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?

Comments

Get it through the power lines

[Scaba]

For New Yorkers, anyway, maybe a little competition from Con Ed will bring prices down.

And they said it couldn't be done!

My Price has DROPPED

[Mike Mentalist]

In the UK, Blue Yonder, are dropping their prices like a virgin on 'prom night'.

My monthly charge has gone down to £30, from £33.
The cost of installation has dropped, with 'recommend a friend' incentives for people to, er... recommend their friends.
They have also been advertising ALOT recently.
Not sure what it is like for NTL customers, though.

This isnt all good news, though. It is more down to the fact that broadband isnt taking off as quickly as it should, and they are desperate for new customers. Both Blue Yonder AND NTL have got massive debts numbering in the billions, and there is much talk of a merger.
I have had my cable connection for over 6 months now, with no real complaints. I hope that this doesnt change when/if they DO decide to merge. I just couldnt hack going back to 56K...

Things probably won't improve soon

[eyegor]

Until there's real competition in large enough geographical regions (as well as sufficient profits to allow price competion), we're probably going to get higher prices for broadband shoved down our throats.

I live in Ashburn, Virginia about a mile from UUNET and three miles from AOL and we really have very few options for broadband. Given the number of geeks and techies in the area, there's a significant market that isn't being served.

There's not a whole lot of profit to be made wiring an area and having to compete with other companies given the current economic conditions (especially if Verizon doesn't have to share their copper anymore). Until there is, the incumbent broadband providers are pretty much free to charge whatever they feel like.

Our cable company is offering Internet access at a reasonable price (if you consider a single DHCP and a lot of restrictions on what you can do reasonable). There is virtually no DSL available other than IDSL (and that's about $129/month for 5 IPs at 128k). We may soon get 802.11 access in the area, but that's only a pipedream at this point.

Until we're able to get some REAL competition into the area (and I suspect that this is the case in many other areas), things will only get worse for the consumer.

It's clear prices can go down.

[Dixie_Flatline]

And why can I say that so authoritatively?

Because here, in Edmonton, it costs me $40.00 a month for a cable modem. That's Canadian money. And I get 8MBit down, and 768k up. DSL costs about the same, and gets you 1Mbit up and down. If you like, you can pay more for more bandwidth.

I have no transfer quotas, just guidelines. No running porn sites, I can't affect the backbone, don't download to the maximum capacity of the modem 24/7...things like that.

Cable and Phone companies have TONNES of money. They can afford to make basically nothing on the service (which they are) and try and get you for the little extras (more web space, email addresses, etc.) Plain and simple: you're being ripped off.

I'm just worried that now that it seems to be a worldwide trend, the providers in this country will decide to try to bend everyone over.

Wireless Co-ops

[chipperdog]

This sounds like an opportunity for neighbors to join together with wireless networks. Split the expensive bandwidth costs between them...

The Bell's not having to share their copper may also increase commercial wireless opportunities. I work for a minicipal electric utility that has access to many street light poles for wireless access points, along with provisions (empty underground conduit) for future data comm. Might be a business for some utilities to get into...

in the land of dsl...

[global_diffusion]

I don't mean to come off as an asshole, or uncaring, but If I pay for 640k/s, I should be able to use 640k/s, meaning a total of:

640k/s * 60s/min * 60min/hr * 24hr/day * 30.5day/month = 1.686528 * 10^9 k/month.

Let me put it this way. By putting a limit on my uplink and downlink, I have essentially bought an amount of bandwidth per month (as detailed above). It makes no sense to charge me for using too much because I cannot physically use more than my allotted amount unless their system breaks, in which case it is not my fault. The telecoms are already charging me for how much bandwidth I use, so the idea of me using too much is silly. If they want to change to a different method of billing then they should take off my speed cap, because the speed cap defines the amount of bandwidth I am allowed to use per month/pay period.

Re:in the land of dsl...

[enigma48]

Just for the record, there are major problems with this overly simplistic model:

1) Everyone is charged regardless of usage. We might not agree with Delta overbooking planes, but it either reduces ticket prices or delta makes more money. (being a public company they publish their better profits and new cheaper local competition comes in since profit opportunities are better)

2) Costs increase *dramatically* for the company for each customer. 640k is near half a T1, so for every second customer that comes in, each new customer pays for all costs associated with that "almost half T1".

You've purchased the service, but I've never seen a document saying you've purchased 10^9 k/month at 640k/s. If they don't document where you get cut off then you're right, you're perfectly able to "rip the company off" and we've been doing that for years.

Now after some of the companies of mostly fluff are gone, the survivors are trying to get out of the red ink and into the black. The myth that content will save the day and you need to sign up millions of customers to be profitable is gone and companies are looking to be stable.

Look at it this way:

*If they overcharge, they lose a major part of the market - someone else will service these customers.
*If they make HUGE profits even with $10/month, other companies have an incentive to get some of this pie and charge $9. Then $8, 7....
*If they don't make enough profit and stay that way, they cut corners and eventually die. Some of the old customers move to larger companies, which likely benefit from economies of scale.

If they are "gouging" successfully, they will benefit in the short term only. Since price increases are small and companies are still going under, I highly doubt major profit is being made.

Letting everyone (ab)use their high speed by downloading every second only hurts us.

If you like 640k/s all the time, buy the fractional T1. If you don't value your 640k/s THAT much, look for a cheaper option. Like what you have now.

Two sides

[Indras]

For the pessimists:

Short-range communications, such as LAN technologies, roughly follow Moore's law. We have gone from 10Base2/5/T to 100Base-T(X) to 1000Base-T/FX and so on. Wireless went from 11Mbps to 54Mbps, and Linksys is working on wireless with burst modes to 70Mbps. Prices on existing technologies keep dropping, and new technologies take the place of those that fell out. Common sense.

Long range communications do not. If it did, our bandwidth would be improving every month, and/or cost of service would go down every month. Actually, once you have your connection via cable or dsl, your bandwidth is most likely going to lower, due to extra users hopping on the network in your area, and prices will rise due to higher costs to maintain a larger network and regular old inflation. This is the opposite of Moore's Law.

I think this is what has me, and many others, a little disappointed, and possibly even angry at telephone and cable companies.

For the optimists:

This is the way I look at it: if I wanted to make a direct connection between two computers that were in the same room at, say, 15Kbps, it would cost me about ten bucks for a null-modem serial cable and maybe a few fractions of a cent per month for electricity in that little cable. If I wanted to do the same thing to a location across the city _without_ the help of a third party, it would cost me a few thousand dollars to set up (for wireless, I'd need a couple towers, for standard cat5, I'd need a ton of cable, a bunch of repeaters, and a whole lot of time and effort into installation and maintenance), and a few hundred a month to maintain. Now imagine if I wanted to connect to a computer in, say, Austin, TX, from my location here in Grand Rapids, MI. The costs would be insane (like I said, no third parties, so if I wanted satellite, I'd have to launch my own, if I wanted wireless, I'd need a tower every few miles for repeating the signal, and so on).

My local ISP is providing me this service at much greater speeds (as much as 250KB/s from some web sites) to websites possibly around the world. What are they charging me? Around $45 a month.

Broadband comapnies should be more honest

[ikekrull]

About what they are ACTUALLY PROVIDING for your $50-$100 per month.

rather than say 'heres a 1.5Mbit/s connection with a 3GB cap', they should say that 3GB over 30 days is really a ~70kbps connection with a 1.5Mbit/s burst speed (which you will be charged extra for using, assuming constant usage of your 70kbps bandwidth)

Personally, i am not averse to paying for pipe. But if i pay for the pipe, then i expect to be able to use the pipe i was sold for the purpose it was sold to me without being branded a 'problem user', a 'criminal' or a 'bandwidth hog'

Why don't the cable comanies just be honest about it and sell me a 70kbps pipe for $50/month, a 150 kbps pipe for $100 a month and a 1.5Mbps pipe for $1000/month?

Maybe because it doesn't sound like a very good deal at all?

In reality, the cable/ADSL companies are simply trying to limit aggregate bandwith usage to exactly what they used to have when the majority of their customers were on dialup.

Its quite likely you would be much better off with 2 channel-bonded 56k dialups if you are a heavy bandwidth user, while it is the light users who want small amounts of high-speed net access that benefit most from 'broadband'

And then they wonder why there is so much dark fiber laying around because of 'lack of demand'

Re:Not pricing themselves out of the market

[T-Ranger]

AT there was never government protection for Bell.. Im also a Canuck, but I do know a bit of the telco history.. Bell acheived a monopoly through mergers in the early early years, and buyouts later on. A communications network is a natural monopoly and once Bell acheaved it it wasent that hard to maintain.

Now, government regulators were at that point faced with a problem: competition is good, but yet natural monopolies are better. All over north america (significantly, crossing national borders and policies) more or less of the same thing happened: Government set up watch dogs to keep prirces low, and consistant from rural to urban areas. In a lot of areas the telcos diddnt want, because they couldnt afford to at there regulated consistant-accross-the-board prices run copper out to rural areas. So governments more or less paid the initial cost of the network install out to stickville provided the telcos would operate it and the bill to the customer in stickville would be the same as in metropolis. Government is happy because now all there peons have telephones and the telcos are happy because now they have more customers for free. Im sure that some of these deals involved long term leases to the telcos for the network, and this might look at government setting up a monopoly, but had they not the network would never have been built in the first place. Not quite so simple and neferiaous as you make it out to be.

The traditional telco are now facing major problems because of this. Consiter Maratime Telephone and Telegraph (now MTT, even more accuratly a part of Aliant..) here in Halifax, Nova Scotia for example. Halifax has the cheepest last mile high speed internet anywhere in the world, save for Canbera Au. We have a dense urban enviroment, both MTT (the traditional telco) and the cable companies offer high speed internet, and the cable companies (Eastlink) also offer telco services as well.

Since the cable companies only offer telco (and HS internet (and for that matter, cable)) in the urban areas there average per-drop pots costs are significantly lower then the average per-drop pots connection of MTT for their provence wide network. Eastlink telco is less then MTT. 'Bundles' of cable, telco and internet are only slightly more then just telco and internet from MTT.

The urban lines pay for the rural lines for MTT. For eastlink the urban lines have a lower sticker cost, and they dont offer rural service at all.

Competition has been forced on MTT. They are obligated to interconnect there telco network with that of competetors. However, regulation has not dissipeared. They are also obligated to maintain service - and cost - to everyone, everywhere in Nova Scotia. They are lobbying hard to introduce a split urban/rural rate for telco service. Eneviatably it will happen.

I guess Im ranting on here, but the moral of the story is that we were all better off with a well regulated monopoly.