Andrew Harries, CEO of network hardware maker
Zeugma, not too surprisingly has penned a
missive in the Financial Times suggesting he's had a change of heart, and that he now likes the idea of metered billing. Harries, who at least admits he has a vested interest in selling hardware that tracks and meters usage, unfortunately goes on to fill his piece with a laundry list of pro-metered billing talking points that ignore countless broadband industry realities.
To start, like an author for Slate did
a few weeks ago, Harries makes the mistake of confusing idealized pure per-byte billing with the metered billing models most carriers hope to implement: namely plans that offer low caps and high overages, don't really offer consumers value, and are really simply designed to have
everybody paying more money, not just heavy users. He also, like most metered billing proponents do, argues there's a bandwidth crunch coming that makes metered billing absolutely necessary lest carriers run out of money:
From where does the capital come that is needed to expand broadband capacity further? Even the academics that populate 'public interest' organisations lobbying for greater net regulation recognise, at least abstractly, that broadband operators need to earn a profit if they are to continue to invest in infrastructure. Given these circumstances, don't usage-based billing frameworks make sense?
Actually, not really. Once again, if Harries bothered to look at ISP tax records, he'd see that carriers are making remarkable profits off of the flat-rate broadband billing model -- not even mentioning the money made from added services, a litany of fees, and advertisements. The argument that modern ISPs don't "earn a profit" is intentionally obnoxious. Meanwhile, if he looked at
substantive network data, he'd see that Internet capacity demand (at least for wired networks) can be met with only modest capacity upgrades.
From where does the capital come that is needed to expand broadband capacity further? -Zuegma CEO Andrew Harries, pretending ISPs don't make enough money to upgrade their networks. |
According to Harries, consumers who are opposed to metered billing are the intellectual equivalent of grumpy electricity customers who don't want to pay their bills. Unless you warm up to the idea of metered billing, argues Harries, you'll simply have to be "satisfied with underinvestment in capacity," and clogged tubes.
Again, like all metered billing proponents do, he's ignoring the healthy financial reality of most carriers, overstating the looming bandwidth crisis, and insulting consumer intelligence with a broad wave of his hand.
Many consumers quite possibly would enjoy a pure, pre-byte billing model but again, that's
not what carriers are proposing. True equanimity will never truly materialize under the per-byte pricing models proposed by carriers, because the vast majority of their customers would wind up paying virtually nothing for bandwidth. There's millions of iPhone customers who do little more than check e-mail. What happens to AT&T profits if they suddenly started paying only for the bandwidth they used, instead of the mandatory flat $30 data fee?
The existing flat-rate price-by-speed model isn't perfect, but it provides healthy, scalable revenue for carriers (more than enough to handle capacity growth) and is simple to understand for consumers. Again, where's the problem?
There is no problem for consumers.
A little more than a year ago, Comcast got their
wrist slapped by the FCC for throttling upstream P2P traffic (and lying about it to the press and consumers), though the "sanction" contained no substantive punishment or fine. Still, Comcast has been battling the ruling ever since, arguing that the FCC's
neutrality principles (pdf) don't give the FCC the authority to investigate the issue, much less sanction the company. In a
final filing (pdf) provided to Broadband Reports by Comcast, the carrier argues that the FCC also violated "basic rules of fair notice:"
As shown in Comcast's opening brief, the Order is unlawful because it enforced mere policy - not any provision of federal law - against Comcast. In addition to this fatal flaw, the Commission's action was procedurally improper and violated bedrock principles of fair notice.
Of course the debate over whether the FCC has the authority to enforce neutrality principles is a major reason why the FCC is taking steps to
expand those rules, so there's little doubt they have the authority to act when carriers engage in particularly heavy-handed neutrality violations.
The Wall Street Journal this week
took a look at the push toward metered broadband, and while the story contains nothing we haven't covered here in exhausting (perhaps sometimes even annoying) detail, the Journal did interview Phillip Dampier. Dampier's a Broadband Reports user ( Dampier) from Rochester, New York, for whom the metered billing debate was so important -- he went off and created the completely consumer funded
Stop The Cap website. It's kind of amusing to see Dampier
fact check the Journal's story for them, highlighting some key points the Journal forgets to touch on -- like the fact that flat-rate pricing is entirely profitable and sustainable:
The article makes no mention of publicly available financial reports from broadband providers like Time Warner Cable that prove that at the same time their profits on broadband service are increasing, the companys costs to provide the service continue to decline, along with the dollar amounts they spend to maintain and expand that network to meet demand.
Dampier also notes how the Journal misidentifies Rep. Eric Massa (who is pushing for laws protecting consumers from over-charging) and omits the potential conflict of interest in ISPs pushing for high overages while at the same time crafting
massive new Internet video empires.
Lawrence, Kansas based
Sunflower Broadband (see our
user reviews) has announced that it will be upgrading its infrastructure to DOCSIS 3.0 in the near future. The company, often criticized for being among the earliest US cable operators to employ
rather low caps, will be launching 50 Mbps service soon for $59.95 per month (up from their high-end tier's current price of $49.95), plus $10 per month if you don't get their cable service.
Their $5 modem rental covers the new DOCSIS 3.0 modem required, or customers can trade up or buy their own for a price that's slightly below retail for the Motorola SB6120, the most widely available consumer DOCSIS 3 model.
The catch? Upload speeds top out at one megabit, and a transfer cap of 120GB applies.