Will Capped Data Plans Kill the Cloud?

theodp writes "With the introduction of its Chromebook, Google is betting big on the Cloud. As is Apple, with its iCloud initiative. So too are Netflix and Skype. Unfortunately, their very existence is threatened by data-capping carriers, who have set a course to make sure that the network is NOT the computer. 'I don't know what the solution is,' writes David Pogue. 'I don't know if anyone's thinking about this. But there are big changes coming. There are big forces about to shape our lives online. And at the moment, they're on a direct collision course.'"

Comments

Simple

[Anonymous Coward]

The solution is taking the networks away from those who don't want to provide the service they promised to provide when they were given monopolies by the government.

Re:Simple

[GIL_Dude]

The solution is taking the networks away from those who don't want to provide the service they promised to provide when they were given monopolies by the government.

Obviously your argument is simplistic. Now, we all know that it doesn't cost much (if anything) more to run a network running at 50% capacity than one running at 10%, so the straight up "utility" model like electricity or water billing doesn't exactly translate. However, it DOES cost more when you have to split out areas that are currently on one cable loop into two or more cable loops (as an example). So there absolutely is a cost to allowing usage to climb with no limit and no increased price. What the real solution has to be is some form of tiered service. Not a "aha! you went over your limit by 2 GB - you owe $100" type of gouging tier. More of a "all use between 0 and 150 GB per month you pay $0.10 per GB, for use between 150 and 300 GB per month you are billed at $0.15 per GB, and for usage over 300 GB per month you are billed at $0.20 per GB" type of deal. There would be a "connection / account maintenance" base fee (like a meter fee for electricity - for an example say $10), and any rental fees (if you rent your modem, etc.). The rest would be simple tiered usage based.

With my admittedly pulled out of somewhere the sun doesn't shine sample numbers it would look like this:

Use 80 GB per month: Base fee + 80 * $.10 = $18.
Use 200 GB per month: Base fee + (150 * $0.10) + (50 * $0.15) = $32.50
Use 400 GB per month: Base fee + (150 * $0.10) + (150 * $0.15) + (100 * $0.20) = $67.50

Obviously those are just sample numbers, but they contain a penalty for using "a lot" of bandwidth. People can argue about whether there should be "night time GB" and "weekend GB" and all that - but the basics of pay as you go should really end up being the model for network usage.

Re:Simple

[Anonymous Coward]

If this does kill "The Cloud" can we go a whole week without a new story about it?

Yes you can cluster computers together so that the individual identity/address of any particular node of the cluster is unimportant. Yes you can combine the resources of those nodes to increase computing power and availability. Can we all collectively get over this and end our eyes-glazed fascination with the subject now? It really is and should be a very simple thing to understand.

Nope, gotta bend over and grab your ankles and say "please marketers, please ruin one more thing, please ravage me hard". So wait, we gotta come up with a term for it. We'll call it, "THE CLOUD" because that sounds mysterious and foggy and like something you can't see through so you wouldn't know what was inside it. That'll keep 'em at the edge of their seats, yeah. Thanks to previous marketing efforts they already think their PCs are magic boxes they could never understand anyway, so this will build on that mystery.

The final step is crucial. We must obsessively expound this at every opportunity. It must be inserted into every conversation. Sure, you can upload a video to Youtube. But have you uploaded a video TO THE CLOUD (cue dramatic music)?! Yeah, you can set up a web server and serve up web pages, but have you made web pages and uploaded them TO THE CLOUD (dramatic music)?! Sure, Seti@Home and other projects (mostly about breaking encryption) demonstrated that distributed computing can process massive amounts of data... but have you hired Amazon so you could do this WITH THE CLOUD (music)?!

It's fun to create a solution and then look for a problem to which it applies. And then mentioning it everywhere and inserting it into every conversation, like an evangelical who just discovered Jesus. Next time we do this can we keep it a secret from the marketers? The only way they ever seem to understand technology is to dumb it down.

Re:Simple

[postbigbang]

It's not that simple. In the old days, data was periodic because it lived in its own time domain. Now, much data is isochronous, so there becomes an aperiodic demand for streams that needed to be timed together so as to allow us to watch videos, listen to music, etc.

100MB of patches from Apple or Microsoft, while important, don't need to happen all at once, breathlessly. But NetFlix needs the timing.

You cite aggregate use over time, while ISPs see torrents, and other data that uses their rails. My solution: charge more for isochronous data. Let those wanting entertainment pay a wee bit more for the privilege. If I want an ISO of the latest operating system goo, then my rate is lower than those wanting to watch a flick- recent theatre release or pr0n.

Re:Simple

[CastrTroy]

The thing is, is even with water and electricity, the cost of providing the service doesn't change much from 10% to 50% usage. In my city, they had a huge push to get people to use less water. Well, that made everybody pay so much less for water that they had to double the rates, because they didn't pull in enough money. The cost of operations was basically the same regardless of how much water people actually used. But you are right on one thing. 200 GB or 400 GB is a lot of data in a month. Unless you spend 10 hours a day watching Netflix, or download every new game on Steam, you won't use up that much anyway.

Re:Simple

[hedwards]

That's a really bad precedent to set. If we start charging more for certain content than for other types of content, what precisely is there to prevent it from spreading to other areas where the ISPs are able to rationalize the decision? A better solution would be for ISPs to start fulfilling their promises rather than using savings to beef up executive compensation.

Re:Simple

[Jeremy Erwin]

100MB of patches from Apple or Microsoft

Here's a list of Apple Patches.

My favorite?

Canon Printer Drivers v2.5 for Mac OS X v10.6
This update installs the latest software for your printer or scanner.
April 13, 2011 - 307.23 MB

Here's a point upgrade:

Mac OS X v10.6.7 Update
The 10.6.7 Update is recommended for all users running Mac OS X Snow Leopard and includes general operating system fixes that enhance the stability, compatibility, and security of your Mac.
March 21, 2011 - 475 MB

An Xcode update? That'll be 4.25 Gigabytes, please.
100 Megabytes is peanuts.

Re:Simple

[Volguus Zildrohar]

"SkyNet"

Re:Simple

[rtfa-troll]

Bandwidth is a scarce resource. [...] They should charge a very minimal fee for running a wire, and then charge users for bandwidth at an auction basis.

This is the horribly misguided wisdom the ISPs are managing to put to us. Connectivity is scarce; putting in cables is expensive. Maintaining them is even more expensive. Once you have the right ones in place however, the difference in cost between installing 500kb/S and 50Mb/S is pretty small. So bandwidth should be pretty close to free once you have the connnection. Why isn't it? Well, bandwidth is a good proxy for technical knowledge. It is also needed to serve content. The ISPs want to use bandwidth charging to stop private people from competing in content creation.

Re:Simple

[Attila Dimedici]

A better solution would be for ISPs to start fulfilling their promises rather than using savings to beef up executive compensation.

Part of the problem here is a conflict of understanding. When ISPs began offering "unlimited" Internet access, they were referring to time, not bandwidth. At the time, the limits on connection speed and number of total users meant that people were not going to use enough bandwidth to strain the system. Of course, the fact that ISPs oversold their capacity gives the people complaining (incorrectly) about it not being "unlimited the way they said it would be", a legitimate gripe that the ISPs are advertising a product that they cannot deliver. The ISPs banked on a certain usage level, but marketed the possibility of a greater usage level than that and now find their networks overwhelmed by the early adopters who understood the possibilities sooner. The ISPs created the situation and have just realized that their pricing model will not support the network expansion that will be necessary to meet the demand for bandwidth that will come as the average person starts to understand the possibilities that the early adopters are paving the way for.

Answer...

[girlintraining]

"Only in the United States, where caps are popular." But in truth, I'd be more concerned about unbrided capitalism and monopolistic practices killing not just the cloud, but any hope my country has of competing in a global marketplace. We've already hamstrung ourselves on an antiquidated patent and copyright system that is forcing our talent overseas to produce, we have our government busy chasing down music pirates while ignoring the massive amounts of identity theft and fraud perpetuated by malware and botnets, and the list goes on.

Re:Answer...

[Anonymous Coward]

Now that Microsoft has been approved to acquire Skype, I'd say Microsoft and Google both pressuring for unlimited bandwidth will come to the aid of consumers...at least to a degree. However, I look for them both to lock users into their own clouds, which could be worse than ISP's locking in people.
I do love the observation that the government is wasting our money chasing down small time music copiers, while letting the big time malware and botnets mostly slide.

Re:Answer...

[Glendale2x]

That's a patently false "answer": Australia and Canada are two countries with major providers that have caps.

Re:Answer...

[Eil]

But in truth, I'd be more concerned about unbrided capitalism and monopolistic practices,

I guess I don't understand why capitalism is a dirty word around here. Isn't it a good thing that businesses are not run by the state? Does competition not spur innovation? Which economic system would you have in capitalism's place?

Re:Answer...

[spinkham]

Would for profit roads be better for our economy then our present system? Are you against municipal providing of water and sewer services?

Government excels at providing these sort of infrastructure projects. If we took a tiny fraction of the military budget and put it to providing fiber to every home in America, we would be investing in important infrastructure just as we did with roads. It would be a boom for our total economy, instead of a small win for a small fraction of the telecom space only.

Re:Answer...

[causality]

But in truth, I'd be more concerned about unbrided capitalism and monopolistic practices,

I guess I don't understand why capitalism is a dirty word around here. Isn't it a good thing that businesses are not run by the state? Does competition not spur innovation? Which economic system would you have in capitalism's place?

The problem is that the ISPs were not built on a model of capitalism. They were built on state-funded and state-granted monopolies. Capitalism is not perfect and the model does have weaknesses. One such weakness is when the barrier to entry is astronomically high so that new players cannot independently enter into the market and compete with established players. It was precisely for this reason that the tremendous cost of running lines to each individual home had to be state funded.

You cannot establish a monopoly with state money, suddenly decide to treat it as a purely capitalistic enterprise, and then expect healthy competition. This is doomed to fail simply because it is inconsistent with the nature of the situation. The reality is, we the taxpayers got these companies and systems off the ground and made their existence possible. We the taxpayers have a reasonable expectation that they behave in our interests. They are rightfully beholden to us and they have the option of changing careers if they don't like that.

So far the best solution we have created is to let them operate as a private corporation that holds a monopoly with reasonable regulations to prevent them from exploiting the fact that they are a monopoly. This includes requiring them to lease lines in such a way that competitors can enter the market without digging up thousands of miles of land to lay down their own lines. Your other option is to have no competition at all. This system has weaknesses that are easier to overcome because they are political problems, not economic problems. The political problem is to keep the monopolies in check so that their interests don't override ours.

But to talk about this as though it were a commodity like coffee, where any farmer can independently grow coffee and sell it on the open market and compete with the big boys, well that line of thought is getting us nowhere. It doesn't apply. It's a square peg that you're trying to drive into a round hole. This is a unique situation and the more general rules of capitalism only partially apply.

Re:Answer...

[joocemann]

You ignored the two words that you actually quoted, that would have informed you and your question.

Unbrided....monopolistic.

Capitalism is best had on markets for wants, not needs, and is only really maintained in the sense that you described when there is enough regulation to keep us safe from the ill efects of greed.

Re:Answer...

[mcgrew]

I've been reading The Mobs and the Mafia: the Illustrated History of Organized Crime by Hank Messic and Burt Goldblatt (1972, ISBN 0-88365-211-0) and was struck by a passage:

... in the three years after the [stock market] crash... those businessmen who didn't kill themselves turned by the thousands to the only men with money and credit -- the gangsters.

It goes on to describe how legitimate business was in debt to the mob, and how politicians were beholden to businessmen for their campaigns. I think that pretty much explains why government goes after file sharers while ignoring spammers, fraudsters, and identity thieves. Our governments, federal, state, and local, are corrupt to the core. The "MAFIAA" really is the Mafia.

Re:Answer...

[R3d M3rcury]

I guess I don't understand why capitalism is a dirty word around here. Isn't it a good thing that businesses are not run by the state? Does competition not spur innovation?

I think most people think capitalism is a good thing. The problem with capitalism--which I'm not sure anyone has solved--is what do you when someone wins?

Capitalism is about competition. I make a widget, you make a widget, and we try to convince a group of people to buy our widget over our competitor's widget. It keeps prices down. It spurs innovation--my widget is more reliable than yours, your widget is cheaper to manufacture than mine, etc. But in any competition, there will eventually be a winner. More and more people will buy your widget over mine and you will eventually buy me out or I will go bankrupt or whatever and then you will be the only person selling widgets. At that point, innovation slows and prices can rise because there is no pressure. You're just out to make as much money as possible.

So, "unbridled capitalism," as the GP puts it, isn't a good thing because the eventual winner--whoever they might be--will have a monopoly. The question is--and this isn't an easy question--what do you do with the winner? Do you try to prevent a winner? Do you allow a winner and then break them up and start a new game? Are the efficiencies that you get with having one company performing the task worthwhile enough that you create a regulated monopoly?

Re:Answer...

[causality]

Utter horseshit. They are not state-funded and state-granted monopolies.

A high barrier to entry isn't a monopoly. Even with the high barrier, I have three competing choices for bandwidth where I am--cable, phone, and Dish.

How would you like to have the following three non-competing choices: Dish, Dish, and Dish? That's what you would have if the state had not made the initial investment to provide the (incredibly expensive) infrastructure on which phone and cable systems depend.

They owe you NOTHING.

They owe us nothing? So then they are so privileged, that the cable and phone companies can just say "hey, thanks for bearing that really heavy initial investment to get this thing off the ground. Oh, thank you too for handing us this infrastructure and handing us a local monopoly. I am sure both of those things will profit us handsomely. Well, guess we have a clean slate now after your very generous free gifts. No we aren't going to do anything for you in return."

That's what you want? How about you take a whole five minutes and look up precisely how those cable and phone lines got to your doorstep. You don't seem like the sort to readily admit when you're dead wrong about something, so you can retreat into the silence of no-reply after you educate yourself. I'll understand.

It's an incredible phenomenon to witness, the way people will actively and passionately advocate for what is so clearly not in their own interests. Coincidentally, they typically use a bitchy tone as you just did, to show their annoyance that anyone would actually disagree. It makes you uncomfortable, I know, when someone doesn't give immediate support to your articles of faith. How dare they! Right? These are largely unspoken impulses but it comes out in the way you respond to me.

You just can't seem to connect the dots to understand whose interests your position there does serve. Great, another soft malleable vulnerable mind with the conceit to believe that the exterior influences and ideas with which it has become infested are actually its own, that the home they have made within you is somehow legitimate. It's about as legitimate as the home that cockroaches or rats make within a dwelling.

To realize just how many of your ideas and beliefs are not your own would probably be more of a shock than you could handle. People have complete nervous breakdowns over less profound things. Should you get through that intact, you'd endure a personal crisis of not knowing anything with any certainty whatsoever, which you'd eventually resolve by undertaking a quest to discover who and what you really are and what is truly a solid foundation for belief. So far as these things go, the fact that people will embrace and defend the very dominators who are screwing them over is basic, bottom-of-the-class material. It's called having no real principles, no real self-hood. It's the main reason why the new boss is the same as the old boss.

Re:Answer...

[ResidentSourcerer]

Capitalism works well when there is a competitive market. So the issue is to keep it competitive.

Things that might help.

1. A progressive income tax for corporations. The bigger you get, the more, as a percentage, you pay. Mergers are much less of a win.

This also has the effect of reducing the taxes on small companies, which favours startups.

2. Corporate directors are personally financial liable for everything their company does. This liability extends to holdings they have in other companies. This would tend to reduce directors having multiple seats, which all too often leads to conflict of interest.

3. All senior corporate staff and directors and paid on some form of acculated delay. E.g. This year you get 100,000 bucks and the dividends off of 100,000 shares for 20 years. Next year you get 100,000 and the dividends of of 100,000 shares for 20 years. When you retire, you get dividends for 20 more years. So make sure the company is run right for the long haul.

4. A company cannot own shares in another company. Shares have to be owned by an individual. Obviously the transiition would have to be gradual. The idea here is to bring personal responsibility back into the equation. There may be merit in still allowing a not-for-profit hold shares.

5. Taxes are no longer calculated on net profit, but on gross income. There are no deductions at all. Needless to say, the rate is much lower. This makes accounting much easier. It penalizes very low margin companies more than high margin companies. Again, there would need to be a transition form to not cause complete chaos.

Will the Cloud Kill Capped Data?

[JoeCommodore]

I think it may be worse news for the carriers. If they wont provide suitable bandwidth, eventually someone will develop a more popular alternative that bypasses their speed bump altogether.

Re:Will the Cloud Kill Capped Data?

[adamstew]

You would think so. But sadly, we don't exist in a free market, as far as internet access is concerned.

There have already been several localities (municipal level) that tried to setup their own internet services for their residents, because they were unhappy with what the local cableco and telco were willing to provide. So the cableco and telco have sent lobbyists to the local city councils and state legislative bodies and are having laws written to prevent these forms of competition from even getting off the ground.

Even if another private entity, outside of the cable/phone companies wanted to try and provide internet access, I imagine they will run in to the same road blocks. Also, you need to get local approval to be able to run your wires on the utility poles.

I had hoped that Broadband-over-powerlines would allow a 3rd carrier in to most areas to help drive up speeds and drive down prices, but it hasn't been very successful and has run in to a whole slew of technical issues.

Wireless communication won't be able to keep up, in terms of speed and data caps. Getting in to the wireless business is a huge investment. RF Spectrum is very expensive and you can only physically push so much data through RF.

Sadly, except in a few small and isolated areas, I think we're going to be stuck with the cableco and telco duopolies for quite a while... The only way that is changing is if there are some pretty serious regulations at the federal and/or state levels to really allow for some good competition.

The only wildcards, and hope, that I see is Google's fiber initiatives and the corporate muscle flexing of some large companies. Once enough big companies like Google, Microsoft, Apple, Netflix, etc. want to start pushing their own high-speed services through the limited broadband pipes, they might be willing to spend some money on a state and federal level to lobby for some sanity.

Re:No.

[mcrbids]

I like the cloud for some things. But i also like it if a device which has more memory than i need for all my personal documents (including 10000 Photos) is used wise enough not to require 24x7 online access.

That's a matter of personal preference.

capped data is the expression of a physical reality vs. a marketing tool used to push users quickly into freshly build networks without investing in the sw and forcing them to new phones.

Capped data is a joke. It's a movement towards charging per-unit prices for a service that has no meaningful per-unit cost. Sure, it costs money to build a network, blah blah blah. But there is no fixed cost for moving data around. A Gbit switch costs about as much as a 100 Mbit switch did a few years back, and moves 100x as much data in a unit of time as the 100 Mbit one. It uses about the same amount of electricity, regardless of how much data is being moved.

Where did that per-unit cost go?

Because of this, I figure it's only a matter of time before this whole "cap the user" nonsense goes away.

Which would be great

[Sycraft-fu]

If it were the truth, but it isn't. Plenty of other countries have caps. At least in the US the caps are usually not super low, so you can still do a reasonable bit of "cloud" type stuff and not hit them. Talk to the Australians, they have some pretty severe caps, enough they have to limits their regular Internet usage.

Caps are not a US thing. They are found in various places all around the world. They also aren't universal in the US. You can find non-capped Internet providers. Probably not in all areas, unfortunately, but they exist.

Certainly an Issue in Canada

[whisper_jeff]

Canada has some horrendous data caps from it's major ISPs. From the numbers I've heard, Americans have almost 10x the bandwidth allowance that most Canadians have. For online services (cloud, netflix, etc.), this is a major concern. While I'm looking forward to iCloud, I will be closely monitoring my bandwidth for the first little bit to make sure I don't go over and, if I do, I'll be figuring out what service I use needs to get cut and, quite frankly, I'd rather the ISPs just offer better service than forcing me to not use what's available...

Internet should be like any other basic utility

[Corson]

The Internet should be like any other basic utility, with rates being regulated and networks being installed for everybody to have unrestricted accees to. People would pay on a per-use basis but ISPs would not be able to raise the rates as they please.

Re:No.

[Archangel Michael]

Its not the per data cost of the lines, it is the cost per port that is expensive. Replacing the 100 MB switch with the GB switch, and then the GB switch with the 10 (100) GB switch in 5 years is what costs. This doesn't include ongoing maintenance and management, and uplink costs. Paying for bandwidth is an easy solution to mitigate against some of that, and makes sense from this standpoint. However, when people like Comcast deliberately choke off data at a single point, in order to charge Netflix and others to bring them into the network (and still restricts this data) that is where I have an issue. If you're overselling/over subscribing your trunks, and aren't upgrading them when they are full, time for class action lawsuit.

I'm just wondering when someone is going to sue Comcast for not providing the service they are selling. Must be in the TOS contract that they don't have to provide any.

Re:No.

[TRACK-YOUR-POSITION]

That's a matter of personal preference.

There are people who prefer their devices to stop working when the network stops? "I can't access my photos because the net is down. Hooray!"

Answer: no

[sprins]

Capped data plans won't kill the cloud. Capping will only be a temporary inconvenience (until capping is gone through competition between carriers).

There are nice-to-have cloud syncs that use a lot of data (music, video, images) and need-to-have cloud syncs (mail, calendar, documents). The urgens syncs usually fit in a data plan. The 'leisure' syncs can be done whilst on wifi.

The real inconvenience will be data roaming charges (eg abroad) where they charge you an arm and a leg for everything :(

Re:Apple

[siride]

The last thing I want is Apple owning the ISP infrastructure. Imagine how locked down the internet would be then.

Fixed, variable and opportunity costs

[sjbe]

But there is no fixed cost for moving data around.

What you are saying is more or less correct but your terminology is wrong. What you are describing is properly called a variable cost not a fixed cost. The equipment used to build and operate the network is largely comprised of fixed costs. It costs the phone company the same money whether they send one packet or one million packets. The costs associated to a specific packet would be variable costs and as you rightly point out, the direct variable costs are negligible. As equipment is used, the fixed costs get amortized over a large volume of data and in time become negligible on a per packet basis. This doesn't mean they become zero but they start large and become small asymptotically.

That said there IS a cost that you are not considering. IF there is insufficient bandwidth available to serve all requests, then there is an opportunity cost associated with the data packet. If your data can't get through because someone else is hogging the pipe, you as a customer will get pissed and possible switch services (if possible). Since we know that the telecom providers have a large but finite amount of bandwidth available, opportunity costs matter. Hence data caps. They cannot serve all possible requests until their network has the capacity to do so. If they allow unlimited usage and people actually do use it that way (and some do), the telecom incurs an opportunity cost in the form of being unable to serve some of their customers.

In THEORY data caps make economic sense. In REALITY, it's probably more greed by the telecoms than a real problem most of the time.

just some of it

[t2t10]

It may kill unlimited HD video downloads and put a crimp into companies that use that as their business model.

Just about everything else is not affected by these "caps" because the data volume is so tiny in comparison to video downloads.