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(The Consumerist)   Cable industry admits that data caps have nothing to do with network congestion   (consumerist.com) divider line 19
    More: Obvious, cable industry, bandwidth cap, fixed costs, flat rate, Weather Channel%  
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5455 clicks; posted to Business » on 20 Jan 2013 at 3:15 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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Archived thread
2013-01-20 06:18:22 PM
4 votes:
My observations after reading the source Link article:

There's absolutely no nicer way to put this: Powell is a liar. This panel was more likely about synchronizing their talking points than educating the public on this industry's real business plan. The fact that this hack is now the industry's regulator bodes ill for the customers the FCC is supposed to protect.

Obviously, it's not about fairness. It's about maintaining a fictional shortage which makes it easier for them to negotiate price hikes. They need not concern themselves with the "fair" rationing of an expensive resouce with a high fixed cost, when In fact, their costs are quite low, and constantly dropping. I suspect even the 95% profit margin that came to light recently is understated. There are surely a considerable number of obscenely large entitlements which they bundle with their fixed expense figures.

In a nutshell it works like this: their network costs something to keep powered, cooled, and maintained. Add the costs of their staff who facilitate these tasks. The networks were paid for long ago and there are no more amortization costs. A large amount of those costs were paid for with public funds, which now has been siezed by the industry, which will not share it's lines with competing businesses. They did not "spend a bunch of money" so much as they pocketed a bunch of money. Over time, the original equipment is being replaced with much more compact equipment that has much higher capacity. Staff are reduced as better management methods replace pioneering ones. The result is that the network aquires more capacity at lower expense to the industry. Yet prices keep rising!

The expense of maintaining the network does not rise or fall with the load of data moving across it. In truth, that "hot tub" and "lights" is on 24/7 no matter what, and it's expense is orders of magnitude lower than the cable bill would suggest. Noone is "subsidizing" anyone else. Everyone's connections, regardless of their capacity or consumption, costs about the same small amount to keep humming. There's simply no reason to charge based on consumption. Why charge on a "consumption" basis then? Powell said himself, "consumers are familiar and comfortable with usage-based pricing". So it's because the industry wishes to. It's easier to hike prices up for something they can themselves make scarce, than it is to invest in a higher quality network and market better and faster connections. Consumers don't know any better.

The arguement about pressuring web app designers is a new one to me. However, it's invalid. Web app designers don't need to care how much bandwidth their apps generate. Their costs are completely disengaged from the costs of their consumers. It should also be said that the content consumed by their customers is none of the industry's concern. Their meddling in these affairs (VOIP, streaming video, torrents) is merely to give their own competing services an unfair advantage.

Lastly, while concern for reaching a broader market of customers seems laudable, my inner cynic says it is likely the prologue of a new effort to extract no-strings "infrastructure improvement" funds from an industry-friendly government. It's not lost on me that Michael Copps essentially says there will be no change in attitude until there is a new FCC chairman, though I don't think that's quite how he intended it to sound.
2013-01-20 05:21:29 PM
4 votes:
"is a completely rational and acceptable process to figure out how to fairly allocate those costs among your consumers who are choosing the service and will pay you to recover those costs."

I can't wait for google fiber to put a bullet in your company's head.
2013-01-20 02:19:43 PM
4 votes:

bronyaur1: It's almost as if cable companies were for-profit enterprises?


And exploiting what is basically a monopoly over the last mile....

How many people have a choice between either a specific cable company and a specific phone company to get last mile service?
How many people have a choice between two competing cable companies? Are their neighborhoods served by two or more cable companies using different lines?
How many people have a choice between two competing phone companies? Are their neighborhoods served by two or more phone companies using different lines?

Sadly, I don't know the answer to these questions. In the places I have lived for the past 20 years it's always been one cable company and one phone company and that's your choice, except for a small duration in which phone companies were required to make their last mile service available to other phone services.
2013-01-20 08:36:21 PM
2 votes:

gingerjet: After complaining a fourth time - my service mysteriously started working again. With no explanation. As if some one discovered a configuration error and refused to admit to it.


This exact thing happened to me. I guess some 'techs' out there presume that all computer users are idiots. Of course I went through every possibility for failure on my end before even bothering to call. When they came out, They blamed a faulty router. I asked him if he noticed the direct ethernet connection, and he sighed. Then he went into my system and started dicking around. When I very politely asked what he was doing, he more or less told me to "leave [him] alone." Well, asshole, if you're digging in my system I want to watch everything you do.

 After he failed to notice anything (and after a series of questions designed for my grandmother), he left and promised another tech between 8am and noon. Later that night, with no changes made - not even a modem reset - everything was hunky dory.

-----------------

 When I recently moved, I discovered that my place was so old that Cox would have to come out and rig the whole place (It's New Orleans; everything is old here, and an older Luddite had lived here for decades prior). But unlike the usual free installation, they wanted $350 because I wasn't a new customer. To this point I had never looked into DSL, but I saw that AT&T "U-verse" was only $20 a month for a year. Yes, it's slower than Cox, but only for direct downloads. Simple browsing and streaming (what I do most often) is just as quick as Cox's network, but here's the kicker...the DSL NEVER blacks out. With Cox it would happen for hours a time at least once a week. So what if it takes me a little longer to download an album. All I did was call, and they sent me the modem/router combo. Plugged it in, waited a few minutes, and booya, I was here on Fark making an ass of myself in no time. And I save about $40 a month over my last package, which was really only superior when downloading something huge like Office, et al. Now I just cue it up and let it run while I sleep. No biggie.

 Also, Cox's similar $20 package is basically as slow as DSL. But the DSL just seems far more reliable in my few months' experience.
2013-01-20 05:26:54 PM
2 votes:

Tommy Moo: T-Servo: Tommy Moo: "Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users. Does raising rates on a product that already sees 90% profit margins sound like 'fairness' to you?"

So, isn't this where the free market steps in with its invisible hand to lower prices? If margins are so high, why don't investors jump into the market with new start-ups that undercut Time Warner until the price reaches a fair level that allows everyone involved to just make what they are worth?

Ha, you think cable companies work in a free market?

Explain. Let's start one. You and me. What is physically preventing us from starting an ISP? Granted it has a high barrier to startup. It would probably take hundreds of millions in venture capital funds, but some team of VC investors will pony up any amount if it is guaranteed to return 15%/year for the first ten years.


We're not talking about ISPs. We're talking about cable companies, which have government-granted monopolies. You literally cannot start a new cable company. Therefore, they don't operate in a free market, because the government protects them. That's the problem.

If you want to start an ISP, you're going to have to lease backbone Internet -- probably from the cable company. (Perhaps you see the problem.)
2013-01-21 02:30:23 PM
1 votes:

gimmegimme: tbhouston: Linux_Yes: dark fiber

Wallmart has all tthose tvs laying around walmart, but if i want one they make ME pay for it... thanks obama

It is not fair wallmart has all the tv's just sitting there, unused... i want one!

The costs of that Wal-Mart are subsidized by the government (low labor costs, corporate tax breaks)...at least some of the reduction in price is passed onto the customer.

The costs of the network are subsidized by the government and the companies have a monopoly...the consumer price is high and always increasing.



I wasn't talk about cost, but availability. just because there is dark fibre laying around unused, doesn't mean it has no value and should be given away for free.
2013-01-21 11:03:52 AM
1 votes:
bandwith is free guys!!

all the data centers, and techs in the fields and equiptment all is free.. cisco is a non proft company who donates their engieneers and gear to help america, electric companys provide free electricy for the hvac, people donate their time because they love working for such a great company

yah bandwith is completely free!
2013-01-20 09:25:58 PM
1 votes:

dickfreckle:

...Also, Cox's similar $20 package is basically as slow as DSL. But the DSL just seems far more reliable in my few months' experience.


I dumped Comcast when Century Link brought VDSL to my old neighborhood. The fiber was installed right across the street from my house, so the copper run was maybe 100' from the side of my house to the node. I never once regretted the decision, because I went from 2 or so multi-hour outages with Comcast to months of continuous uptime, improved speed, and a lower bill.

I was so sold on the reliability that when I moved to another city that didn't have FTTN, at least in my neighborhood, I went with DSL anyway because I hated Comcast so much for the outages that I didn't even consider using them.

/Don't get me started on Comcast's "we've changed the payment date to be a few days earlier" scam. If you have Comcast, and use automatic bill pay, watch out for that one. You'll get hit with late fees otherwise.
2013-01-20 09:13:05 PM
1 votes:

KWess: Austinoftx: KWess: My current monthly Internet allocation is 75GB. My TV is also delivered by the same fibre optic cable, and I was told they allow me 300,000GB/month bandwidth for that, but no extra if it goes over.

The upshot is that your Internet usage, if it's anything other than gargantuan, is trivial to your provider.

It's undeniably trivial as long as that traffic stays on your provider's own network, like the video services or customer-to-customer. And they're clearly equipped to differentiate the two. But it's "too hard" to do so if it threatens their overage-fee profits. ;)

My provider is Bell Canada. Their principal competition in my area is called Vidéotron. Wouldn't they effectively blow their competition out of the water by folding my tiny Internet use into my TV bandwidth at a nominal charge, and forget about the accounting hassles? After all, as I said to the technician 'data is data.'


But why give you data for free with your TV when they can charge you for both? I think they tacitly know that pure TV service is doomed, so the industry now days is literally offering TV for ten bucks more if you're ordering Internet service. Data IS data. And data is really cheap. But how does a greedy industry keep their profits soaring when people are leaving their expensive monopoly TV and phone services for cheap monopoly data service? By jacking up the price of the data to achieve the desired profit, and lying about how much it costs. You may be dealing with a "duopoly" in your part of Canada, but it works essentially the same as a monopoly.

Recently, someone in the industry claimed that Internet service really cost more than their own books historically said, because their figures were manipulated in order to hide some "data" costs as "television" costs. He promised that they would re-manipulate the books to back up their more recent claims that data is expensive, so we should all be satisfied then, LOL.
2013-01-20 08:21:13 PM
1 votes:

KWess: My current monthly Internet allocation is 75GB. My TV is also delivered by the same fibre optic cable, and I was told they allow me 300,000GB/month bandwidth for that, but no extra if it goes over.

The upshot is that your Internet usage, if it's anything other than gargantuan, is trivial to your provider.


It's undeniably trivial as long as that traffic stays on your provider's own network, like the video services or customer-to-customer. And they're clearly equipped to differentiate the two. But it's "too hard" to do so if it threatens their overage-fee profits. ;)
2013-01-20 08:19:17 PM
1 votes:
"Despite the substantial decrease in the cost of operating a network and transporting data, consumers have not seen a resulting decline in the cost of service,"

Nor will you. Why would a for-profit company operating in a near-monopoly situation (sorry, DSL is not a serious competitor to cable) willingly lower its prices?

This is why cable execs are shiatting bricks about Google fiber.
2013-01-20 08:18:18 PM
1 votes:

SuperT: bandwidth isn't like water or electricity.

you don't have to burn coal to generate it, or pump it. It's basically there as a side affect of the network's existence. using it at max costs essentially the same resources as not using it. The problem is the ISP have oversold their capacity past the point their infrastructure could bear. Since real level competition will probably never be in the consumer level ISP business again, I'd vote for nationalizing the home internet connectivity business.


I think that's pretty much right, except that you forgot about all that dark fiber the monopoly telco/ISPs have. They certainly wouldn't have a shortage if they lit one of these up now and then. At present, they're probably already operating with late-generation equipment, but over-centralizing it in order to produce bottlenecks, as well as other things to mismanage the backbone so that it looks like they are overwhelmed.
2013-01-20 07:58:22 PM
1 votes:
bandwidth isn't like water or electricity.

you don't have to burn coal to generate it, or pump it. It's basically there as a side affect of the network's existence. using it at max costs essentially the same resources as not using it. The problem is the ISP have oversold their capacity past the point their infrastructure could bear. Since real level competition will probably never be in the consumer level ISP business again, I'd vote for nationalizing the home internet connectivity business. I mean, how much would it cost to run a real fiber line to the majority of houses in america? and 4G for the rural parts? I mean, didn't the fed spend 200B for a similar purpose back in the 90s?

could you imagine if almost any company could bring you google fiber-like service? for no more than line rental from the gov, at the same rate as everyone else?

for an example, remember what early dsl was like?
2013-01-20 07:00:45 PM
1 votes:

Tommy Moo: "Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users. Does raising rates on a product that already sees 90% profit margins sound like 'fairness' to you?"

So, isn't this where the free market steps in with its invisible hand to lower prices? If margins are so high, why don't investors jump into the market with new start-ups that undercut Time Warner until the price reaches a fair level that allows everyone involved to just make what they are worth?


Because what began as a niche service turned into a must-have utility. Like phones.
I don't know what the crossover period was, I'll have to ask Europe or the northeast, but at some point running water stopped being niche and everybody needed that shiat. I don't know how they decided to municipalizipate any of this shiat, but with rednecks goin 'oh dem commynists' I think we're basically farked here in 'murica.
2013-01-20 05:53:39 PM
1 votes:

Karac: Dokushin: Tommy Moo: T-Servo: Tommy Moo: "Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users. Does raising rates on a product that already sees 90% profit margins sound like 'fairness' to you?"

So, isn't this where the free market steps in with its invisible hand to lower prices? If margins are so high, why don't investors jump into the market with new start-ups that undercut Time Warner until the price reaches a fair level that allows everyone involved to just make what they are worth?

Ha, you think cable companies work in a free market?

Explain. Let's start one. You and me. What is physically preventing us from starting an ISP? Granted it has a high barrier to startup. It would probably take hundreds of millions in venture capital funds, but some team of VC investors will pony up any amount if it is guaranteed to return 15%/year for the first ten years.

We're not talking about ISPs. We're talking about cable companies, which have government-granted monopolies. You literally cannot start a new cable company. Therefore, they don't operate in a free market, because the government protects them. That's the problem.

If you want to start an ISP, you're going to have to lease backbone Internet -- probably from the cable company. (Perhaps you see the problem.)

Actually, the articles does talk about ISP's, which are not necessarily (but usually are) cable companies. It's entirely possibly to get your internet off a DSL from the local phone company.


Depends. For example, my local government prohibits Verizon from providing DSL service within city limits due to an exclusivity agreement with TWC on internet service rights.

The startup costs to creating a new ISP would have to include line items for bribery because otherwise it's not going to happen.
2013-01-20 04:14:19 PM
1 votes:
And nothing good will happen & there will be no positive change, because this is America. Shiat only gets worse.
2013-01-20 04:01:52 PM
1 votes:
"Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users. Does raising rates on a product that already sees 90% profit margins sound like 'fairness' to you?"

So, isn't this where the free market steps in with its invisible hand to lower prices? If margins are so high, why don't investors jump into the market with new start-ups that undercut Time Warner until the price reaches a fair level that allows everyone involved to just make what they are worth?
2013-01-20 03:31:46 PM
1 votes:
5GB a month?  I'd go through that in a couple days...easily.
2013-01-20 11:40:27 AM
1 votes:
Say it aint so!

You mean data caps are just a cash grab?
 
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