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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?!?
About three months ago I got a call from Shaw, my cable modem company. They called to tell me that they were dropping the price of internet service from can$50 to can$40, retroactive as of three months before that, because of "increasing popularity of internet cable usage without corresponding television cable" (price for the combo was can$70 - and has remained at that, I believe).
So I'd say that all you Americans are just living in the wrong country - we're fine up here in the Great White North.
Websurfing done right! StumbleUpon
augment your senses: http://sensebridge.net/
But it's not.
Even if you ignore the technical aspects of monitoring bandwidth usage and tying it to individual accounts you then run into the business cost overhead increase of changing your billing method.
Which is easier and/or cheaper? Flat-rate billing all of your customers regardless of bandwidth usage or doing it as they suggest and charging the bandwidth pigs extra?
As the overhead goes up that cost gets passed along to the customers as well.
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.
OK, I'm not being 100% truthful. In a free market system, prices are tied to demand. The higher the demand, the higher the price. However, I didn't mention the one way out of this because it would involve sacrifice, which seems to be a foreign concept to most of Slashdot's readership. That's right, kids, you'd have to boycott broadband and live with 56k until enough people dropped the services that the providers would be forced to lower rates to attract people back.
There really isn't any other way to deal with "gouging", except to pass more laws and create more government bureaucracy in an ill-concieved attempt to implement price controls. This is obviously a bad idea, so basically it boils down to "if you don't like it, don't buy it."
"I don't know that atheists should be considered citizens, nor should they be considered patriots." - George Bush
I'd like to quote this message I received from AT&T Customer Care regarding higher upload speeds on AT&T Broadband. I was concerned about the 128K upload cap.
Take a look at this:
Hello! Welcome to the Online Customer Support Center for AT&T Broadband service. A message from a customer care specialist should appear in the chat window shortly. Your session ID # is 2142439.
In-Kevin Roberts has joined this session!
In-Kevin Roberts says, Hello and thank you for contacting AT&T Broadband. My
name is Kevin & I'll be glad to assist you today. I see you have a question regarding higher upload speed . Can you please give me a little more detail ?
You say, Is there a service plan which provides me with greater upload speeds
than 128k?
In-Kevin Roberts says, Yes, AT&T broadband is coming up with higher upload speed.
You say, when will this be available?
In-Kevin Roberts says, This will happen anytime between May 2002 to December 2002.
You say, what is the pricing?
In-Kevin Roberts says, The pricing will be the same.
You say, what will be the new speed?
In-Kevin Roberts says, The new speed will be 256kbps.
So, to appease cable modem customers, AT&T is rolling out more bandwidth on the upstream side. If you'd like to confirm this, log in to AT&T member services and join a chat room of theirs -- that is what this transcript is from.
I hope this helps those of you who are concerned about higher prices. I, for one, am a very satisfied AT&T cable modem customer.
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"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."
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.
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...
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
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.
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.
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.
The speed of time is one second per second.
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'
I gots ta ding a ding dang my dang a long ling long
I use Charter. They just introduced a new tier. They have for $37.99 or so, you can get 768Kbps/128Kbps or for $50 or so, you can get 1.5MB/400Kbps. I think $50 or so is fair for now, but it sure seems like every couple months the price goes up
Fair prices for what you get there indeed, i would say.
Wouldn't expect it to last however. I'm in southern California and on Adelphia, rumor has it that Charter is the expected winner of the Adelphia fire-sale here in Los Angeles, so i decided to check their pricing plans in the So Cal area... what costs you 50 a month is gonna cost me 113.95.
Here's the prices listed for SoCal Charter Pipeline (from their website):
***
Service plans (select one)
768Kb Down / 128Kb Up Bronze Package: $39.95 Charter Pipeline High Speed Internet Access, no contract. This price does not include the promotional $4.95 modem lease or the $10.00 cable access fee for non-cable television subscribers.
256Kb Down / 64Kb Up Value Package: $29.95 Charter Pipeline High Speed Internet Access, no contract. This price does not include the promotional $4.95 modem lease or the $10.00 cable access fee for non-cable television subscribers.
1Mb Down / 256Kb Up Silver Package: $60.00 Charter Pipeline High Speed Internet Access, no contract. This price does not include the promotional $4.95 modem lease or the $10.00 cable access fee for non-cable television subscribers.
1.5Mb Down / 384Kb up Gold Package: $99.00 Charter Pipeline High Speed Internet Access, no contract. This price does not include the promotional $4.95 modem lease or the $10.00 cable access fee for non-cable television subscribers.
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
C'mon guys, remember what cable deregulation was supposed to do to cable prices? Cable prices were supposed to go down.
I don't know about any other slashdotters, but my cable bill has NEVER gone down. It only goes up.
Some people will say that increased competition from satellite TV drove the cable industry to upgrade to digital cable....I say baloney. I still can't get digital cable, and i'll only get it when cablevision decides they want to give it to me.
Why would broadband providers structure internet connectivity any differently? The only way the United States will get widely available broadband at reasonable prices is if the US government makes it a priority. The gov't must aid in the build out and then REGULATE the industry.
We've already tried the unregulated approach and wall street bent over and took the results. All we've got now is spotty broadband coverage and high prices....don't even get me started on wireless internet!
-ted
I live in San Mateo (zip 94401) and I have RCN (http://www.rcn.com)
/sbin/ipconfig parameters! I was impressed. I had dealt with too many tech morons who would say 'sir we dont support Linux, or broadband will not work with Linux' :-)
- cable tv
- broadband
- phone line
for about $80/month. No contracts!
All services are _great_. Trust me I know. I have been with AT&T and other DSL providers. By far RCN is far better. I only had to contact their customer service a couple of times at start and they were very knowledgeble. The average service rep knew about
Their upstream cap is around 700kbps (that cool compared to the 128kbps by AT&T and all other DSL providers). I get about 700-1500 kpbs downstream. I just use SSH but even if I ran a small FTP/webserver they are not that anal. I have LimeWire running and people have been downloading stuff off me @ crazy speeds (e.g 100 kBps, yes with a capital B). I don't share any illegal crap, just typical opensource programs and some copylefted MP3s.
If you are in the same area, please consider these guys.
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.