the high tech they have where you can't edit posts

Re:Who has data caps in the USA? (0)

tqk (413719) | about 2 years ago | (#42633973)

/. and the high tech they have where you can't edit posts

/. and the culture where you're expected to know how to proofread, damnit!

Re:Who has data caps in the USA? (0)

Anonymous Coward | about 2 years ago | (#42633561)

Comcast has data caps. 250GB/mo, break it X number of times and they cancel your internet according to their documentation.

Re:Who has data caps in the USA? (3, Informative)

alen (225700) | about 2 years ago | (#42633583)

so how much do you have to stream to use 250GB? i only ask because i stream all my TV. i have done it since september and i have used 450GB the whole time according to Time warner

Re:Who has data caps in the USA? (0)

Anonymous Coward | about 2 years ago | (#42633935)

It's hard to hit the cap by yourself, but families can easily manage it if they have separate viewing devices.

Re:Who has data caps in the USA? (1)

jythie (914043) | about 2 years ago | (#42634081)

It also depends on how much TV you are talking. Casual viewing will not eat up much but, if, say, you tend to leave the TV running as background noise or something, then it can really add up.

Re:Who has data caps in the USA? (1)

KreAture (105311) | about 2 years ago | (#42634339)

If you stream at 2.5 mbit for 7 hours and 24 minutes a day you will use 250 GB/month on average.
If you and your sister/brother/son/mother or whatever do it colaboratively you reach it quickly. Since seperate streaming does not use broadcast techniques in ip networks 3 people sharing the connection get 2 hours and 28 minutes each a day. I am still assuming you stream at atleast 2.5 mbit as I don't think you are interested in watching what looks more like lego.

Re:Who has data caps in the USA? (4, Informative)

poity (465672) | about 2 years ago | (#42633773)

They changed that last year. It's 300GB/month now, with 3 months overage without charge (you are warned whenever you get near the cap or go over), then on the 4th month that you go over they will automatically bill you +$10 for an additional 50GB

Re:Who has data caps in the USA? (0)

Anonymous Coward | about 2 years ago | (#42634267)

There is some double speak going on here.

I think they're talking about throughput caps and not monthly aggregation totals. Why am I only getting 10MBps when the infrastructure will hold me having 40MBps? And for all my neighbors as well? Your bandwidth hogs, or those who exceed the monthly cap amounts, are statistical outliers. The majority of the customer base is going to use far less in consumption compared the those outliers, yet they're holding the majority to the behavior to that of the hogs. There isn't much that's fair there, right?

I also love this tidbit: Powell went on to say that ISPs had huge up-front costs which had to be allocated out to consumers, .. If anyone thinks ISP's haven't monetized your service cost to be the most benificial to them in the shortest amount of time, your living in a dream world.

Also, Internet access is a moving target, is it not? Provide enough service for enough time, to make enough profit and income to further upgrade the network, to provice more and better service. These people sound like it's a finished job once it's been put in place.

Re:Who has data caps in the USA? (0)

Anonymous Coward | about 2 years ago | (#42634373)

My local cable company's cap is 300gb at our current plan. My problem with the whole system is that they whine about people going over a certain cap and that they need to charge you, but they don't charge you less if you use less.

They set the pricing model (5, Insightful)

Anonymous Coward | about 2 years ago | (#42633483)

So they can only blame themselves. I remember back when dial-up was the option, and there were packages with time-limits. But then a few ISPs started offering unlimited time, and as we moved to always-on, they continued to not set limits. 15 years later, they decide limits are what they want, and they're shocked people react negatively?

Re:They set the pricing model (3, Insightful)

sumdumass (711423) | about 2 years ago | (#42633719)

All they have to do is offer a pricing tier and be honest in their advertising.

People will pay for more when they know what they are getting. Cell phone companies do it.

Re:They set the pricing model (2)

jythie (914043) | about 2 years ago | (#42634095)

There is an important change though. In the days of dial up you had effective competition, so companies had to, well, be competitive. Now in many regions the local ISP is an effective monopoly, so their only competition is 'no internet'.

Re:They set the pricing model (1)

luther349 (645380) | about 2 years ago | (#42634125)

that's how it works when the fcc moved to nationwide free internet that would have forced them to compete with free like they had to in the 90s they would have none of that. it was the same with early dsl isps even a free was in the works so they quickly passed laws making it inpossable.

Then why is overuse 5x as expensive as in-band use (5, Informative)

localroger (258128) | about 2 years ago | (#42633485)

I have to use wireless because there is no reliable wired service to my house but I'm practically underneath a cell tower. I pay USD$60/month for 5 gigabytes and, if I go over, USD$60 per gigabyte for every gigabyte I go over that. The only way to tell how close I am to the usurious cap is to log into a website that's only updated once a day and which itself serves several megabytes of ads before I can get to the summary of my data usage. Oh, I also get 50%, 75%, and 90% emails and similar SMS messages which I can't receive because my access point is a MIFI which isn't really a phone. I have complained, and of course not only is nothing done the only competitor has EXACTLY the same pricing model. The one time I went over by accident it nearly doubled my bill and when I complained they "generously" gave me a one-time waiver, but when I told them I'd rather have the service slow down or stop working I got nothing but shrugs. Because, of course, it's a profitable trap and nothing else.

Re:Then why is overuse 5x as expensive as in-band (1)

alen (225700) | about 2 years ago | (#42633525)

everyone prices stuff like this in the 21st century

90% of your customers pay a fee and you find a way to gouge a small minority willing to pay a premium for that product or service

not much different than getting large fries and drink at a fast food place. they give you a few pennies worth of potatoes and water, the cheapest food products in the USA for $1 or some other huge profit margin price

Re:Then why is overuse 5x as expensive as in-band (2)

C0R1D4N (970153) | about 2 years ago | (#42633573)

I have the t-mobile throttling plan on my Tab 10.1 it is horrible. 5GB cap which I usually hit around a week before my turnover. The final week it is throttled to 120k. If the throttling was to half speed or even 1/3 speed it'd be fine. 120k is absurd though.

Wi-Fi (1)

tepples (727027) | about 2 years ago | (#42634355)

I have the t-mobile throttling plan on my Tab 10.1 it is horrible. 5GB cap which I usually hit around a week before my turnover.

Do you use Wi-Fi everywhere you can? What bandwidth-intensive actions do you usually do away from Wi-Fi, and in what specific locations away from Wi-Fi do you do them?

If the throttling was to half speed or even 1/3 speed it'd be fine. 120k is absurd though.

What that means is you're falling back to EDGE.

Re:Then why is overuse 5x as expensive as in-band (0)

Anonymous Coward | about 2 years ago | (#42633531)

Some of the providers do have a throttle when going over the cap instead of a price-trap. You have to shop around.

The last time I was researching this, T-mobile had a product similar to the one you describe ( I think it was a 4 GB cap, though), but the terms were that exceeding the cap resulted in throttled service rather than overage fees.

Unfortunately such terms are typically in the fine print...

Re:Then why is overuse 5x as expensive as in-band (1)

C0R1D4N (970153) | about 2 years ago | (#42633691)

I have the t-mobile throttling plan on my Tab 10.1 it is horrible. 5GB cap which I usually hit around a week before my turnover. The final week it is throttled to 120k. If the throttling was to half speed or even 1/3 speed it'd be fine. 120k is absurd though. Replied to wrong post before :(

Re:Then why is overuse 5x as expensive as in-band (2)

Splab (574204) | about 2 years ago | (#42633839)

Why is it absurd? You got what you paid for, would you rather get billed like GP by the GB when going over? Or completely dropped from the net?

While I agree data cap sucks, fact is, you have a contract with them, like it or not, those are the terms.

Re:Then why is overuse 5x as expensive as in-band (0)

Anonymous Coward | about 2 years ago | (#42633631)

Millenicom has much more generous no-contract plans for $70 on either Verizon or Sprint's network.

Re:Then why is overuse 5x as expensive as in-band (0)

Anonymous Coward | about 2 years ago | (#42633681)

Look up Millenicom...69.95 a month no data cap no contract. Used service for 5+ years no problem

customers are idiots (1)

Anonymous Coward | about 2 years ago | (#42633695)

A complex pricing system would enable someone to get lots of data transfer for a low price, if done at the right time and/or the right place, and maximize equipment utilization. Sounds great!

Before the simple xxx minutes per month pricing system, cell phone customers complained about the complexity of their cell phone bills. Many Americans are stupid. Customer support is expensive. Large numbers of customers are needed to make a cell phone system profitable. Therefore, price systems must be simple. Sorry.

Re:Then why is overuse 5x as expensive as in-band (1)

gl4ss (559668) | about 2 years ago | (#42633837)

because that way they can get money out of the customers.

what did you think fair meant? it just means billing as much as they can. which kind of sucks since they aren't doing the right thing and getting as many customers on as many devices as they can..

Re:Then why is overuse 5x as expensive as in-band (1)

luther349 (645380) | about 2 years ago | (#42633959)

get t-mobile there 70$ no cap prepaid plain has gone live. enjoy it wile it last.

Re:Then why is overuse 5x as expensive as in-band (1)

mike.mondy (524326) | about 2 years ago | (#42633977)

[ Charged for caps on home wireless internet & no easy way to determine usage & would prefer throttling ]

How much of your own effort do you want to put into it? It's easy to put your own cheap off the shelf router just before the ISP's device and flash it with your own firmware. Look at OpenWRT or one of the other FOSS or commercial firmware router projects [wikipedia.org] . Probably pretty common among /.ers. Since they provide statistics via SNMP, a (free) off-router network monitoring package could provide all sorts of usage graphs. Admittedly, many of these only show past day/week/30 days and not usage since the first of the month. There are a raft of reasons why it's a good idea to deploy one of these, including improved security. Using bandwidth monitoring and iptables to do custom throttling would be feasible, but you might have to build it.

No wired connection for wireless Internet (1)

tepples (727027) | about 2 years ago | (#42634377)

It's easy to put your own cheap off the shelf router just before the ISP's device and flash it with your own firmware.

How so? A lot of these MiFi and similar devices have no Ethernet port to which one could connect an off-the-shelf router. Instead, users are expected to connect through Wi-Fi.

Fraud (2, Interesting)

Anonymous Coward | about 2 years ago | (#42633493)

They underprice their services to get users (recurring!), then force users to switch to higher-tier plans when they consume more? This is classic bait-and-switch.

http://en.wikipedia.org/wiki/Bait-and-switch

Re:Fraud (3, Interesting)

alen (225700) | about 2 years ago | (#42633543)

no, they price a few users into paying more

lots of customers like my parents' generation only uses 10GB a month at most on their home internet

this is why i haven't run p2p in years. its cheaper to buy blu rays or pay for netflix and be on the cheapest internet plan or a cheaper tier than pay $100 a month for internet and the high electricity costs to keep your stuff on 24x7

you only need 5mbps for netflix. about the same for itunes streaming media. less for most youtube crap. i pay $50 a month for 20/1 to time warner cable and don't see a reason to pay more

Re:Fraud (2)

tepples (727027) | about 2 years ago | (#42634399)

this is why i haven't run p2p in years. its cheaper to buy blu rays or pay for netflix

Provided what you want to watch is even available where you live. I'm aware of several films and TV series that aren't on DVD [1], Blu-ray [A], or Netflix VOD at all.

you only need 5mbps for netflix.

After streaming for four hours, you'll have eaten up nearly your entire 10 GB for the month [exede.com] .

I For One... (1)

Anonymous Coward | about 2 years ago | (#42633501)

I for one am shocked to hear this! I would never have even suspected that money and profit taking were behind this scheme.

Who would have guessed?

So who were these wrong people? (5, Interesting)

Anonymous Coward | about 2 years ago | (#42633511)

"Powell said that while a lot of people had tried to label the cable industry's interest in the issue as about congestion management. "That's wrong," he said."

So who were these wrong people who said it was congestion management?

Oh, that's right, THE CABLE COMPANIES THEMSELVES.

And if they want to talk about "fair", then what about the salaries of these executives?

Re:So who were these wrong people? (0)

Anonymous Coward | about 2 years ago | (#42633825)

He also got wrong the bit about them paying for the infrastructure. At the very least in Comcraptic's case @Home actually paid for that and then Comcraptic bought them...

Buying the infrastructure (1)

tepples (727027) | about 2 years ago | (#42634409)

In that case, Comcast paid for the infrastructure when it bought @Home and assumed its debt.

Don't make me laugh (-1)

Anonymous Coward | about 2 years ago | (#42633517)

Pricing fairness? You people would sell the cheapest product for the highest price if that were the most profitable thing to do. Go insult someone else.

Up-front costs? (3, Interesting)

Shoten (260439) | about 2 years ago | (#42633519)

Okay, I don't get it. The companies in question are showing record profits...and what he's saying makes it sound like the capital expenditures necessary to have built out the networks in the first place are on some other set of books that don't come into effect. Isn't it the case that companies usually finance capital expenditures, and then pay off the debt over time? Under those circumstances, if the price of connectivity had to stay high in order to pay off that debt, the level of profitability wouldn't be rising the way it is. His argument sounds like bullshit to me.

Re:Up-front costs? (2)

alen (225700) | about 2 years ago | (#42633577)

the cable internet companies don't make much money which is what this article is about

for wireless, the wireless part of the company makes huge profits. for AT&T and Verizon. Sprint is losing money along with T-Mo. but AT&T and Verizon have lots of legacy stuff they still have to run and pay for. the wireless pays for the legacy crap.

then you have the operations costs. electricity, tech support, etc and it's different across markets. supporting people in the burbs is more expensive than the city.

Re:Up-front costs? (1)

sokoban (142301) | about 2 years ago | (#42633787)

the cable internet companies don't make much money which is what this article is about

O, RLY?
http://online.wsj.com/article/SB10001424052970204792404577224844011375490.html [wsj.com]

That seems extremely profitable to me.

Paywall (1)

tepples (727027) | about 2 years ago | (#42634419)

[link to paywalled WSJ article]

Could you cite another source that won't charge me $21.99?

Re:Up-front costs? (0)

Anonymous Coward | about 2 years ago | (#42633735)

Okay, I don't get it. The companies in question are showing record profits...and what he's saying makes it sound like the capital expenditures necessary to have built out the networks in the first place are on some other set of books that don't come into effect. Isn't it the case that companies usually finance capital expenditures, and then pay off the debt over time? Under those circumstances, if the price of connectivity had to stay high in order to pay off that debt, the level of profitability wouldn't be rising the way it is. His argument sounds like bullshit to me.

Evidence for that assertion, please.

Re:Up-front costs? (1)

way2trivial (601132) | about 2 years ago | (#42634381)

http://en.wikipedia.org/wiki/List_of_assets_owned_by_Comcast [wikipedia.org]

how did they acquire all of these items, in such a short period of time.

they fucking BOUGHT NBC

they bought the FLYERS

where did they get the money for that? (hint, profits)

Re:Up-front costs? (1)

nine-times (778537) | about 2 years ago | (#42633805)

It is bullshit. The real reason why they want to have data caps and usage-based pricing is that it's a way that they can drive up prices without incurring a huge backlash.

Their marketing psychologists have told them, if you simply raise prices without improving services, then you'll anger your customer base. It's safer to maintain the same price while lowering the standard of service, and then offer to restore the standard of service at an increased premium price. It's just convoluted enough to confuse a lot of people and keep them from being outraged.

Re:Up-front costs? (1)

luther349 (645380) | about 2 years ago | (#42633991)

of course its bullshit the cost per gb these days is so cheap it would take terabytes of data to start hurting there pockets. they also proved this fact with cell phone company's when they claimed there bandwidth was expensive. its more bought taking there overpriced service and buying new cars with it and keep using the same old junk eq they put in 15 years ago. when have you seen a cable company expand in the last 10 years.

Re:Up-front costs? (1)

akpoff (683177) | about 2 years ago | (#42634139)

It's more than that. States and the Federal government have given the telcos and cable companies money multiple times over the past ~15 years to build out infrastructure[1]. In many cases cable companies have received exclusive rights to deliver phone service, cable TV or both.

Despite public largess, these companies come back to the trough over and over poor mouthing how expensive infrastructure build out has been. In Houston we can get up to 100 Mbps downloads but the price is nearly $300/month. To stay under $100/month you have to "settle" for 12 Mbps. That's not bad but when you consider how much money we've spent publicly the ROI isn't great. And let's not forget the gouging the public takes over wireless data.

I'm firmly in favor of for-profit businesses and letting free market work...but when as a society we've decided to hand over full and partial monopolies to for-profit corporations we have every right to participate in setting pricing and profits.

At this point I'm in favor of treating the last mile for internet connectivity the same way we treat the last mile for electricity. Have a poles-and-wires company and separate service providers who deliver content and services. There's too much incentive to drive users to in-house offerings and service when the ISP is also a content company. In other words, if we're going to make the last mile a monopoly then we need net neutrality.

[1] "$7.2 billion for complete broadband and wireless Internet access" See American Recovery and Reinvestment Act of 2009 [wikipedia.org] as one example.

In summary.. (5, Insightful)

UPZ (947916) | about 2 years ago | (#42633529)

It's about using tax-payer money to build a network that is cut up into regional mini-monopolies where each monopoly can extract substantial prices for basic network use and even more exhorbitant prices for overages. All of which goes to line executive and shareholder pockets while tax-payer pays the cost of building the infrastructure in the first place. This is called corruption, folks!

Re:In summary.. (0)

Anonymous Coward | about 2 years ago | (#42633731)

It's about using tax-payer money to build a network that is cut up into regional mini-monopolies where each monopoly can extract substantial prices for basic network use and even more exhorbitant prices for overages. All of which goes to line executive and shareholder pockets while tax-payer pays the cost of building the infrastructure in the first place. This is called corruption, folks!

Ain't government intervention great?

You really expected something ELSE?

Why?

You can't "bundle" $100,000 worth of "campaign contributions".

Yet the Slashdot herd wants the government to "fix" this? (And impose "gun control" while they mock the failed "War on Drugs", but I digress...)

When the government set it up in the first damn place?

Re:In summary.. (1)

BlueStrat (756137) | about 2 years ago | (#42634389)

It's about using tax-payer money to build a network that is cut up into regional mini-monopolies where each monopoly can extract substantial prices for basic network use and even more exhorbitant prices for overages. All of which goes to line executive and shareholder pockets while tax-payer pays the cost of building the infrastructure in the first place. This is called corruption, folks!

Ain't government intervention great?

You really expected something ELSE?

Why?

You can't "bundle" $100,000 worth of "campaign contributions".

Yet the Slashdot herd wants the government to "fix" this? (And impose "gun control" while they mock the failed "War on Drugs", but I digress...)

When the government set it up in the first damn place?

It's also about protecting cable TV and the DVD/Blu-Ray movie market. Many ISPs are also media and cable TV companies as well.

A lot of people are dropping cable TV and/or reducing/eliminating buying movies on disc in favor of getting their entertainment all from the 'net.

This is a trend they want to mitigate for obvious reasons.

The FCC underwent "regulatory capture" decades ago. Don't expect any help from the government unless they find themselves under a lot of public heat, threatening re-elections/campaign contributions.

Strat

By this logic (5, Interesting)

SquareOfS (578820) | about 2 years ago | (#42633549)

shouldn't we also have usage-based pricing for the TV they sell us? So that we pay "fairly" for for the fixed cost of establishing the network? Why would that model be different, since it's not really about congestion, as admitted in the article?

The electric bill and buffet examples in the article are terrible: when we pay for electric usage, we actually are paying for utlization/generation; use more and something (coal, natural gas, etc.) actually gets consumed more. And most buffets are all-you-can-eat; if you're paying by weight or something, the analogy is the same — you're actually consuming something. But both bandwidth and TV channels are there no matter how much they're "consumed." Bandwidth can be saturated (the congestion problem) but it can't be actually consumed.

If we're going to talk about "fairness", let's talk about:

  1. 1. Fair access to the wired networks built out, frequently, under monopoly guarantees
  2. 2. Fair levels of monetization of the network: does the telecom industry really want the equivalent of a utilities commission deciding how much they profit?

Re:By this logic (1)

alen (225700) | about 2 years ago | (#42633641)

the food costs different amounts

on a buffet the fat people will actually eat more of the cheap foods if you watch. pasta, white rice, potatoes. the meat and veggies aren't eaten as much.

when i eat buffet i go paleo style and make out

Re:By this logic (5, Informative)

Gaygirlie (1657131) | about 2 years ago | (#42633785)

One thing that baffles me is that, well, here in Finland we just don't have data caps. Period. Since we don't have data caps whatsoever, even on most mobile broadband - connections, does that mean we're somehow being unfair? Incompetent? Both, even?

I just don't see it. We're a small country with lots and lots of rural land, only about 8 million people in the whole country and all, and yet our ISPs and cell-phone operators are just thriving without any data caps. We have only one ISP/cell-phone operator that does data caps, the rest do "speed limits," ie. the lowest of the lowest mobile broadband - packages one can get from my cell-phone operator is 512kbps up/down for 4.99€/month and on which you can simply upload and download as much as your heart is willing. 512kbps is enough to download about 158 god damn gigabytes of stuff a month and I didn't even factor in the amount of uploaded data at all -- this is also a package that you can just drop off or switch to a higher/lower tier at your own leisure, there are no 12/24 month contracts involved at all. So basically, even our lowest-tier broadband packages grant us consistent speeds, no long contracts and no sudden extra charges no matter how much you transfer. For some reason our method sounds fairer to me.

Re:By this logic (1)

luther349 (645380) | about 2 years ago | (#42634033)

t-mobile does a simler style of the ability to switch a package at will but like most cell providers that are not the mega monopoly called at@t there coverage wile decent still has big areas that using 10 year old slow towers.

Well no shit. (1)

Anonymous Coward | about 2 years ago | (#42633555)

It's about being money grubbing assholes. We always knew that.

Now... lets start teaching people to block ads on a massive scale.
You don't want all those ads counting to your bandwidth cap now do you?

  Lets see how their tune changes when all the advertisers get on their case.

Use it or lose it ! (2, Interesting)

Anonymous Coward | about 2 years ago | (#42633585)

Bandwidth can't be stockpiled. Any bandwidth not used is lost forever.

So while it's fair to sell priority access but it's not fair to block traffic from empty lines.

That's obstructionist.

Eminent domain exists to seize private assets for the public good.

All natural monopolies should be co-ops.

what infrastructure build-out? (5, Interesting)

Anonymous Coward | about 2 years ago | (#42633597)

the phone company here runs DSL off copper at least a generation old and refuses to build-out to serve customers past 3 miles from a CO.. even though it's possible to bring the per-subscriber cost of extending DSL down to as little as $100.. and even though they charge nearly double the 'in town' rate for a fraction of the speed past about 1.5 miles.

the cable company hasn't upgraded anything outside of its headend since they moved into town in the 80s, except for dropping a neighborhood node on each end of town for data. cable internet rates go up at least once per year even though it's a small town with a big fat, underutilized uplink.

each wireless company has exactly one tower here, and when one is down (happens a few times a year) there's not even an agreement between them to carry calls on the other company's tower. towers are well under capacity but data rates go up and caps go down. what was a reasonable $50 for uncapped unthrottled data no longer exists thanks to verizon's buyout of alltel and the fcc for allowing that to happen.

and oh yea.. all four companies receive federal funds to provide service to this rural area....... it just never makes it here.

Re:what infrastructure build-out? (0)

Anonymous Coward | about 2 years ago | (#42633775)

> the cable company hasn't upgraded anything outside of its headend since they moved into town in the 80s, except for dropping a neighborhood node on each end of town for data. cable internet rates go up at least once per year even though it's a small town with a big fat, underutilized uplink.

Eminent domain the thing then. Propose it at your next town council meeting.

"huge up-front costs"? (2)

jc42 (318812) | about 2 years ago | (#42633607)

Is "huge up-front costs" a euphemism for payments to maintain their legal monopoly in most of the neighborhoods that they "server"?

One reason for suspecting this is the recent stories (most recently from a study in Canada that was discussed here on /.) about the actual cost of running an Internet service being less than 1/000 of the money charged the customers. If that's not the explanation of the "huge costs", it must be something else. The obvious guess is the, uh, "campaign contributions" and other related costs of all those zillions of local monopolies that the comms industry has relied on since the development of the telegraph and telephone to prevent any actual competition from arising.

What other sorts of payouts could the phrase "huge up-front costs" refer to? It might be interesting to get a detailed accounting of all this, though I suppose a lot of it would be similarly buried behind a pile of euphemisms.

Re:"huge up-front costs"? (2)

maxwell demon (590494) | about 2 years ago | (#42633705)

Buy a stock of them (yes, one suffices), go to their annual stockholders meeting and ask them where they spend their money.

Duh? (2)

drinkypoo (153816) | about 2 years ago | (#42633619)

If it were about congestion, they could simply use QoS with classification by quota to slow you down as you reach higher percentiles of bandwidth consumption.

Re:Duh? (1)

PPH (736903) | about 2 years ago | (#42634165)

But then if I want more bandwidth (unthrottled) and I'm willing to pay for it, can I do so? If so, we're right back to the fee for bandwidth model. If I can't, then it rapidly becomes an example of the tragedy of the commons [wikipedia.org] .

More fairness for the fairest! (0)

Anonymous Coward | about 2 years ago | (#42633627)

Why do I suspect those who are most in favor of progressive taxation in the interest of fairness are the most up in arms about progressive pricing which, apparently, is in the interest of fairness (bandwidth being a fixed amount).

Fair is fair is who's fair? who cares - it's my fair!

Right to over sell (0)

Anonymous Coward | about 2 years ago | (#42633665)

This is nothing more than trying to hide the fact that they over sell their network. Like airlines double booking a seat or more classic the 10:1 or even higher ratio of dial-up users to modems in the bank or channels on the PRI.

economics (1)

buddyglass (925859) | about 2 years ago | (#42633679)

Tiered pricing is nothing new, no is it anything sinister. When you have some customers deriving vastly more utility from your fixed-cost service those customers are understandably willing to pay more for it. So you charge them more. You'd be a fool not to. Charging every customer the same price means the base price has to go up in order to cover the fixed costs. The base price going up means some customers at the margins (of low use) will simply not bother to pay for your service, i.e. fewer overall customers. You get grandma off dialup by making it artificially inexpensive for her to purchase broadband. You recoup the discount you gave to grandma by charging "guy who streams hundreds of movies every month" more.

My personal preference would be to have broadband companies charge a base price for some reasonable amount of bandwidth that would cover, say, 90% of their users, then charge a per-unit-bandwidth rate for usage over that base threshold. Set the per-unit rate at some reasonable level such that heavy users pay approx. 2x or 3x the base cost as opposed to some astronomically higher price.

Re:economics (1)

doubledown00 (2767069) | about 2 years ago | (#42633949)

You are referring to the concept of "price discrimination". This would be all find and good except 1) The all-you-can-eat model was the one chosen by the providers themselves thus now *they* after all these years wish to change the deal; and 2) You're applying concepts of resource consumption to a entity (bandwidth) that doesn't play by the same rules as other resources. Bandwidth is a different cat in that it can be "managed". It can be allocated, throttled, prioritized, etc. You can't do that with electricity, gasoline, coal, etc as they are more binary in nature (used or not used). Furthermore bandwidth can be increased much more readily as there isn't really a finite amount available.

The ISPs of course could manage all this if they wanted to. Instead they find it more convenient and profitable to take the "fuck you, pay me!" approach. If you want to sound all educated and cite an economic justification for all this, the far better one would be "price elasticity of demand".

Re:economics (2)

buddyglass (925859) | about 2 years ago | (#42634059)

They may have initially chosen all-you-can-eat, but it's entirely their prerogative to change that at any point in time (barring regulation by the FCC). If they think they can increase profits by going to a tiered model then I applaud them for doing so. Certainly their shareholders do. At the end of the day, the heavy users derive more utility from the service being provided, so I don't have much sympathy when they're required to pay more for it. They are, after all, getting more out of it. From the provider's point of view, his job is to ensure that the price for each individual customer is as high as possible without motivating that customer to forgo the product altogether (grandma stays on dial-up) or take his business elsewhere (heavy user migrates to a competitor whose service is purely flat-rate with no caps).

It seems that if bandwidth has very little cost to the provider then a given provider could differentiate itself as the haven for heavy users, moving to a flat-rate pricing model that's moderately more expensive than what its competitors is charging for "normal use" but significantly cheaper than what a "heavy user" would pay once he goes over the competition's bandwidth caps and starts paying by-the-byte. All heavy users would migrate to this provider. His cost to provide all the extra bandwidth would be only marginally higher than if all his users were "normal", but each one of them would be paying premium over what his competitors end up charging to 99% of their customers (who are not "heavy users").

Re:economics (1)

doubledown00 (2767069) | about 2 years ago | (#42634223)

They may have initially chosen all-you-can-eat, but it's entirely their prerogative to change that at any point in time (barring regulation by the FCC). If they think they can increase profits by going to a tiered model then I applaud them for doing so.

The point of this article isn't outrage over model change, it's that one of the very people who was tasked with regulating this kind of stuff is now saying "Yea, you guys were right all along.

Also, these users aren't "getting more out of it". They are using a service they *paid for*. As in what they were contracted to receive. Now some providers want to change the deal because they didn't have the forsight to anticipate how their agreement would be utilized. What's the point of having a contract then?

Look, they can change their future pricing models any time they wish. Fine. But don't sit there like an obtuse Slashdot user and pretend that the industry didn't outright lie to the FCC to get the changes approved. Then don't sit there and again obtusely pretend that the very Chairman that "believed" the lie wasn't hired on to lobby for the industry.

It seems that if bandwidth has very little cost to the provider then a given provider could differentiate itself as the haven for heavy users, moving to a flat-rate pricing model that's moderately more expensive than what its competitors is charging for "normal use" but significantly cheaper than what a "heavy user" would pay once he goes over the competition's bandwidth caps and starts paying by-the-byte. All heavy users would migrate to this provider. His cost to provide all the extra bandwidth would be only marginally higher than if all his users were "normal", but each one of them would be paying premium over what his competitors end up charging to 99% of their customers (who are not "heavy users").

After reading the above the issue here is obvious: You don't know your history. The communications industry is well known for "unofficial" collusion and price fixing. In your freshman level econ utopia, yes the above is how it would work. In Real World, USA there is no differentiation. All ISPs buy from the same handful of upstream providers that charge uniform rates. Choice of consumer level provider (if it exists at all in your area) is limited because everyone has colluded to offer the same plans with some slightly different window dressing.

As long as you subscribe to the incorrect view that competition in the communications industry exists (here in regards to ISPs) then naturally you will see nothing wrong with these new pricing models.

The wireless analogy (2)

ChangeOnInstall (589099) | about 2 years ago | (#42633715)

Powell went on to say that ISPs had huge up-front costs which had to be allocated out to consumers, and those consumers were familiar with usage-based fees from paying their power bill or buying food.

In the case of wireless, I couldn't agree more. I negotiate with my local grocery store and set a fixed price for the maximum amount of groceries I might need each month. It works great most of the time, except when unexpected company shows up at the end of the month and I wind up paying an extra $70/egg in overage charges.

Of course it isn't (2)

onyxruby (118189) | about 2 years ago | (#42633729)

Of course this isn't about congestion, if it was other countries with far higher bandwidth allocations wouldn't be charging a fraction of what we charge. Our national broadband is an international embarrassment and is holding back the economy. Hell, even China is starting to deploy Fiber directly to new construction - and - letting you pick your ISP.

Network lines need to be declared a critical infrastructure, turned over to a third party and let consumers truly have a choice of ISP's. There is no competition for broadband in this country outside of a select few areas and the results are overwhelming. If your lucky enough to live in an area with competition you get /much/ better deals.

The free market is a wonderful thing that work around almost any problem. However the free market can't work if competition isn't allowed and monopolies can corner the market. We need another trustbuster like Teddy Roosevelt.

Next election vote for zombie Teddie Roosevelt - dammit.

Define Fixed Costs (2)

I_Voter (987579) | about 2 years ago | (#42633779)

From TFA
QUOTE... for a business that requires "enormously high" fixed costs -- digging up the streets, put the wires in -- and operational expense, "it is a completely rational and acceptable process to figure out how to fairly allocate those costs among your consumers who are choosing the service and will pay you to recover those costs.UNQUOTE

To me -- "digging up the streets, put the wires in" - are start-up costs. And I would be willing to agree that they are "enormously high" However; operational expenses plus depreciation, insurance, etc. are recurring or "fixed" costs. My understanding is that operational "fixed" costs are very much, lower.

I have no problem with conspicuous consumers of bandwidth paying more. My problem is with costs not dropping for all consumers!

Re:Define Fixed Costs (1)

jmauro (32523) | about 2 years ago | (#42633897)

"[D]igging up the streets, put the wires in" is considered a fixed costs because the cost doesn't change whether you have one customer or a million. It's not a recurring fixed cost, but it is a fixed cost.

If you can't figure out why or what's going on... (0)

Anonymous Coward | about 2 years ago | (#42633793)

If you can't figure out why or what's going on - then it's all just about the money.

Woa there cactus. (1)

doubledown00 (2767069) | about 2 years ago | (#42633883)

Powell said that while a lot of people had tried to label the cable industry's interest in the issue as about congestion management. "That's wrong," he said. "Our principal purpose is how to fairly monetize a high fixed cost."

----

Mr. Powell is straw-manning here. The only ones who have ever even suggested that data caps were about congestion management were ISP industry shills (usually company spokesman and industry paid commentators). Every other reasonable person (including the customer base) has guessed from the get go that the caps were pure cash grabs.

While I appreciate that Mr. Powell is finally coming clean, this candor now way after the fact merely slightly elevates his status from "pure whore" to "occationally honest whore".

We missed the boat on the infrustructure.. (3, Insightful)

ducomputergeek (595742) | about 2 years ago | (#42633885)

The US should have been building the fiber lines based around a munipal/county model much the way most water/sewer systems work where the city/county government installs and maintains the lines and then leases out that line to whatever ISP the customer wants. Then we would have been allowed actual competition. Charter offers you the best package, fine you sign up for Charter for $X per month and they pay the city/county $y per month to lease the line. Want Mom&Pop ISP that charges $Z per month, great, they still pay the city/county $y per month to lease the line.

That is something at the local level I would have voted a bond issue, sales tax increase, or property tax increase for without a problem.

Instead we have the system we have now...

Re:We missed the boat on the infrustructure.. (2)

luther349 (645380) | about 2 years ago | (#42634083)

we had such a system in place for the phone lines why we had the tons and tons of dial-up isps but at the same time dsl became a home use product the government pretty much passed a law restoring the telcos monopoly on the phone lines. killing off most early dsl isps if that law never based dsl rates would probably be going down wile getting faster not going up. basically the same game the cable company's got.

Two words: eminent domain (2)

Bill Musically (2819243) | about 2 years ago | (#42634157)

US citizens have a collective power to take real estate, easements, and capital - as long as that taking is a forced sale for public use at a legally-determined "just" price. This power has been exercised through the states since before the federal Constitution was ratified. In fact, it's usually not possible to build electrical transmission lines, roads, and telco networks without using eminent domain. Telcos and public utilities thus have a constitutional obligation to facilitate public use - and if they don't do a good job, we the people can and should take their easements back - and take their wires while we're at it. Right now we're paying world-class profits for less than world-class service. If the telcos ask, "Well what are you going to do about it?" like schoolyard bullies we should remind them that their entire business is based on property rights that are not absolute.

Re:We missed the boat on the infrustructure.. (1)

Insightfill (554828) | about 2 years ago | (#42634171)

The US should have been building the fiber lines based around a munipal/county model much the way most water/sewer systems work

I used to live in a town that brought up such a measure to a referendum. Leading up to the vote, there was so much disinformation (coming in scary, B/W postcards) coming from the entrenched phone and cable companies that they never stood a chance. Something along the lines of "DID YOU KNOW THAT YOUR TOWN WILL STICK YOU WITH A SIX MILLION DOLLAR BILL FOR A RISKY VENTURE?" I don't think they were offering to lease out the lines, but that would be moot since the existing companies had their own lines and didn't want additional competition. What made it worse was that the vote was scheduled during an "off-year" (non-presidential election). Those tend to have smaller turn-out, and older voters.

Uh huh and to also be fair... (1)

sunyjim (977424) | about 2 years ago | (#42633921)

To also be fair.... former FCC chairman Michael Powell (now president of the U.S. cable industry's trade association) confirmed as well his large payout was exactly where they said it would be when he walked into the president of the U.S. cable industry's trade association job.

High upfront costs? (2)

Chas (5144) | about 2 years ago | (#42633933)

Like the BILLIONS some of these providers were paid BY THE GOVERNMENT and WITH OUR TAX MONEY for the development of broadband?

You know, all that money they frittered away?

Re:High upfront costs? (1)

luther349 (645380) | about 2 years ago | (#42634107)

come now by the time they got new lambos and privet jets and of could everyone got a big bounes there just was enough to go to anything,

fair schmair (1)

TripWire (28087) | about 2 years ago | (#42634127)

Did they lower the base price accordingly when adding caps? Didn't think so.

Read Their Statements, Do Some Math, Think (1)

Cycloid Torus (645618) | about 2 years ago | (#42634191)

Go to SEC and read the latest 10Q/10K for your company. ( URL: http://www.sec.gov/edgar.shtml [sec.gov] ) My ISP (Cablevision) has $10 B in debt, negative equity and last year made about 3% on the total assets after covering operations, depreciation and interest due. They reduced their debt and pay an 'ok' dividend which is why they are attractive to investors. So I feel pretty good about paying $70 @ month for a cable/internet connection with basic 'TV' and about 20Mbps download / 2Mbps up. I guess the government could have done it and just paid for it with taxes, but it would have probably been for 128Kbps ('who needs more?'), have cost 3-5x as much and taken 7 years longer. As to FCC, maybe they should look at the electric bill... my bill breaks delivery away from supply...and I can get 'supply' competitively. That leaves the 'delivery' (infrastructure) to be assessed separately by folks who (hopefully) understand capitalization, recapture rates, sinking funds, etc. Maybe the real question we should be asking is: Why should cable industry keep the 'utility' part combined with the 'content' part?

Now do you understand? (0)

Anonymous Coward | about 2 years ago | (#42634271)

"now president of the U.S. cable industry's trade association"

Maybe now you deadheads can understand his actions as head
of the FCC, a job he was sooo highly qualified to hold.

Wake up folks! The cable companies bought and own this guy.

If ISPs are overcharging, start your own! (0)

Anonymous Coward | about 2 years ago | (#42634451)

If you believe that ISPs are cheating their customers, then start a competing ISP. Lay your own fiber, license spectrum, peer upstream. You are allowed to do all of these.

After you add up all the numbers, you'll realize that it *really is* expensive to sell internet access.

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