ISP Capping Is Becoming the New DRM

Crazzaper writes "There's a lot of controversy over ISP capping with Time Warner leading the charge. Tom's Hardware has an interesting article about how capping is the new form of DRM at the ISP level. The author draws some comparison to business practices by large cable operators and their efforts to protect cable TV programming. While this is understandable from the cable operator's perspective, the article points out how capping will affect popular services such as Steam for game content publishing and distribution, cloud-computing and online media services. Apparently this is also an effective way of going after casual piracy."

Comments

In Europe

[__NR_kill]

In particular in Belgium, there are just a few ISP's that do not have any capping. The major ISP's make BIG profit of the users who want to download lets say, more than the 40GB they offer. It's NOT a DRM, it's just another way to squeeze more money from their customers.

Re:In Europe

[Anonymous Coward]

Bullshit.

It may hold true for Belgium /in particular/, but Europe is too diverse to conform even loosely to the shenanigans you mentioned.

On the oposite side of the spectrum, less than two hours away by plane, we have Sweden, where a 100Mbps pipe costs less than a Big Mac meal per week.

Your neighbour, Holland, has pretty decent Internet, as does Germany, Finland and France.

Damn ignorant first-poster.

Re:In Europe

[Hurricane78]

It's NOT a DRM, it's just another way to squeeze more money from their customers.

I thought that was the very point of DRM.
And I still think this.

Re:In Europe

[sjames]

As telecommuting takes off, it will become somewhat less rare for a bad ISP to be a good enough reason to move. If it's unreliable enough to make doing your job impossible, moving starts looking good.

Local governments might want to keep that in mind.

Why Not Just Metered Service?

[blcamp]

Rather than have these ridiculous, confiscatory rates for so-called "unlimited" service (which will still be capped under some other excuse)... why don't the ISP's just provide metered service?

This way, Grandma who just wants a couple of recipies every now and then, and occasionally looks at baby photos posted on thier adult children's Facebook accounts (and is not pulling down 10GB/month)... only pays a little bit.

And the Torrent operators pay for what they use.

Pay for what you consume. Fair for everyone.

Or is that too much common-sense for all involved?

Re:Why Not Just Metered Service?

[Akido37]

Pay for what you consume. Fair for everyone.

Or is that too much common-sense for all involved?

Because that's bullshit.

The ISPs' costs aren't based on how much you download, but on the bandwidth they provide. A better limit, and more fair for consumers, would be tiered service based on speed.

Re:Why Not Just Metered Service?

[sqrt(2)]

Because the cost to the ISP isn't based on how much I use. They have to maintain the infrastructure no matter how much it's being utilized. Their operating costs are the same whether their customers are using 50% of their bandwidth capacity or 99%. I shouldn't have to pay more because I use the resource that is available. If they are unable to deliver the service they are selling then they need to invest in upgrading their capacity. Bandwidth demand is only going to increase, gouging customers is not a solution to the problem.

Re:Why Not Just Metered Service?

[Anonymous Coward]

Because, unlike a real utility like water or electric, it doesn't cost big ISPs anything more whether you use the service or not. They peer their costs amongst each other.

So no, it's not common sense. It's pure greed. Maybe if the same companies would let you pay per view for the TV shows they carry they'd have a better moral position to stand from. But that's not going to happen. We pay for shit whether we watch it or not.

Re:Why Not Just Metered Service?

[u38cg]

I do agree with you that straightforward per-GB charging is not ideal. However, the fact is that if people actually paid a fair price for guaranteed service, they would be quite surprised. In the same way that hotels overbook rooms and airlines overbook flights, it cuts costs all round if this practice exists. Not an entirely simple problem, and not one that is easily solved by capping, either.

Re:Why Not Just Metered Service?

[Albanach]

Because, unlike a real utility like water or electric, it doesn't cost big ISPs anything more whether you use the service or not. They peer their costs amongst each other.

So laying cables and Cisco routers, they all come free if you're an ISP, yes? Where do I sign up?

Come off it. You can argue about the size of the caps, then I'll listen, but to pretend that increases usage doesn't impose any additional costs on ISPs in nonsense.

Most ISPs report that a very small number of users use the majority of their bandwidth. When their capacity hits a bottleneck, all their users start to suffer. The ISP has two choices - increase capacity, which could be straightforward by adding a couple of extra routers, or could be very very expensive such as installing new DSLAMs or laying fiber between locations.

So as an ISP what do you do? Eat the cost? Raise the rates for all your customers, even those that use 2GB/month? Kick off the high users for breaking an 'invisible' cap hinted at in your TOS? Or introduce tiered pricing, so those that use most, pay most?

If you want a debate about whether the level the caps are set at are fair. go right ahead. But to pretend that ISPs somehow have unlimited free bandwidth and that extra usage has no additional cost implication is an untruth.

I can see two solutions to the problem. Fairly set caps that accurately reflect the increased costs of increased usage, or a service like water or gas where you pay a connection fee and a per gigabyte fee, possibly with tiers so costs increase faster with very high usage.

There's a problem with this in the US - very limited competition. If you're not competing against anyone else, why try and lower your profit margin? Until the US sorts out local loop unbundling, so there's real competition over the last mile, US customers will continue to be gouged.

Re:Why Not Just Metered Service?

[xouumalperxe]

Ok, let's assume the cost to the ISP doesn't directly depend on how much total download volume you use. The bandwidth they can provide is limited though (like you said, by their infrastructure), and the more you download, the more time during which you're taking up a portion of that bandwidth, which can't be assigned to somebody else. A cap on the download volume is, effectively, a cap on how much use you make of the limited good. Now, if you provide a good, and there is contention for that good, you need to upgrade the infrastructure, which is more expensive than upkeep. That means either consumption goes down, or somebody has to pay for the upgrade. Raising the base line for flat pricing is quite unfair on the lower-usage customers, so you charge based on the total traffic.

This said, I do agree that the actual prices (if not the metered scheme itself) are way off-base.

Re:Why Not Just Metered Service?

[Mr. Underbridge]

Because the cost to the ISP isn't based on how much I use. They have to maintain the infrastructure no matter how much it's being utilized.

That's fantasyland. The only reason they need the infrastructure is because people use it. And the lion's share of that need for more infrastructure is people using it a lot. Otherwise, they could use less infrastructure and provide lower prices. Since you are the reason the rest of us can't get lower prices, it's in the interest of the rest of us to boot you from the shared pool and make you pay your own way.

In effect, you're the asshole who gets the filet mignon and wants to split the check. Uh, no.

I shouldn't have to pay more because I use the resource that is available.

Just so long as you're OK with the other side of that - namely, that by not paying for what you're using, they won't be investing in higher bandwidth.

Bottom line is, if there's a shared resource and you're using 100x as much as the average person, why the hell SHOULDN'T you pay more? I've no idea why people accept metered usage for cell phones but not network connectivity. There's no substantive difference in the argument.

Re:Why Not Just Metered Service?

[jaxtherat]

At that point the grand mum would realize that she is paying 10$ per GB while the guy next door is paying 0.2$ per GB.

*worlds smallest violin*

Welcome to economies of scale. http://en.wikipedia.org/wiki/Economies_of_scale

Re:Why Not Just Metered Service?

[Skuld-Chan]

If you figure they have an ever growing customer base (which they should if they are a good business), and have been investing into their bandwidth, equipment and support like a good company - while costs increase, it should be offset by their increased customer base anyhow.

Not to mention their price they pay for bandwidth has been going down steadily over the years (don't believe me? read their quarterly SEC report!).

So actually yeah their prices should stay steady, or even go down eventually.

Re:Why Not Just Metered Service?

[metamatic]

The amount of data I transfer incurs costs from their upstream providers (or, in the case of the really big ISPs, the traffic affects the networks that will peer with them for free).

And they are welcome to pass that cost on to me. I'll gladly pay the approx. 3 cents per GB.

Wait, they want to charge $1 per GB? Suddenly it seems less reasonable, yes?

So who gets rationed?

[tjstork]

If there's not capping or charges for bandwidth, then somebody gets rationed. There's a fixed amount of bandwidth available, and you have to decide who gets it. Whether or not that's someone that pays extra to get more or just some random assignment, you still have to decide.

Re:So who gets rationed?

[__aatmkh9910]

ISPs just need to upgrade their backhauls to accommodate more traffic, they are selling people bandwidth that doesn't exist and hoping people don't use it, ISPs need to fess up about exactly how much bandwidth each customer will get. Here in the US, at least where I live, Verizon is one of the only ISPs left that doesn't do any sort of throttling or capping, and I've seen more than a few people switch to them for that exact reason.

Re:So who gets rationed?

[TheRaven64]

Did you read the small print? I'd be very surprised if you are paying for 6Mb/s all day every day. Most likely, you are paying for a connection that supports peak throughput rates of 6Mb/s. It is possible to buy 6Mb/s connections, but they run to hundreds of dollars a month. If you think you can pay a few tens of dollars a month for a 6Mb/s connection that you can saturate 24/7 then I have a diamond ring to sell you.

The only thing I have a problem with is ISPs not advertising their caps clearly. When they started selling broadband connections, there wasn't enough interesting content for most people to use more than a tiny fraction of their capacity. Now there is a lot more, and people are starting to go over the invisible line that they drew with the maximum that an average user would need. If you really need a connection that you can saturate, then you buy a leased line, and pay for it. For the price of my (capped) 10Mb/s connection, I could buy something like a 256Kb/s connection which allowed me to saturate the link all of the time (it would more if I want an SLA that guaranteed a certain uptime it would cost more). This seems to be what you are suggesting ISPs offer instead, but for most users it would be much less valuable. Being able to download an ISO image in a few minutes, or watch streaming video, is a lot more useful than being able to constantly saturate a slower link.

Re:So who gets rationed?

[evilkasper]

So when I was trying to find out what my ISP's version of "unlimited" was it took me forever to actually find the page where they list the caps for the different tiers they have. I'd get pissed and switch to a different provider but it's not really an option, which seems to me to be the main reason for the poor customer service. Most of us have 2 options if we are lucky, not a lot of need for them to compete for our business.

Re:So who gets rationed?

[mpcooke3]

Regardless, they sold it as "unlimited". Yes, 6M is a peak throughput, but there was no restrictions on WHEN nor HOW LONG I use that 6M peak throughput.

It's a bit like a water-slide park, where they originally charge kids $20 for 10 slides that have to be used the same day. Then they switch to a new pricing scheme where kids can have an unlimited number of slides on that day for $20.

The scheme is so popular at drawing people in, none of the kids can get more than 5 slides in because the queues are so long.

Sometimes people running a club do the same thing over here, you pay one fixed price to get in and you get unlimited drinks! Only catch is that the club is always packed and they only have 1 slow barman serving. It's also a very unpleasant experience at the bar!

Re:So who gets rationed?

[jedidiah]

> This requires a bit of context, doesn't it? "Unlimited" began being advertised at a time when dialup was charging for hourly use.

Nope. Not even close.

It was "dialup" that made the break between being charged by the hour and being charged a flat monthly rate.

By the time "broadband" came around, it was already taken for granted that what you
paid for per month covered ALL OF YOUR ACCESS. There might have been usage caps even
then. However, they were rare and typically represented absurdly high levels of usage
that even an abuser would have to work at violating.

Broadband was sold as a means to download (pirate really) large media files and to do this faster than dialup.

Re:So who gets rationed?

[SanityInAnarchy]

Worth mentioning, that's initially a win for the service provider -- the slides are packed, but each kid is still paying $20. Even if you assume the waterpark was fully utilized at $20 for 10 slides, that means they have at least twice as many kids getting 5 slides, but still paying $20 each.

What I've humbly suggested is, instead of pocketing the extra money, spend it on building more slides. It may take time, but you'll eventually get even more kids paying $20 each, and having a lot more fun.

Instead, ISPs have done the equivalent of advertising even more, and pulling in even more people, until no one can get more than about 2 slides. Some kids figure out exactly which slides to use, and when to use them, coordinate with each other to plan it out, and somehow manage to get 20 slides each -- thus forcing everyone else down to 1 slide. The pool cracks down by randomly kicking people out who "slide too much" without defining it.

Eventually, after enough people complain, the park goes back to its original model, this time stating explicitly that you get 5 slides, and more than that costs extra.

All of this just to make a few bucks in the short term.

What shocks me is that there's no competing waterpark with five times as many slides to pull all the customers away. Surely, at least some ISPs have to have gotten it right, and invested in infrastructure, right?

Oh, and it was a good analogy, sorry to abuse it...

Re:So who gets rationed?

[mpcooke3]

What I've humbly suggested is, instead of pocketing the extra money, spend it on building more slides. It may take time, but you'll eventually get even more kids paying $20 each, and having a lot more fun.

That's only worth it if people pick water slide parks based on how busy they are. If they mainly just select based on price and the 'Unlimited' feature then there isn't any point in building new slides.

Hell, if the people are mainly just interested in a cheap price and hearing the term 'Unlimited' maybe it's a better business strategy to spend the extra money on advertising your already overcrowded water slides!

You've now made a lot of money with little investment. What if someone else starts building an alternative water slide park?

Well you could then add some extra slides to your park and use your stockpile of cash to give away unlimited slides for free, announcing this on the same day as the other water park opens. You then run your water slide park at a loss for a few months until the competitor goes bankrupt at which point you may choose to pick up that second water park at a big discount. You can then put prices back up to $40 a day to compensate for the free days you had to give out before.

Eventually you run all the water parks in the world, you charge whatever you want, move your headquarters to a tax haven and use the money you've saved to offer large contributions to political parties in return for dropping any lawsuits against you.

It's the American Dream.

Killing the Goose...

[agorist_apostle]

Let's see...people back in the 90s bitched about having rationed access, so companies got rid of it and went to unlimited use because their competition was. How long is it going to take a competitor to again figure out they can have all the business they can handle if they don't charge for volume?

Re:Killing the Goose...

[Anonymous Coward]

Problem is unlike the 90's when dial up providers were rationing, there's no competition for broadband in a lot of areas. With dial-up it didnt matter what phone service you had, you could still get AOL, MSN, Netzero, Juno, ... Now with broadband, some people don't have that choice to make. Where I live, I have 1 option for internet, Comcast.

I've been saying this since comcast instituted it.

[DragonTHC]

A throughput cap will only hurt consumers and legitimate transfer-intensive services like steam, netflix, xbox live, and hulu.

The large few ISPs like to say that it's 1% of their subscribers who aren't playing fair. That's just not the truth. They see a trend emerging and they're not happy about it.

You don't institute major policy change because of 1% of your users. You do it because in less than a year, it could be 15%-20% using as much as the 1% currently uses.

Why? Online content providers are now offering larger quality services and more transfer-intensive services. Comcast certainly didn't like that. They have to pay for traffic outside their own network.

It really is a scam. They sold me unlimited service and they have reneged on their part of the deal. They altered the contract. That should be illegal, but they did it.

Caps and metered service are both money-saving scams. They will not prevent the inevitable.

The only real solution is to increase network capacity.

a market based entirely on Artificial Scarcity?

[NZheretic]

Monday, July 17, 2006

Network Neutrality : Two question for the great debate. In California there was an outrage when it was disclosed that electricity companies had deliberately idled plants while supplies were tight and then waited for prices to skyrocket on the spot market. If the current Internet network infrastructure provided by the backbone providers and Internet service providers can currently support much higher speeds and data quantities to current customers, then is the act of packet filtering and setting arbitrary low speed and data caps also effectively providing an "idled" service? Is a tiered Internet service, where content providers would be effectively competing on a similar market to the electricity "spot market", a market based entirely on Artificial Scarcity?

What scares me..

[rotide]

Caps are fine, at least in the sense that they ALWAYS existed under some vague asterisk following the word "unlimited".

But what's got me worried is the fact that when I started playing around on the internet, the most heavy web surfing was a few gifs and/or jpgs.

Now, we have full flash animations, games, interactive multimedia presentations. Not to mention embedded audio and video.

Downloads use to be smaller as well. Now with more bandwidth available, software gets bundled with more features and more multimedia. Game demos have gone from 10-20 meg up to 500meg to 2+ gig, easy.

Hell, I'm a legit user, I don't download music (anymore, I did when I was younger) and I don't pull pirated movies/software either. I don't run bittorrent except for the occasional WoW update (when I did play). But I've seen a large jump in bandwidth usage with my new Roku box for watching NetFlix on my tv. That's a lot of streaming video. Are they keeping tech like this in mind? Doubt it.

So, say the caps are aimed at the bandwidth of today, ok, fine. What happens "tomorrow" when demos START at 2gig+? What happens when the only video online starts at widescreen HD? Our bandwidth usage, for simple surfing, has been going up. It would be shortsighted to think it won't keep going up. If the companies with hard established caps don't keep growing your cap, you're going to eventually have to pay for the top tier.

Bandwidth usage inflates with time. I'm not holding my breath that the ISP's will generously increase caps over time.

Re:I've been saying this since comcast instituted

[Jason Levine]

They're not excited. They're terrified. With services like Hulu, YouTube, Netflix, and other legitimate online video sources, the draw of their cable TV services is weakened. Why pay the cable company $50 a month if all of your favorites TV shows are online? (Legally, again. Let's not consider pirated shows for the moment as that introduces different arguments.)

So they institute caps. Now you can download and watch a couple of HD movies from Hulu, but that could eat up your entire month's bandwidth allotment. So you're less likely to use online video and more likely to tune in on your TV. Cable wins. And if you decide to buck the system and view online videos? They charge you overage fees which coincidentally add up to approximately the cost of a cable subscription. Cable wins again.

And just to introduce a Network Neutrality wrinkle into the equation, I'm pretty sure that they'll exempt any online video services that they introduce. If Time Warner releases "RoadRunner Online" where you can watch your favorite shows on your computer, they'll keep that usage from counting toward your monthly bandwidth cap. The net result will be that ISP sponsored online video sources will be given an advantage (maybe they will thrive, maybe not) while other legal online video sources will be held back with every attempt made to get them to wither and die. All to protect the cable companies' bottom lines.

Re: fixed amount of bandwidth

[T-Bone-T]

Revenue != Profit unless costs are 0. It costs a lot of money to keep such a large network running and Internet is one of many services they provide. I do feel your point, though.

Re: fixed amount of bandwidth

[poetmatt]

As someone who worked for an ISP, you should know pretty well that the connections were being oversold for profit margin, and this "coming bandwidth crunch" has been coming for what, 15 years? I have no sympathy for ISP's that couldn't see a slowly rolling tide that they have been putting off. Honestly they are the companies that provide the capacity and they know what's coming down the line as far as upgrades. Even now they bitch about small investments to increase capacity for longterm or longer-term.

Better Than DPI

[Bob9113]

Total transfer has a cost. Your connection to the Internet, if kept running wide open full time, would be a money loser for the ISP. There are essentially three solutions to this:

1. High transfer users are subsidized by low transfer users. This will fail as everyone becomes a high transfer user. My Mom now sends me YouTube videos occasionally.

2. Deep packet inspection (DPI), with the high transfer user of services the ISP likes being subsidized by the high transfer user of services the ISP does not like. IE: They charge company A or inhibit customer B, while allowing company C to send high volume content to customer D. Some ISPs think this it the right answer because some services are inherently high volume. Others like the idea of being a toll-road and getting to charge monopoly rents. Ultimately this is insidious because it hides the cost and distorts the free market.

3. Tiered pricing based on the numbers of 1's and 0's you consume, but without regard to which 1's and 0's you consume. IE: net neutrality with tiered pricing.

Of those three options, is there really any question that option 3 is the best?

One may argue, "The ISPs are charging too much, their profit is too high, it's an inefficient market and prices are too high because of lack of competition." Fine, maybe that's true. The answer to that problem is increased competition. Asserting that the ISPs should not be allowed to use option 3 to solve a problem which may be real, however, can only lead to either option 1 or option 2 being used instead. Option 1 would imply increasing the price to everyone. Is that really fair? Should I really continue to have my Internet access subsidized by the guy next door who doesn't use high volume media? I mean, I like it and all, but it's not fair, it's not free market, and it makes the ISPs want to find ways to shut me off so they can focus their business on the guy next door.

Option 3, on the other hand, makes me the most important customer to the ISP. It makes them want high volume users. It makes them more money when we use more Internet. Suddenly the ISP's profit incentive is directly in line with making the Internet faster and encouraging high volume services. Seems like a pretty good thing, no?

So choose your poison:

1. Subsidization with the ISP hating high volume users.

2. Deep packet inspection with the ISP choosing which 1's and 0's are "good" and which are "bad".

3. Net neutrality with tiering, and the ISP becomes profit motivated to encourage high bandwidth and high volume services.

Gee, tough question.

Tom, I love ya. I was making banner ads for your site back in 1997, and loved every little review you put out. But you're off your nut on this one.

Re:I've been saying this since comcast instituted

[spinkham]

If ISPs really wanted to reduce bandwith costs, they wouldn't have all dropped their internal Usenet feeds, and would be caching the heck out of everything.
The reason no one has complained much before:
Comcast:$43 for 250 GB - Seems mostly reasonable. 250 GB is a lot of traffic at the moment, if you're pulling more then 10 GB every day, you're doing some serious stuff and should probably get a business connection.
Time Warner: $40 for 10GB? $60 for 40GB? - Not reasonable at all.

This is retarded.

[Big Boss]

If the local ISPs start this crap here, I'll buy business class service with an SLA (or even a T1) and start running CAT5 to the neighbors, which happen to be my family, and split the costs. Maybe even set up a WISP.

Or get a group together to lobby the city council to join Utopia.

Re: fixed amount of bandwidth

[jmauro]

That is true only the most simplistic analysis and incorrect. The costs don't include any of the costs of discharging the debt incured on building the network. It also doesn't include the costs that would be applied to general cable usage that share the same communication system or any labor and tax costs that are incurred running the either system. It's just a subtraction of two lines (total data revenue and direct data costs) in the 10-K form and the "implication" that the result is 4 billion in pure profit.

While they're making money, 4 billion they are not. At that profit rate the market would be flooding with other competators who would undercut them (see cell phones).

Re: fixed amount of bandwidth

[andymadigan]

However, it does seem unlikely that even a doubling of network costs would bankrupt them, and yet they want to cap usage.

Re:I've been saying this since comcast instituted

[AdmiralXyz]

The large few ISPs like to say that it's 1% of their subscribers who aren't playing fair. That's just not the truth. They see a trend emerging and they're not happy about it.

Excuse me, do you run an ISP? Do you have access to their network traffic logs? I'm not saying you're right or wrong, but getting on your high horse and making these bold assertions about their deceit with zero evidence on your side is not commendable by any means.

You don't institute major policy change because of 1% of your users. You do it because in less than a year, it could be 15%-20% using as much as the 1% currently uses.

Sure you do, if that 1% is in fact using 50% of the network capacity.

The only real solution is to increase network capacity.

Which costs money. This is a cost that will have to be passed onto the consumers, and if I am not part of the small group of people using up huge chunks of capacity, I fail to see why I should pay that cost.

Re: fixed amount of bandwidth

[Thraxen]

That's Time Warner's own information to their investors. They claim they made $4B in profit off their data services. You talk about their other services, like cable TV, but don't forget that those other services also have their own revenue streams. You act like they are being run purely off the profit from the data services. The bottom line is they have plenty of money to upgrade their network, but instead they would rather implement caps and squeeze the consumer for even more profit.

Fuck them.

[hoskeri]

I am using SneakerNet. Never underestimate the bandwidth of a portable harddisk in my pocket.