NNSquad - Network Neutrality Squad

NNSquad Home Page

NNSquad Mailing List Information


[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

[ NNSquad ] Re: Big ISPs to Customers: Bend Over and Close Your Eyes

At 10:41 AM 4/10/2009, Lauren Weinstein wrote:

No matter how creatively they
try to spin their press releases, telecom is taking the elevator to
profits, and subscribers are being left with -- that's right boys and
girls -- the shaft.


As much as you'd like to play the role of "consumer crusader," the above is simply false. Internet providers are imposing caps and overage charges not to reap unfair profits but rather to avoid big losses.

Internet service providers buy backbone bandwidth according to the continuous capacity of the link (usually measured in megabits per second). That bandwidth can be very expensive (in our case, $100 per Mbps per month; in some ISPs' cases, $325 per Mbps per month or more). In certain big cities, you can sometimes get bandwidth at $3 per Mbps per month, but only if you purchase huge amounts of bandwidth and pick it up at a major hub. (In other words, the $3 per month doesn't include the delivery system.)

End users, on the other hand, want a palatable flat rate price for service. Typically, it's $30 to 45 per month (though what they really want is $15-20). And even at the lowest service level, they expect Web pages to arrive quickly. They want VoIP to work. And they want interactive games to be responsive.

And so, what ISPs must do to provide them with reasonable monthly rates is reminiscent of the old engineer's joke:

Q: How do you carry two tons of canaries in a one ton truck?
A: You keep beating on the sides as you drive along, so that at least half of the canaries are airborne at any given moment.

In other words, to satisfy consumers, and ISP needs to oversell bandwidth and rely on the fact that not all users are consuming network resources at the same time. The ISP can let users burst to very fast speeds, but you can't have all of them doing things which continuously take up megabits of bandwidth for extended periods of time.

ISPs can also leverage the fact that most users have a limited capacity to produce new content. They may be prolific writers, but this isn't even a blip on the radar because text takes so little bandwidth. They may be avid photographers, but even good still photographs take lots of time to compose, crop, and post. They may even create a lot of video, but since video is generally uploaded to servers close to the backbone (e.g. YouTube) for general distribution, this also does not create much continuous upstream traffic. For this reason, ISPs can buy more downstream than upstream bandwidth, and design their systems so that they have more downstream than upstream capacity.

Now, enter two classes of applications that don't lend themselves to oversale. One is P2P. Leaving aside for a moment the fact that P2P is overwhelmingly used for illegal activity, the two big problems with P2P are that it often has a 100% duty cycle and consumes precious upstream bandwidth. This wreaks havoc with the careful engineering that is done to reduce the cost of users' service.

The second application that causes problems is video streaming. An HD stream can easily take up several megabits per second... and users, who are used to leaving the TV on, don't realize just how much it would cost the provider if they left the stream on in the same fashion. So, they often stream content for hours -- EVEN WHEN THEY ARE NOT WATCHING IT. (The same is true of music; many users leave Sirius/XM or Pandora running all day even if they are out of the room.)

The problems are further compounded by the fact that the Internet is not a broadcast medium. When another user tunes into an over-the-air television station or even a station on a cable TV network, no new resources are consumed. But on the Internet, each video is an individual stream which consumes more resources and creates additional costs. And as users attempt to lower their household expenses in the face of an economic downturn, more and more people are cutting off their video services and trying to stream their favorite shows instead -- multiplying this effect.

For all of these reasons, ISPs MUST either discourage continuous use of bandwidth-hogging applications (analogous to beating on the side of the truck in the joke above) or raise their prices. This creates a serious dilemma. They do not want to insist that customers pay the full price of backbone bandwidth plus a markup, because the higher prices would anger consumers and cause many of them -- especially those not financially well situated -- to drop their service. It would also discourage potential new customers from signing up.

ISPs likewise do not want to charge by the bit, because so many applications that download (e.g. virus checkers, which download updates frequently) are beyond the average user's control.

So, they have been forced to adopt a hybrid approach. They start with a low flat rate that applies when the user obeys the assumptions that allow cost reduction. They then add surcharges which -- if they're designed correctly -- will approximate the direct sale of backbone bandwidth on a "cost plus" basis to heavy users who push their connections to the limit.

Of course, all such schemes are approximate. The crudest approximation -- caps plus overage charges -- tends to discriminate against users who do lots of long, low bandwidth downloads, and also tends to cause nasty surprises (as do overage charges on cell phones). But as one makes the formula more sophisticated (and more accurate), the combination of restrictions and surcharges becomes less and less comprehensible to the customer.

The result: more and more naive consumers are already claiming that ISPs are discriminating against online video because it competes with their own offerings (at least when the ISP is a cable company) or leveraging market power. One member of the US House of Representatives, Rep. Eric Massa of New York, has gone as far as to say that any sort of metering should be illegal. "I firmly oppose capping Internet usage," he said in a press release posted at


"and I will be taking a leadership role in stopping this outrageous, job-killing initiative." The Congressman also claimed that metering and capping Internet service harms free speech, which is absurd on its face because virtually no user can "speak" enough to have his or her speech impeded by the caps.

I called and e-mailed the Congressman's office and asked, "Would you also be opposed to metering of electricity? Of natural gas?"

As of this morning I haven't gotten a response.

--Brett Glass

  [ Brett, a key factor that makes the situation intolerable from a
    consumer standpoint is the lack of any effective regulation to
    help ensure reasonable parity in costs, bandwidth caps, and other
    associated factors related to Internet service.  In the absence
    of such regulation, it's totally luck of the draw depending on
    where you live, with vast variations.  And as we've seen, when
    significant competition is available in those very limited areas
    with major ISP overbuilds, suddenly things seem to change in a
    positive way.

    This isn't rocket science.  Lack of effective major competition
    plus lack of regulation historically always equals consumers
    getting kicked in the groin.

        -- Lauren Weinstein
           NNSquad Moderator ]