Slashdot Mirror
Preventing Broadband Price-Gouging?
Wrighter the Pessimist asks: "I've been seeing a lot of stories recently about cable modem companies raising rates and baby bells winning monopolies on broadband. It seems that indeed cable companies are already raising rates, or will be in the near future. Shouldn't broadband be getting cheaper, with improvements in technology? Or has demand already surpassed the capability? Or, have the monopolies just decided to give themselves a raise? What can we as consumers do to prevent prices from going sky high?" The first article mentions the need for higher pricing for users who tend to use more than their fair share of the bandwidth. The second article is about AT&T raising its rates, which is not news to many Slashdot readers, I'm sure. I would think that in situations like this, that a tiered pricing approach might be better than applying a flat rate. Think you are going to be a high bandwidth user? Pay a fair price to your upstream. Web and e-mail only? Pay less. So do you think the current trend in broadband pricing is fair, or are broadband providers pricing themselves out of the market?
Broadband users have been riding the wave of cheap access for a long time, and its just about time that we got what was coming to us.
It's the same thing that happened with the rash of free webhosting services -- the companies finally realized that their businesses were flawed -- free webhosting just doesn't exist.
And broadband companies are having quite the same epiphany: bandwidth is not free! I am surprised that everyone isn't paying per GB downloaded and/or uploaded yet. Personally I think we should be happy that we got cheap (unmetered) broadband bandwidth for so long.
Never argue with an idiot, he'll just lower you to his level and beat you with experience.
See, that's the thing ... they aren't pricing themselves out of the market because the DEMAND for broadband won't diminish without an alternative and these monopolies that are springing up (or mergers, if you will) are making it so that there aren't many alternatives ... at least not widely available. I'm not sure why broadband isn't treated like phone access, long distance service, etc. The competition in that sector seems to be healthy and provides for relatively fair pricing, same with mobile phone service. If a few large providers are going to be allowed to exist, broadband should become a public utility and be regulated as such. Right?!?
Demand really has surpassed capacity. Think about it, a cable modem or DSL has as much or more downstream bandwidth than a T1 costing ten times as much. They can only get away with flat-rate pricing if they can amortize it across every cable modem that shares the high-speed line they bought. MP3 programs have made bandwidth use skyrocket, to the point where too many users are downloading at the highest speed they can get 24 hours a day. The broadband companies have 3 choices here: Cap speed per user, raise the price to reduce demand, or allow the performance to decrease unreasonably when the system is over capacity. None of those options are terribly good, but option 2 is the one that will keep the company afloat.
If you want to help solve the problem yourself, stop sucking down MP3z and ISOz all the time.
"Don't like it? Too expensive? Don't buy it. "
Would that be your attitude if your phone company did that? I doubt it since life in America virtually requires you to have a phone. (Which is why phone rates are so heavily controlled...)
The problem is that the internet is becoming a requirement in a lot of households. A lot of us have jobs that require us to have an active connection to the net. If the ISP's get too greedy, what do we do?
My situation, in particular, is a little more unique. I don't have a phone line, just a cell phone. If I got a phone line, it'd be almost strictly for getting on the net with. It'd cost between $20 and $30 a month for me to get the phone line, and another $10-$20 for internet service. I pay $55 for cable modem right now. If my cable modem gets too expensive, it won't suddenly get much cheaper for me to get 1/25th of service.
I could find myself in a spot of trouble if AT&T gets too greedy. Capitalism may work, but not without seriously screwing me in the process.
"Derp de derp."
Yes, demand is higher than supply. The problem is also that most broadband markets does not consist of several providers competing for customers. The customers are glad to have a fat pipe, almost regardless of price. Very few have a choice, and where there is a choice it's between DSL or Cable, it's never between to different Cable carriers or DSL carriers.
.5 MBps. It's not electricity where there is an acutal added cost in producing more.
The cost of producing bandwith is fixed, it is not three times as expensive to give someone 1.5 MBps than
But still, since at this stage the users are paying for the building of the networks, tiered or even metered price is a good way to split the costs somewhat fairly. Yet again, who pays for the highways, airports, seaports etc etc. Taxpayers. Why isn't Internet, the infrastructure of the 21st century to a greater extent paid for by our taxes ?
The local monopolies will maximize their short term gains, not do what's best in the long run for the consumers.
Oh, I can't help quoting you because everything that you said rings true
You seem to have been missing the boat on the whole M$ antitrust thing. If you have a monopoly in a sectors do you know what you get? It's sure not Capitalism, the laws might be the same but it's a whole new ball game because there is no competition. When corporations get too powerful (a point where our present system is starting to approach) it's them, not the governments, pulling the strings. What if you need the broadband but the cable provider and the telco are in bed together and charging through the roof. Competition can't get in because of the monopoly so the prices and service stay at that horrid level and you still have to buy it. Unfortunatly market forces arn't quite powerful enough to keep the big boys in line anymore and they're starting to make their own rules. I don't trust governments but I'd trust a corporation with the same power a whole lot less, at least in the end the leaders of the government are directly accountable to you and not dependent on how well they are able to force you to buy their product.
I stole this Sig
I work for a telecom equipment manufacturer. Over nearly the past decade, the regional bells (RBOCs) and competitive local exchange carriers (CLECs) were stumbling over themselves trying to build out broadband networks, and they went deeply into debt to do so. Broadband equipment isn't cheap. Believe, I know! The current pricing scheme was based upon the internet-bubble business plan of "market share at any price." We all know how well that worked. The RBOCs and the very few remaining CLECs are bleeding very badly with broadband, so this was inevitable as competition decreased due to carriers going out of business. So, this is the future. The faster we get used to it, the faster the RBOCs will resume building out the network and the better off we will all be.
You guys are nucking futs! Price gouging? What price gouging?
Ten years ago I was paying $19.99 a month for 2400 baud access. Five years ago I was paying 25$ a month for 28.8K access. This year I am paying $49 for 1.5Mbps access. That's an awesome deal. It's like moving from a studio apartment to a ten bedroom mansion for only twice the rent.
A Government Is a Body of People, Usually Notably Ungoverned
There is no question in my mind that large-scale tiered pricing would really pour cold water on all of the internet. Alongside every single click we'd make, we'd find ourselves calculating whether this is a wise use of our allotted bandwidth. ("If I watch that BBC video now, I might not have enough allotted bytes left to catch my favorite streaming radio show from France later tonight." "I could check to see what was posted on usenet, but just downloading the headers for the few groups I monitor is over 200MB. I can't afford that!" "Hey, the demo of a game I'm interested in is available for download, but if I get it, my wife won't be able to use the internet for the rest of the month. Better not!")
Basically, Americans would become second-class internet citizens if tiered pricing is put into effect. Video and voice over IP are going to be technologies that only Europeans and Koreans (and maybe some Canadians) will have the unmetered freedom to explore. I'm not sure what the next big application for the internet will be, but when it comes, you can bet it will use a lot of bandwidth, and you can bet that if US broadband is metered and you pay by the byte, Americans won't be anywhere near first to notice and take advantage of its potential. We will be the pedestrians of the internet.
The majority of people on the internet are already non-US-Americans. There is no way to prevent that. However, the USA is still far ahead in terms of buisinesses that make money from the internet. Inertia does not carry you far in this market. Just look at Netscape, Lycos and countless others who seemed invincible not very long ago. What has kept us ahead is that we have a head start on using the net, and we do a good job educating the next generation. As soon as we fall behind, others will be happy to take over our place.
Broadband might look to some like an entertainment service not too different from cable TV. It's a natural assosiation to make, given that they go across the same wire and the bills go to the same place. However, in terms of economic externalities, there is a world of difference. The country gets no benefit from the broad availability of cable TV (yet we regulate the industry to keep the prices low, which seems as stupid as regulating tobacco producers to keep the prices of cigarettes low). There is a huge economic and educational benefit provided by unrestricted and fast internet access. How many billions of dollars flowed into our treasury as a result of kids basically playing on the internet and inventing something? And how many dollars will be lost when their parents drag them away from the computer in fear that their bill will force them to cancel the family vacation?
Yes, I'm close to saying that it is our patriotic duty to see to it that as many Americans as possible have fast and unlimited access to the internet. We will reap the benefits of this later, and they will outweigh the costs by orders of magnitude. Remember, Canada has understood this for a long time, and even though they have a much more scattered population, far more of them have broadband, and they are paying far less than we are (because of direct government action). I understand the situation is similar in Republic of Korea. Anyway, it doesn't take a genius to see where the next generation of internet billionares will come from.
Like electricity and telephone, broadband must be regulated by the government. Actually, if I had my way, the government would just nationalize all the lines, a la Cuba. I honestly think that forward-looking countries would see internet access as a service they must provide for the entire population, for the same reason that the government provides us with basic education. I know that most readers here don't have socialist leanings to the same degree I do, but you won't be laughing at me when you're old and you find we have "unrestricted-capitalismized" ourselves out of a huge emerging market.