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This is a sub-selection from Crimecast economics


THRILLHOU

@verizon.net
reply to nlew

Re: Crimecast economics

But it actually was a fair comparison.

The problem with your analogy is that internet connections aren't cars and don't require re-fueling to begin with. So to use that analogy perhaps more correctly, this is a case of Comcast trying to create an artificial re-fueling requirement, so it can turn internet connections into cars, and itself into an oil company.

And when you boil it all down, the cable and telephone companies are instituting these caps for two reasons:

(1) They're trying to crush the streaming television industry, which represents an inevitable, natural, and long-overdue evolution of television away from channelized networks owned and controlled by large entertainment conglomerates, and supplied by large middleman providers via highly controlled and closed networks (cable systems). There is a tremendous amount of fat and bloat in that old system, manifesting itself in everything from the trend, even on pay television (basic cable), toward low quality reality-based programming stuffed with overbearing amounts of commercials and infomercials, to the high carriage prices and high subscriber bills the public is now being gouged with today. (And there's no end in sight to those increases, either. The cable industry is on track to raise cable rates to $200/month by the year 2020 -- Google cable $200 2020.) Streaming television, on the other hand, promises to trim away all that lard by offering a reboot of the current television distribution paradigm; one providing the public with a completely open-ended, a la carte styled potpourri of entertainment entirely on demand, with no controls over how big you must be to get seen on people's HTPC's and STS'es (set-top streamers). The very concepts of channel availability and of scheduled programming will vanish. As will most of the basic cable industry as we know it, considering that only a few of the existing basic cable networks' business models will be fully compatible with tomorrow's streaming world. The live news networks, for instance, will easily survive in tact, as live streams. Non-specialized broadcasters, with specialized programming, like The History Channel, will in turn probably be forced to switch tracks and make themselves over as "record labels" for original pay programming; stuff that will simply be offered alongside all the other a la carte, on-demand selections in the streaming universe. And the remaining 80% -- the non-specialized channels that serve up little more than commercials, infomercials, and reruns all day, will be gone, replaced with a new and infinite universe of upstarts of all shapes and sizes. Who knows what that will bring. And this whole evolution towards streaming television is already well underway. Mid-sized services like Netflix, while still having very incomplete catalogs, are already to a point where their catalogs cannot be dismissed as anything close to inconsequential anymore. They are actually surprisingly lush. And Netflix Instant alone now has more American subscribers than Comcast does, as of this year. If they continue to succeed, others will join them. So ultimately, what it all means is oceans of change for entrenched interests. And entrenched interests loathe change. They do in fact see all this writing on the wall, and they absolutely do not want the promises of streaming television to blossom and behead all their cash cattle. There's just too much control and money at stake. Hence the bandwidth caps. Which they're implementing primarily in an attempt to derail the upstarts before they can gain mass traction. (Personally, I'd call having more subscribers than Comcast mass traction, but...)

(2) Outside the realm of pay television, and this being the secondary reason for their interest in bandwidth caps, the incumbent telephone and cable companies are also trying to completely reverse the atmosphere of the mid-late 20th century's telecommunications regulatory boom, which saw the public become accustomed to, and grow to expect and even depend on, low and fair prices, and flat rate services, in the communications world. They want to devolve communications back to how it was in the days of Ma Bell, where there was a killing to be made from carefully metered "consumption" of what was in all meaningful ways an infinite resource, which in turn cost essentially nothing to provide, and very little to maintain and upgrade, yielding obscene profit margins. More literally, they want to go back to the days when you built the infrastructure once, and then allowed it collect (1) dust, and (2) cash; while doing only the bare minimum to maintain it. That was the old AT&T. And you know, they love old Ma Bell, and want to carry on in her footsteps.

The only problem is, the segment of the public that's aware of all this is absolutely against them. And the louder that segment screams, the larger it grows. Meanwhile, none of the industry's justifications for its bandwidth caps are working. Remember when they invoked red herrings and canards like "bandwidth hogs" and "MP3 pirates" to back up claims that their networks were in danger of being clogged and brought to a standstill? That was back when they wanted to charge web sites tolls for high-speed access to their networks. Now, with online video, they're trying to tell everybody their networks again can't handle the latest thing. And they've decided to see whether their own subscribers will be easier to push over than all the online businesses were, by shifting the toll road burden from companies like Netflix and Youtube to people like John Q. Public. That's all the bandwidth caps really are, after all: Toll Road Internet version 2.0, with the previously proposed fees shifted to their own subscribers. Yet their claims about capacity versus online video are equally transparent. The public has a long memory, and knows that the internet has always been this way. That its growth has always been "relentlessly explosive." And that while its growth when measured in gigabytes may allow providers to wave around scary looking numbers, its growth as expressed in ratios turns out to be no different than its growth ten years ago. "Continuous upgrades," in the end, is just a fact of doing business in the world of internet service provision, and if anything, today's upgrades are even cheaper than yesterday's. There's a great article toward that end here: »www.theglobeandmail.com/technolo···e622177/

Anyway. With wholesale internet bandwidth now costing just 3 cents per gigabyte, and still falling toward zero, those familiar with the realities of the industry's technical underpinnings know that these recent bandwidth caps are only the latest cons of an industry that has bought up all the infrastructure through mergers and acquisitions, and that now wants to play ball like it's 1972 instead of 2012. It's not going to happen, though. And on that note, I'll leave you with this excellent comment, posted in another DSLR thread earlier this month:

"I think [AT&T] would prefer to hook you into LTE and charge you up the yingyang for data overages. Their $$$ margin is in wireless these days, and I know they don't give a hoot about wireline service. Even business-to-business, their margins are disappearing as companies like Level3, XO, etc., are lowering their pricing on new circuits week by week. They are practically giving away T1's and DSE3's these days. The general assumption in the industry is that bandwidth prices will continue to fall to zero, and that the money is in the services (network security, cloud, etc). Take a look at the sale price of PacNet last week. They practically gave the company away. The company is flush with fiber and underwater cables, and nobody saw any value to it. They lacked the vertical services. It is a shame this hasn't translated into residential service, but there isn't any competition there. Consumers are seeing prices go up, while businesses are seeing record low pricing for bandwidth."

IMHO, if the home broadband industry wants to go on being profitable while not running afoul of the public and ultimately regulators, it needs to invest in vertical services, as the above-quoted commenter says. Verizon is opening up a Red Box branded streaming service, for example, which is a good move. But at the same time, it absolutely must also lower access rates to prices which actually reflect the realities of the bandwidth market, while simultaneously not punishing subscribers who choose to take their business elsewhere with scams like bandwidth caps (and especially fraudulent scams like bandwidth caps which exempt in-house vertical services). If they only did all that, everything would be fine. Alas, all the short-term investors with dollar signs in their eyes will need to be booted to the curb before any of this can happen.