In the last Backspin column I discussed Time Warner's dangerous plan to set caps on consumer Internet service and charge for exceeding those caps. While I'm sure that TWC would defend their scheme vigorously I'm amazed to see the likes of David Isenberg in their corner!
In his blog post "Time Warner Cable does the right thing" Isenberg contends that "If you must manage congestion, then doing it explicitly is, at very least, honest. It is better than doing it (a) covertly or (b) indirectly, by injecting artificial interrupts and (c) denying you're doing it -- like Comcast currently does."
OK, agreed, but defending capped service because it obviates obviously unethical strategies is like cutting off your foot because you don't want to deal with trimming your toenails.
Isenberg continues "If the problem is, indeed, congestion, or the related problem that a few 'bandwidth hogs' are using more than their share of the network's capacity, tiered pricing is a simple, straightforward solution." Again, it is indeed a solution but hardly the best one and ignores the key issue; Why is there congestion?
The answer is simple: The big US ISPs haven't built out their infrastructures adequately to meet consumer demand and they are trying to maximize profits by adding subscribers to an under-engineered system. Just consider that the cost of Internet service as a percentage of GDP per capita is 0.014% in the US while the South Koreans and the Japanese manage, magically, to deliver the same service for 0.006% and 0.002% respectively! What we can conclude from that is that profitability is thought about very differently in those countries. Why? Because Internet service matters profoundly to democratic cultures!
Isenberg also notes that "Of course, [capping] does discriminate against high-bit-rate applications, such as video. But it does so in an above the board manner."
Yet again, Isenberg is correct in that capping an above board solution but that's not the problem. The problem is that once caps become commonplace for consumers innovation and ecommerce will slow down and the US economy and competitiveness will suffer accordingly.
What seems to be overlooked is the issue of the public interest. Sure, the big ISPs are businesses and have every right and indeed responsibility to act, within the law, to maximize their profit. But when that profit motive runs counter to the interests of our culture isn't it time to do something about it?
Users prefer simple pricing
Even if you only read the abstract, you should look at Andrew Odlyzko's paper from 2000, titled "The history of communications and its implications for the Internet". It can be found at http://www.dtc.umn.edu/~odlyzko/doc/history.communications0.pdf
It's a broad historical consideration of all types of communications systems and what has worked best over long stretches. The paper might look daunting at first, but I promise it will be an enjoyable read.
Captive markets
This is the problem with captive markets. In many areas, customers have no alternative to one provider. In our area it is Time Warner. With no competition, Time Warner is free to impose whatever rules they wish and provide whatever service level they feel meets their own needs, instead of the needs of their customers. So by charging by bandwidth they not only increase their revenues without increasing their rates, but they also get to provide less service and call it progress. I am not usually a fan of big government, but this might be an argument for classifying internet service providers as public utilities, and regulate them like power and telecom companies.
HBO Downloads
HBO is partnering with TW to allow users to download movies and other content. I this a scheme to promote legal downloading and then overcharge because of bandwidth usage. Sounds like a great deal ... for Time Warner.