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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."
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.
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?
The problem with socialism is that they always run out of other people's money. - Margaret Thatcher
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?
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.
They're using their grammar skills there.
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.
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.
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.
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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.
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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.
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.
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.
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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.
Blessed are the pessimists, for they have made backups.
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.
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!
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.
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).
However, it does seem unlikely that even a doubling of network costs would bankrupt them, and yet they want to cap usage.
The right to protest the State is more sacred than the State.
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.
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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.
> 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.
A Pirate and a Puritan look the same on a balance sheet.
I am using SneakerNet. Never underestimate the bandwidth of a portable harddisk in my pocket.
Even if you win the rat race, you are still a rat
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...
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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.