dslreports logo
site
spacer

spacer
 
   
spc
story category
Cable Industry Finally Admits Caps Not About Congestion
After Insisting For Years Caps Were About Congestion
by Karl Bode 10:27AM Friday Jan 18 2013
For years the cable industry insisted that they imposed usage caps because network congestion made them necessary. You'll recall that Time Warner Cable insisted that if they weren't allowed to impose caps and overages the Internet would face "brown outs." Cable operators also paid countless think tanks, consultants and fauxcademics to spin scary yarns about a looming network congestion "exaflood," only averted if cable operators were allowed to raise rates, impose caps, eliminate regulation or (insert pretty much anything here).

Click for full size
The problem of course was that real data from researchers like Andrew Odlyzko repeatedly showed that well-run fixed line networks don't have serious capacity issues, and that looming video growth was easily handled by even modest network investment.

It only took the better part of a decade, but the cable industry has apparently realized they can no longer pretend that caps are really about congestion. Speaking at a meeting this week, former FCC boss turned top cable lobbyist Michael Powell finally acknowledged caps weren't about congestion, though he did continue pushing the myth that caps are about "fairness":
quote:
National Cable and Telecommunications Association president Michael Powell told a Minority Media and Telecommunications Association audience that cable's interest in usage-based pricing was not principally about network congestion, but instead about pricing fairness...Asked by MMTC president David Honig to weigh in on data caps, Powell said that while a lot of people had tried to label the cable industry's interest in the issue as about congestion management. "That's wrong," he said. "Our principal purpose is how to fairly monetize a high fixed cost."
Except the argument that usaged pricing is about fairness has been just as repeatedly debunked. If usage caps were about "fairness," carriers would offer the nation's grandmothers a $5-$15 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website. 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?

Another favorite industry argument is that providing broadband is so expensive for a carrier, the flat rate pricing model simply isn't sustainable, but that's also debunked if you eyeball quarterly earnings from any of the major broadband players. Yet another argument is that carriers are just "being creative" with pricing, but so far consumer wallets aren't feeling the creativity. What the industry's really doing is using the benefit of uncompetitive markets to price gouge customers, though Mike Powell obviously isn't paid to acknowledge that kind of reality at a press event.

Still, acknowledging that the Internet won't collapse if cable operators aren't allowed to charge $10 per gigabyte is at least a positive baby step and a victory for fans of reality. Perhaps in ten years the cable industry will acknowledge what caps are really about: driving up the cost of data for all users in order to offset the inevitable decline in TV revenues, while trying to retain the competitive upper hand in the age of streaming video.


124 comments .. click to read

Recommended comments



InvalidError

join:2008-02-03
kudos:5

2 recommendations

reply to MovieLover76

Re: Yeah, let's just ignore the access charges

said by MovieLover76:

it's a huge accomplishment that the opposition had so much proof the network congestion was a farce that they finally had to come clean and admit it.

Congestion would become very real and a very expensive problem to fix if all incentives to moderate usage and artificial speed bumps were removed while people are still expecting dedicated-like performance.

Building the network just to reach the customers is expensive but bulking up the network to sustain high concurrent usage at high speeds quickly gets expensive too.


mr sean
Professional Infidel
Premium,ExMod 2001-07
join:2001-04-03
N. Absentia
kudos:1

2 recommendations

reply to skeechan

Re: In other news...

And Generalissimo Francisco Franco is still dead...


MovieLover76

join:2009-09-11
kudos:1

2 recommendations

reply to espaeth

Re: Yeah, let's just ignore the access charges

It's news because a cable lobbyist admitted it, and it's a huge accomplishment that the opposition had so much proof the network congestion was a farce that they finally had to come clean and admit it.

Of course they just switched to a new argument, but that argument is even weaker in my opinion.


espaeth
Digital Plumber
Premium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2

4 recommendations

If metered pricing were about "fairness," carriers would offer the nation's grandmothers a $5 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website.
The first packet is the most expensive one to deliver, because you have to have all of the necessary underlying infrastructure in place to get it there.

The key problem is trying to time your technology refresh cycle so that it lines up with the next generation of available technology so that you get the most "bang for your buck" when you purchase new hardware for replacement or expansion.

Data caps are an imperfect system to try and shape demand into something that meets that refresh cycle. It's been pretty clear for years that caps are about the business model, not congestion.

We had this whole discussion on this site in 2008/9 when there was news every freaking day about the Comcast network management system. This isn't news.