Mixed feelings about broadband caps

[jducoeur]

[Expanding on some thoughts I've made in comments elsejournal recently.]

Comcast has just made official what they've been hinting at for quite a while: they will be capping residential monthly bandwidth at 250GB. Needless to say, this is causing some consternation in the blogosphere.

On the positive side, they're actually giving a concrete number, as opposed to being vague about it, which is a real improvement -- there have long been reports of them tapping heavy users on the shoulder and saying, "Too much". If that's going to happen, I'd much rather have them saying publically what the limit is rather than applying it secretly and arbitrarily. And in their defense, 250GB *is* a lot of traffic: I'd be pretty hard-pressed to use that much with current technologies.

More importantly, the economist in me doesn't mind the idea of bandwidth caps. The notion of "all you can eat" is bad economics: by failing to set a price on consumption, it encourages people to be stupidly wasteful, and that will usually lead to bad results. By saying explicitly "this much bandwidth will cost you this much", it allows people to see what their consumption is costing, and to compare plans appropriately. In principle, competition should drive the cost-per-bit down to appropriate levels.

(And perhaps even more importantly, it's a move towards treating Bits As Bits, which is a healthier way to think about the Internet than trying to distinguish one kind of traffic from another, as they've been doing lately.)

OTOH, in practice there's a big snag here -- this isn't a particularly competitive market. It's not *too* bad in the Boston area: we've got three big players (Comcast, RCN and FiOS) duking it out in many towns, which is enough to keep them somewhat honest. But a lot of places have only two, which is dangerously cozy, and many only have one, which typically leads to things being more expensive than they should be. Even with three players, frankly, the market is smaller than I like, especially when those players have shown a tendency towards acting as a block when convenient.

So the situation does make me a bit nervous: in the face of weak competition, Comcast could potentially abuse their pricing power. The only reason I'm not *really* worried is the details of this particular market -- FiOS is the hungry new entrant into this market, and one of their best competitive advantages is bandwidth. (FiOS' network is in some respects much better than Comcast's.) I expect this to keep Comcast honest, lest they hand Verizon a big competitive advantage. But it's worth watching developments in this space closely, and it makes it even more important to fight against the industry's constant attempts to stifle new competition...

Comments

[crschmidt.livejournal.com]

Maybe you people in the outskirts have FiOS, but in Cambridge, we've got none, and no prospects thereof.

That said, you didn't mention DSL; is that intentional, or does FiOS just overrule all out there? In Cambridge, we've got Verizon and Speakeasy at least for DSL... Makes up for the fact that I can't get FiOS or RCN, I guess.

[oakleaf-mirror.livejournal.com]

No, DSL doesn't really make up for it. It's broadband only in comparison to dial-up, and is glacially slow compared to cable modems or FiOS. I do wish Cambridge had competing broadband providers.

[mindways]

Maybe you people in the outskirts have FiOS, but in Cambridge, we've got none, and no prospects thereof.

I live in a city adjoining Cambridge, and we also don't have FiOS. That lack, however, is not due to low demand, nor inability on Verizon's part to run their FiOS here. It's because Verizon's terms for doing so are apparently so eggregiously excessive (I don't know the details, but the sense I got was either "city-granted monopoly" or "city-granted subsidies") that the city refuses to accept them.

[jducoeur]

Interesting -- hadn't realized that FiOS wasn't available in-town. Doesn't surprise me to hear that some towns are refusing them because of their strict terms: uneasiness about the details is why we haven't installed them here yet. But yes, they're out in the 'burbs, and are downright pushy in trying to get people to switch.

And as oakleaf_mirror says, no, I really don't count DSL. It has its advantages, but it is looking quite slow these days, while cable modem speeds are continuing to double almost every year...

[crschmidt.livejournal.com]

Yeah. If you don't count DSL, I'm definitely in monopoly-land, with no likelihood of moving away from it in the near future.

As it stands though, I'm happy with DSL, and have no plans to switch until FiOS comes to town.

[be-well-lowell.livejournal.com]

Without DSL, I would have no options that allow me to run my own servers. Even paying for a business package (Verizon and Comcast won't offer a business package to my address).

[jducoeur]

A fair point, and this is one of my great annoyances with the cable industry: this business of not permitting servers does indicate that they still don't really get the Internet.

Ironically, the right way to deal with the potential server problem *is* bandwidth caps, on upload instead of down -- I would be much happier with those than on the stupid no-server rules...

Home servers

[metageek.livejournal.com]

Yeah, when I went to cable, I had to give up on keeping our server on-site. Now I use a hosted virtual server, which isn't nearly as good—the uptime has been better (407 days, last I looked), but I can't do basic things like upgrade the OS. I can't even back up the drives without using up most of my 10GB/month bandwidth budget. (This is with Rimu; I'm working on moving to Linode, which looks better, but it's still going to be frustrating.) The only consolation is that cable plus a VPS is about half what I was paying for a 384kpbs line from Speakeasy.

[be-well-lowell.livejournal.com]

I think that's unfair. The ISP industry is expected (correctly so) to keep down the spam pouring out of zombie machines all over their networks, and (somewhat less correctly so) to keep a clamp on open web proxies on their networks.

The easy way to do that is to block all web and mail connections. If they don't do that, they have to do more work to make sure their customers aren't abusing the rest of the net (whether or not the customers are personally responsible or have merely had their machines sucked into a botnet is irrelevant), and that costs money. I suspect there aren't enough of "us" to be worth worrying about, except as a truly niche market. Even in an open market, niche products demand a premium, so I'm not sure we'd be that much better off if we had more competition for the general home Internet market.

Why I can't get business-class service at my house is another issue entirely.

DSL is good enough for many people

[metageek.livejournal.com]

Until a year ago, I was on DSL, at 384kbps. I was using it because I could run servers (this was Speakeasy, not Verizon); but, really, it was generally fast enough. It wouldn't do for full-quality video (YouTube was fine), but that wasn't important. What finally got us to go to cable was Second Life; cvirtue was spending more time on it, and 384kbps just wasn't fast enough.

A lot of people who aren't really heavy users are just fine with DSL; and Verizon sells their first-tier service pretty cheaply ($15 for 1.5Mbps, isn't it?). I'd say that makes them a legitimate competitor in the marketplace.

Suburban fiber

[metageek.livejournal.com]

Maybe you people in the outskirts have FiOS

Hollow laughter. Verizon has no plans to come to Chelmsford. They're in some of our neighbors (Lowell, Westford), but we're not even scheduled.

[baron-elric.livejournal.com]

Up here in New Hamster, we have one option--Comcast. We're too far from a hub for DSL to be offered. Verizon has left the state. Satellite won't work due to horizon angles. It'll be interesting to see how far 250 GB really goes.

[its-just-me.livejournal.com]

I'm not really able to comprehend what that means to the average user.

[umbran.livejournal.com]

Depends what you consider an "average" user. But the person who is web-surfing, reading e-mail, using IM, and watching the occasional video clip on CNN.com or YouTube, it probably means nothing. They aren't going to come close to that limit.

I think a typcial XviD/DivX movie runs in around 700 MB - so you can even get a bunch of those in a month.

A blue-ray movie disk can store 25 to 50 GB - so downloading a lot of high-definition movies is going to cause problems.

[its-just-me.livejournal.com]

That puts it into better perspective for me, thanks.

[baron-elric.livejournal.com]

The problem for most cable users is that they have no idea what their current level of use is.

We use VOIP for two phone lines (though one is for fax and is inactive 98% of the time), we have active browsing schedules, and we both play WoW. Sometimes we download a TV show or movie (at about 350 and 700 MB respectively). What is our use? No idea. I'm going to start hunting around for tools that might tell me.

If you know of any already, please share. I'm sure others here would also like to know.

[baron-elric.livejournal.com]

Just had a friend point out that 250 GB/month works out at something like 770kb/second...for the entire month. That's some pretty hefty use.

Straw, camel.

[anu3bis.livejournal.com]

I've finally had it with Comcast, only to find out that FiOS is going to be a long time coming and RCN doesn't service my area. So, Comcast is the only game, even though I'm in the middle Somerville. Still, I'm considering switching the Internet from Comcast's abysmal cable service to Verizon's 3MB DSL. Anyone know what the actual throughput is on this?

Re: Straw, camel.

[crschmidt.livejournal.com]

On my 1.5/384 line, I get 160KBps sustained down, 30KBps sustained up. (I think those are the numbers I pay or anyway, I only really pay attention to what I get, figuring I'm getting the best I can.)

Re: Straw, camel.

[metageek.livejournal.com]

It depends strongly on how far you are from Verizon's switches (the "CO", for "central office"). I'm something like 12,000 feet from the CO, and the best I can get is 384kbps. Mind you, that was with Speakeasy; Verizon might be less clueful about it, and try to sell you a 3Mbps line anyway.

I think broadbandreports.com will tell you how far you are from your CO, if you give them your phone number.

[goldsquare.livejournal.com]

Here's what I wrote for a mailing list.... slightly redacted.

When the question is why, the answer is "Money". (Robert Heinlein).

Interestingly, there was a recent technical report on the theoretical limits of old "copper" phone line, which was far higher than most coax based cable companies.

My non-expert opinion.

Comcast has a simple choice. They can spend oodles of money on network upgrades to fix capacity at the customer end, the so-called "last mile". Or they can "monetize" the last mile, and make money off their lack of capacity, by setting limits and charging if you exceed them.

In a realistic competitive environment (the kind of enviroment that, in theory, capitalists prefer) there would be many competitors and any attempt to squeeze the consumer by monetizing a shortage would lead to mass exodus by the customer.

But that's not what we have. Even in happy-town, a place where you can get 3 different sorts of high-capacity bandwidth (and numerous DSL providers), we don't have the theoretic level of true competition (5 providers).

So, Comcast has a choice - make money, or spend it. And they choose to make money. Because Comcast has a choice, and the consumer does not.

"Why isn't Comcast competitive with their speeds?" Because they have no competition. (And the standard alternative to competition, regulation, is not easily available in this political climate.)

[laurion]

This doesn't strike me as Comcast being 'responsible'. It strikes me as another case of consumers drawing the short straw because there are no other straws available. In most of the country there is at best a duopoly, and far more often a regional monopoly. The definition of broadband in the US has been laughable for years, and we have fallen far behind where most of our peer nations are at.

I will agree that there is a capacity issue, and that individuals are maxing out that capacity. But the problem is that ISPs have been unwilling to invest in infrastructure to keep up with the demands of the Skype, YouTube, and Hula age. Setting caps like this is just another way of telling the market what the demand side of supply and demand should be, so they can keep margins high and services low.

Even without increasing capacity, they could better set and honor bandwidth rates. Most people these days are purchasing a 5mb connection, and getting half of that if they're lucky. Honest and enforced rate caps would give more relief to most. With a usage cap, the lines are still saturated until some people get cut off. I'm sure many would be happy to downgrade to a guaranteed 1.5mb (fast enough for most things) if it were cheaper and made available. As it stands, the package providers don't want to lower prices, so they compete on advertised speeds, that they have no ability to meet, so you often see similar performance from the 10mb line as from the 5.

[baavgai.livejournal.com]

There's really only one reason they're doing this, they fear litigation. Verizon got slammed for the "unlimited" (http://www.oag.state.ny.us/press/2007/oct/oct23a_07.html) BS. They've been wide open for this kind of suit, they just had the luck not to get hit first.

They're still answering to the FCC on their practice of traffic shaping. They must see revealing what they're also already doing as damage control. The unlimited moniker seems doomed.