Bandwidth Caps May Be Critical Error For Broadband Companies

Technical Writing Geek writes "An Ars Technica article argues that after many years of stagnation, the US broadband landscape is finally 'primed for change'. Companies like Time Warner that decide to cap bandwidth risk being relegated to a 'broadband ghetto. Alternatives to the standard cable modem vs. DSL conundrum will come from technologies like WiMax and (eventually) the 'white space' broadband that might be offered by whoever wins the 700mhz auction. 'All of that is to say that cable and DSL won't always be the only games in town. If wireless solutions are able to deliver on their promises of high speeds with no usage limits, capped cable broadband service like Time Warner has planned is likely to be unattractive, to say the least. Instead of developing plans designed to discourage consumers from feeding at the bandwidth trough, cable companies would be better served in the long run by making investments in new technologies like DOCSIS 3.0 and the kind of infrastructure improvements necessary to meet bandwidth demands.'"

Comments

FP?

[dosius]

Yeah but in these days of corporatocracy, who wants to actually provide better service to their consumers (since it's the shareholders, not the consumers, who they see as their customers), instead of just jacking up the prices and LOWERING service?

-uso.

Re:FP?

[pod]

Au contraire.

The execs see lots of upside when the stock goes up, and lots of downside (and pressure from senior leadership and stock holders) when the stock falls. The stock price and happy share holders are utmost in many executive's minds.

Re:FP?

[riseoftheindividual]

The current situation in corporate America is that management serves shareholders, not customers. Customers are secondary to shareholder needs. This has led to an outbreak of executive leadership that focuses no more than 2 quarters out. This is one of the reasons why US companies aren't as competitive globally as they used to be. Not the workforce, the management. The management goals aren't for strong long term corporate heatlh(which is what serving customers leads to), but rather, making sure they hit the numbers for the current quarter(the customers and customer service be damned).

This isn't true everywhere obviously, and where it is true it's in various degrees. This thinking has become commonplace and leads to decisions that will hurt the company down the line. But since they aren't focusing on anything beyond 2 quarters, they just don't see it.

Re:FP?

[riseoftheindividual]

Profit making enterprises whether public corporations or private businesses are created for the benfit of their owners not customers.

Say what? If your business is not created to benefit your customers, you don't have a business. It's really that simple. Nobody is going to hand you money to benefit yourself. Try it, go ahead. Start a company called "in it for me Inc." and try to convince people to give you money without benefiting them in return. It doesn't work.

Honestly, I don't think you understood the point of my post. I wasn't decrying or acting as if it's news that businesses are in business to make money... I was decrying that it seems rampant in corporate america today to look only a few quarters out in planning business, due to an extreme focus on the shareholders. It's as if these idiots forgot that there is no business without their customers. There is no benefiting yourself in business if you are not benefiting your customers. That this principle of decay often plays out over years, as a company more and more gets focused on quarterly numbers, means that it won't really be taken into consideration by executives focused on quarterly profits, versus building a solid long term business. This also is a contributing factor to the growing corporate scandals and accounting fraud, but that's another topic.

They seem more than willing, to squeeze out some extra dollars of this quarter in profit at the cost of stepping on the toes of their customers. They do this, without looking at what the long term ramifications of such actions will prove to be, more and more having the attitude "we'll deal with it when it comes, for now the quarters numbers must go up". Cable ISPs have one main competitor now, but if/when wireless heats up and becomes more common place, they will end up with several. Will the customers they squeezed some extra dollars out of now due to the caps remember this when the new competition comes to town? Will the new competition be able to trumpet the benefit of not having similar caps as a benefit to customers?

Seems pretty likely to me. But I'm looking further out than a quarter or two, so that's why I can see it coming. The cable companies don't seem to be and if they are, they seem to be writing off all the customers this will annoy and the friends and people those customers have sway over.

Re:FP?

[Anonymous Psychopath]

Great post, and I agree with all points except for "Managers of corporations often talk about customer satisfaction..."

More precisely, managers of corporations often talk about customer retention, of which satisfaction is one component. At the end of the day, managers would rather have 500 customers who continue to do business with them, for whatever reason, than 400 extremely satisfied customers. They go hand-in-hand, but aren't the same thing.

it's not the bandwidth caps stupid,

[Scudsucker]

it's the lack of competition. Your consumer typically has the choice of either cable internet or DSL, or just one of the above. The FCC change in allowing telecos to lease their lines for more than bulk rates was a big part of this.

Re:it's not the bandwidth caps stupid,

[Shakrai]

As for the US, welcome to what the rest of the world has been putting up with for a while, really don't see what all the fuss is about.

By "rest of the world" do you mean "Canada and Australia"? Because the last time I checked, there are quite a few countries (South Korea, Japan and Sweden come to mind) where you can get connections into the dozens of megabits for what we are paying for our lousy 1.5Mbit DSL or 5.0Mbit cable over here in the states. Hell, you can oftentimes even get symmetric 10/10 or 100/100 connections in those countries.

Might it have something to do with the fact that they have no content industry to protect in those countries?

Don't worry, it'll get "better"

[MBCook]

Don't worry, it'll get "better". My big worry with something like this is that specific services I use will cause me to go over. Netflix watching, TiVo downloading shows, Apple TV (if I had one), etc.

Which means that they'll probably start adding exceptions. Soon your plan will be:

10 GB per month, except stuff coming from Netflix, TiVo, or Apple... you get 200 GB there. Our site(s) are unmetered, watch our ads all you want. Also, you can add any site you want to the list of exceptions for only $5 per month, but we don't have to honor that.

Re:My first first post evern?!

[amuro98]

What free market? The cable and phone companies have divided the country into their own small kingdoms, where only 1 may exist. If both my DSL and cable provider decide to be jerks and charge $100/mo for dial-up type performance, there's not a whole lot anyone can do, other than go offline. Permanently.

As the article says, wimax may be an alternative...eventually.

They know most of us are boned

[techpawn]

Like the RIAA and Oil companies this is the last gasp of a company that can't adapt to the changing market demand with anything that won't screw the customer. Also like the above mentioned you have little choice in the immediate, all the options being talked about are down the road ideas. So, they're going to bend the customer over and get what more money they can before they die a painful death.

Which is more profitable? Innovation or screwing the customer?

Oligopolistic pricing

[pigiron]

With the choice of high speed providers for most people being limited to 2 or 3 at best, we will see an oligopolistic pricing model much like that in cellular service where all providers passively collude in a price structure that maintains high profits.

Re:Uh Huh

[Anonymous Coward]

The backbone can handle more bandwidth if the providers upgraded their equipment. The media (fiber) is already in place.

totally naive

[Quadraginta]

Fact is, most users want a fairly modest average bandwidth, with rare bouts of high-bandwidth usage. It's only the few rare addicts and power users that want a big pipe open to their PC all the time. That's why cable has succeeded as well as it has so far -- because the basic bandwidth-sharing paradigm works for most customers, who usually just write e-mail and every two weeks or so download some MP3s from iTunes or watch a video preview of some movie. The fact that jacking the price up for the average-bandwidth power users might drive some of them away (to surely more expensive options) is not going to be a bad business decision for the cable companies, any more than it's a bad business decision for an HMO to drive its sickest patients to other insurers.

The other thing most people want is for their Internet connection to be dirt cheap. Hence the pressure on cable companies from their customers has not been towards higher and higher average capacity, but towards reliability and cheapness. My cable connection costs the same in nominal dollars now, in 2007, as it did the first day I got it, in 1997. That means its real price has fallen steeply. But the bandwidth hasn't budged. If anything, it's worse. That's not because the cable company is stupid, contra this naive article, but because those have been the priorities of my neighbors signing up for the service. The fact that the cable company has made a huge pile of money operating as they have is the surest evidence that they know what they're doing, business-wise.

Will that change in the future? Will people start wanting to stream HD movies over the Internet? Got me. Maybe. But the demand for enormous bandwidth has been predicted to be Right Around The Corner(TM) every year for the last 12 years in my experience. That wouldn't inspire me to invest my retirement funds in any big pipe to every desktop tech.

Re:totally naive

[div_2n]

the demand for enormous bandwidth has been predicted to be Right Around The Corner(TM) every year for the last 12 years in my experience

I think that if Bittorrent has taught us anything, it's that when content is available (either legal or otherwise) that people want, they WILL saturate their pipe to get it as soon as they can.

I sincerely think that this is a chicken and egg scenario where the demand _would_ be there if the content owners would get over themselves and work with tech companies to meld content and technology in an inexpensive and unrestricted manner.

The past decade has proven so many lessons that organizations like the MPAA and the RIAA are either unable or unwilling to learn. Sadly for them, in trying to be a damn in the path of the river, they are quickly becoming a bump in the road slowly being pound level to the pavement.

The saddest part of all is that we could all be enjoying inexpensive access to music and video content legally _right now_ with those organizations profiting instead of this stalemate we're in where we can last forever while those relying on profit cannot.

There's your corner and while I can't possibly predict how long it will take for us to get around that corner, rest assured that we will and then you will see demand skyrocket.

Re:Uh Huh

[Surt]

Mod parent up past the max. This is the only response such a stupid article deserves. Bandwidth doesn't magically exist free for wireless providers.

Re:It's about time!

[KublaiKhan]

Costs a lot less to toss up a couple of towers than it does to negotiate rights of way, dig trenches or erect poles, maintain a fleet of trucks and techs to go from residence to residence making connections, et al.

Transfer Cap, not bandwidth cap, right?

[corsec67]

Even going with the horrible misdefinition of "bandwidth" to mean "throughput", that isn't what this article is talking about. All high-speed connections have a throughput limit, and that certainly isn't measured in gigabytes (yet, for almost all people). It is more often in the megabits/second range, or kilobits/second for the unlucky.

This article is talking about a transfer cap, or a limit on the number of bits that can be sent in a month. 15GiB a month doesn't have anything to do with the throughput. For example a 28.8Kbits/second modem sending for a solid month can send over 5 Gibibytes of data.

I'm not optimistic.

[MaWeiTao]

That would be nice, but the lack of real competition in television and movie phones doesn't make me particularly optimistic. The mobile phone carriers all charge virtually identical prices. Satellite and cable companies nickel and dime for every little thing.

The problem is that consumers just accept this. They'll complain, but they keep right on paying these companies. So if consumers accept this bandwidth cap all providers will start doing it.

With this general trend to charge people for every little thing how can they not do it? I guess I'm just a pessimist.

Usage fees but not caps

[Jah-Wren Ryel]

Caps would be a very poor business decision for all the reasons mentioned in the summary and more.

However metered billing on some sort of sliding scale (the more you use, the less each byte costs because the fixed costs of supporting a customer don't vary by bandwidth consumed) has the potential to be better for both the customers and the ISPs.

When ISPs charge by the byte their business interest becomes aligned with their clients' interests - the more bandwidth the clients use, the more money the ISP makes and thus the more money they can afford to invest in infrastructure which means even greater amounts of even cheaper bandwidth becomes available due to economies of scale, technology improvements, etc.

I know there are plenty of cynics out there (I am one too) who think that the ISPs would just use metered billing as a way to gouge customers rather than improve service and reduce costs - they do tend to be monopolies after all. But I don't see the current situation being sustainable (which is one reason things like network neutrality are so hot right now, with fixed pricing the only way for the ISP to make more money per customer is via tricky back-door schemes that conflict, rather than align with their customers' interests).

How Much Is "Enough"?

[nick_davison]

Instead of developing plans designed to discourage consumers from feeding at the bandwidth trough, cable companies would be better served in the long run by making investments in new technologies like DOCSIS 3.0 and the kind of infrastructure improvements necessary to meet bandwidth demands. When my connection could manage text, I sucked down all the text I could get. When my connection could manage images, I sucked down all the images I could get. When my connection could manage audio... OK, I'm one of the few that still buys audio. When my connection could manage 320x240 video, I sucked down all I could get of that too. Now I'm downloading HD movie trailers and full CD at a time OS images and game demos.

If the content were available, I'm pretty sure I wouldn't be stopping at 1920x1080 HD video. Monitors can already handle 2560x1600 fairly commonly and all we're waiting for is someone to come up with a way to put multi-angle video in a single steam.

What's been the limiting factor throughout? Bandwidth availability. As soon as it's available (or just becoming available), someone releases their next great idea that just hadn't taken off so far because the files were too slow to download.

Cable companies can release 100mbps lines... They can up to 1gbps, 10gbp, 100gbps... And we'll come up with cool ways to use them.

That's not to imply they shouldn't invest in new technologies and keep moving forward... but "just give people more" isn't a real solution either. That more will never be enough and you'll be back in the same position.

Realizing I'm going to be mocked as the "the intertubes are a series of roads" guy... It does have a lot of parallels to the road construction argument.

To many people, most even, the answer's simple: If there's congestion, build more and bigger roads.

The thing is, all the research demonstrates that people will drive up to a given pain threshold. You reduce the amount of pain they feel... they drive more until they're back up to it. You spend a whole load of money, destroy the environment, and everyone complains just as much about how sucky traffic is.

Of course, refuse to build more roads and you very quickly get voted out of office by angry commuters who "know" the system far better than any researchers with their numbers ever could. On the internets, we call them discussion boards.

Unfortunately this sounds reasonable

[trulore]

Time Warner already has caps on bandwidth where you have to pay extra to get their "Turbo" speed. Capping the total volume used per month is the next logical step. The majority of the American people (i.e. not tech-savvy Slashdot readers) only need 5gb per month and would be very happy to have a lower bill. The wireless carriers will never come close to the raw speed of modern cable. Geeks will hate wireless and the wireless companies will soon learn to hate geeks for hogging bandwidth. The wireless companies will eventually have to cap their service as well.

What is really the problem with per MB charges?

[Realistic_Dragon]

I have been on mixed line + per-MB charges since I moved to cellular broadband and my costs have gone _down_ not up. This is compared to fixed line DSL!

In a commercial environment the best way to make sure that you aren't being screwed is that the cost model reflects the services provided. E.g. if you have the services of line+bandwidth then paying something for the line and something for the bandwidth:

* Increases the incentive for the line to always be working and fast.
* Decreases the pressure to keep bit torrent queued up 25 hours a day to 'get your money's worth'.

Any sort of unlimited bandwidth plan encourages a sort of game where supplier and customer repeatedly try and screw each other over by abusing the wording of the T&Cs. So, if you manage to arrange a contract where cost and incentive are equally shared it's much harder for everyone to end up unhappy.

After all price = cost + markup. If the markup isn't acceptable then expect something to give - businesses that run at a loss can't survive for long.

Re:Uh Huh

[ultranova]

Mod parent up past the max. This is the only response such a stupid article deserves. Bandwidth doesn't magically exist free for wireless providers.

Actually, you are wrong. It does. After all, nothing stops two neighboring wireless networks from exchanging packets directly, without going through the backbone, or relaying each others packets towards third parties. Naturally this is slower in the latency sense than going through the backbone, but that doesn't really matter for BitTorrent, streaming media, or other high bandwidth consumers.

At some point we need to get rid of this silly notation of Internet Service Providers and simply let any device act as a wireless router for any other, forming a worldwide mesh. Then again, this would be a nightmare for the control freaks who want to keep exact logs of who does what online, so it might take some time to happen.

Re:Happy after nigger day!

[MightyYar]

I know I shouldn't reply to a troll - it only encourages them. But this one demonstrates what an awesome thing MLK, Jr. did and how far we've come.

The civil rights movement had to deal with millions of people with the same attitude as our Anonymous racist here, and yet it prevailed. While at one time you could be a US Senator and publicly espouse the same sentiment as CmdrIdiot here, now the racists number far fewer and can only safely spew their venom from behind a mask of anonymity. Frankly it is amazing when you consider how short a time has passed.

Ars Technica, sloppy

[Yath]

What a rubbish article.

It isn't a "bandwidth cap". It isn't even about bandwidth. It's about usage (at least they used the term "usage" in the title).

It isn't a "usage cap". It's tiered pricing. Your basic subscription covers a certain amount, and then you pay more. A "cap" would mean you got cut off, which you aren't.

And it isn't even the end of the world! People who use more resources pay more. Sounds pretty efficient. Now you may quibble that the specific prices they set are high due to low competition, and that's one area where Ars may have a point. But god you have to wade through a lot of crap to get there.

Re:Uh Huh

[Eivind]

Offcourse they don't, but one huge trunk tends to be several orders of magnitude cheaper than the thousands of thin end-subscriber-lines that feeds into it.

What do you figure cost more, wiring up 50.000 dwellings in the municipality of Stavanger with 1mbps or more to a central point, or linking Stavanger to Bergen (next larger city, 150km away) with a single high-capacity fibre-line sufficient to deal with it all?

Keep in mind that the needed capacity will NOT be 50.000 * 1mbps, (50Gbps) not even close, that would only be the case if 100% of all subscribers where using their lines 100% the ENTIRE time, which completely fails to be the case.

In practice a 10Gbps link would do it just splendidly, which is still orders of magnitude within the capacity of a -single- fibre. (yes you'd want to have atleast 2, preferably 3 fibres out of town for redundancy)

Advertisers Will Never Allow It

[jesdynf]

The day I pay per byte is the day I install AdBlock. There's no contest. There's no way around it. If I pay for the ads -- or even if I pay for the DNS requests to resolve the ads -- I don't request the ads.

They can't whitelist every ad server in Creation, and if I pay for even one ad, that's one ad too many. Not happening. I'll even block Google's scripts. And I'll do the same for every member of my family.

Re:Bandwidth isn't free, you idiots

[evilviper]

See, you may be paying $50/month for an "unlimited" connection at 6 megabits/second. But guess what? 6 megabits of bandwidth costs your ISP *at least* twice that.

It was ENTIRELY their decision to advertise a 6mbps "unlimited" service. If they expect users to stay under some amount of data transfer every month, they should advertise as such.

Many, many years ago... my cable modem service was advertised as 386kbps. Yet if you were a light user, for any given week, the modem speed would double, until you started utilizing it more heavily. Yet, they didn't advertise the doubled speed, that they couldn't sustain... they advertised the speed they COULD actually supply. Will wonders never cease?

Also, ISPs are quick to whine and complain about their bandwidth costs, yet for some strange reason they aren't begging companies (eg. Google, Netflix, Apple, Microsoft) to setup a mirror server in their offices. Even though it would be technically pretty simple to do so, for some reason, ISPs don't provide the maximum possible speed for in-network traffic (to/from your neighbors, and/or the ISP's caching proxy server, and what-not) and only limit speed when it has to go over their oh-so-expensive leased lines. So while ISPs cry uncle, they've taken NO technical measures that would save them money, while benefiting their customers.

Re:Uh Huh

[Surt]

But then you don't have a 'wireless provider', you have a wireless mesh. Each node becomes a provider, and now in addition to still having the limited bandwidth between nodes, you have to deal with routing (chokes, failure, tampering, unreachability), security/privacy, etc. This is a bad idea in many many dimensions, which is why it hasn't caught on in spite of widespread availability.

Re:Uh Huh

[peragrin]

Your logic is what has gotten us into this mess to begin with. ISP's don't have enough overall bandwidth for the number of users they are supporting.

The promise everyone can get this much at this speed but in order to deliver it they either have to increase their bandwidth, or throttle a percentage of the connections. If you don't plan for giving 50.000 people 1mbps connections then when you have 50.000 people trying to use their connection to download the latest TV show your screwed.

think farther ahead than today's bandwidth usage please!!!

Re:Uh Huh

[patrikor_007]

Easier said than done. Such a decentralized scheme wouldn't lend itself very well to hierarchical addressing and routing. How would all those millions of devices decide how to route packets?

In this house we obey the laws of thermodynamics!

[brassman]

"If wireless solutions are able to deliver on their promises of high speeds with no usage limits,"

Excuse me? NO usage limits? At all? Even if you envision the wireless solution as a peer-to-peer cloud rather than a fix for the last mile issue, 'no usage limit' sounds unrealistic.

Assume that everyone who comes to the cloud brings excess capacity to the party. Assume that the cloud is given free rein to use the spectrum currently being wasted (IMHO) on broadcast TV and radio. Is even that going to be enough to sate everyone's demand for rich media?

When (not if) the cloud needs to connect to a backbone, there is certainly going to be a limit there.

If we're talking about service at a price that a mere mortal can afford I expect there will be limits, and they will be set low enough to pinch.