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FCC Boss Oblivious to Dangers of Broadband Caps
Genachowski Still Ignoring Key Facts, Like Most Meters Don't Work
by Karl Bode 03:46PM Wednesday Sep 26 2012
FCC boss Julius Genachowski has been busy lately paying lip service to Silicon Valley, most recently telling a bunch of Silicon Valley conference attendees that caps were something we should be "concerned" about, after telling cable companies just a few months earlier he thought caps and overages are nifty and innovative. Speaking again to Silicon Valley folks yesterday at a speech at Vox Media headquarters, Genachowski hashed out his muddy position a little further, again insisting he was "concerned" about caps -- sort of -- maybe:
quote:
(Growing usage) presents challenges for broadband providers in managing the growing loads on their networks while earning returns to drive capital investment in network upgrades and expansion. One tool we’ve seen is usage-based pricing, often implemented with monthly data limits. I’ve said since 2010 that, in a competitive market, usage-based pricing can be a useful tool, consistent with the goals of driving efficiency, investment, and faster and more robust network infrastructure. In general, experimentation in business models in competitive markets is something to be encouraged, and has historically benefited consumers.
in a competitive market, usage-based pricing can be a useful tool, consistent with the goals of driving efficiency, investment, and faster and more robust network infrastructure.
-FCC boss Julius Genachowski
That sounds lovely except for two problems.

One, caps (and especially usage fees) are not technically or economically necessary whatsoever. Flat-rate broadband is perfectly profitable and despite doomsday prognostications designed to scare regulators (it apparently worked), most networks consistently keep pace with demand thanks to dropping bandwidth and hardware prices and improved engineering. Ten years of ISP earnings reports are proof the flat-rate pricing model is sustainable.

Two, they're not being imposed in a "competitive market"; they're just price hikes on already-expensive service, designed to protect TV revenues from Internet video -- and they're made possible specifically because of limited wireline competition, a problem the FCC refuses to seriously tackle. Most modern, well-managed wired broadband networks don't see much congestion. Caps and overages are an executive and investor pipe dream; an entirely new unnecessary fee system layered on top of what is already some of the most expensive broadband service in the developed world (OECD data).

Genachowski appears to have swallowed the lie that money gleaned from overages goes back into the network; yet CAPEX and wired network investment is dropping like a stone for most incumbents, and most of the cash gleaned goes into the pockets of CEOs and investors. While that's the public corporation's primary objective, pretending that caps are helping to create the networks of tomorrow is not supported by the facts. If the money from overage fees actually went back into the network, Canada would have some of the most advanced residential broadband networks in the world. Go ask our Canadian forum users exactly what caps have done to improve the quality of their services.

ISPs want to bill like utilities but refuse to have the "pumps" regulated like a utility and regulators, including Julius Genachowski, haven't shown one second of interest in the subject.
Genachowski then seems to remember that he's talking to Silicon Valley, a group of people whose products and services are directly threatened by totally arbitrary usage limits and surcharges:
quote:
At the same time, I’ve been clear that I’m concerned about practices that harm competition, including from over-the-top providers; unnecessarily depress broadband usage; or reduce incentives to increase broadband speeds and capacity. As I said earlier this year, as consumer usage grows and technology improvements enable providers to deliver more bits at lower cost, we should expect that any monthly usage limits will increase and that consumer cost-per-bit will decrease.
In short, Genachowski is saying that unnecessary caps and overages are just fine as long as they scale to modern usage trends (that rarely happens, and only if there's competition) and result in lower prices (that never happens). If you understand that overages are just an unnecessary price hike on a captive audience to begin with, that's like arguing that mugging people in dark alleyways is just fine, provided the robber is reasonable and accommodating when it comes time to stick the revolver in your ribs. And while Comcast appears to be scaling their caps (largely because of competition from Verizon FiOS), many carriers in uncompetitive markets (like AT&T) aren't. In uncompetitive Canadian markets, carriers just keep on squeezing.

Even if you want to ignore all of this and still argue that usage caps and per gigabyte overages are a good thing, there's another major problem Genachowski and the FCC continue to ignore: the meters being used by ISPs to track usage aren't accurate, and users are being over-billed for service. Our forums are filled with story after story from users of ISPs like Suddenlink, AT&T and Cogeco who complain that their ISP is over-billing them for data they never actually used. ISPs want to bill like utilities but refuse to have the "pumps" regulated like a utility and regulators, including Julius Genachowski, haven't shown one second of interest in the subject.

The primary criticism of Genachowski is that he's a consummate politician and fence-sitter, telling everyone exactly what they want to hear while failing utterly to make real, hard decisions that could (gasp) potentially result in somebody getting upset. The end result are weak rules, and show pony policies that don't accomplish much of anything, which just the way uncompetitive legacy companies like it. But just for the record Mr. Genachowski, and not to get too technical, but imposing unnecessary new fees and unreliable meters on already-expensive uncompetitive U.S. broadband services isn't "innovation" -- it's crap.

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Metatron2008
Premium
join:2008-09-02
united state

It's just so difficult...

To kiss everyones ass.

Oh, but to be a politician, then I could know the truth definition of prostitute:

Somebody who tells you they care about you while screwing you for your money.
Kearnstd
Space Elf
Premium
join:2002-01-22
Mullica Hill, NJ
kudos:1

1 recommendation

Re: It's just so difficult...

The difference is almost everybody can afford an hour with a whore. while most Americans cannot even get ten minutes with their congressman or senator for under $10k
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports

Metatron2008
Premium
join:2008-09-02
united state

Re: It's just so difficult...

You need to get with a local polititician in your town! Those are the small time whores. Big time whores in expensive hotels cost tons too ya know.

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:5
Reviews:
·Comcast

1 recommendation

Re: It's just so difficult...

said by Metatron2008:

Big time whores in expensive hotels cost tons too ya know.

Ask any Congressman>
Telco

join:2008-12-19
This guy is a lawyer and a businessman, hardly the person who should be running the FCC.

The death and downfall of this nation are due to these lawyers, that have their tentacles in everything.
iansltx

join:2007-02-19
Austin, TX
kudos:2

Re: It's just so difficult...

Who should be running the FCC?
openbox9
Premium
join:2004-01-26
Germany
kudos:2
said by Telco:

The death and downfall of this nation are due to these lawyers, that have their tentacles in everything.

I thought it was due to VZ's BoD?

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:5
Reviews:
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3 recommendations

Almost there, Karl.

except for this falsehood.

"One, these caps (and especially usage fees) are not technically or economically necessary whatsoever. Flat-rate broadband is perfectly profitable and despite doomsday prognostications, most networks consistently keep pace with demand thanks to dropping bandwidth and hardware prices and improved engineering.
1}IF you go back to "UNLIMITED" useage WILL again increase at an uncontrolled rate, faster than the current plant "refresh" rate (hardware upgrade cycle) allows for.
2}it's great the price is plunging, but if you replace something today (say CMTS) expect a 5-year life-span, and "UNLIMITED" exceeds it's capablity in 2 years, CISCO does not upgrade it for free. It is cheaper, it's not cheap enough to run a 2 year replacement cycle at today's rates.
3}IF forced to provide flatrate ($) "UNLIMITED" , either the rate($$$) will grow exponenially year after year, or capacity will rapidly be overwhelmed leaving a nearly useless traffic jam 24/7.

MovieLover76

join:2009-09-11
kudos:1

Re: Almost there, Karl.

Your statements are the falsehoods
Unlimited is perfectly manageable, FiOS and cablevision still have unlimited.
You can argue that FiOS has more capacity fairly. But cablevision is working with the same cable wire every other cable company works with.

Note that cablevision provides one of the fastest cable modem peak speeds of all cable providers as well, despite offering unlimited.

Alex J

@sunwave.com.br

IF forced to provide flatrate ($) "UNLIMITED" , either the rate($$$) will grow exponenially year after year, or capacity will rapidly be overwhelmed leaving a nearly useless traffic jam 24/7.

Which is why Verizon FiOS is so totally unusable and Verizon makes no money, right?

This is nonsense.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Almost there, Karl.

said by Alex J :

IF forced to provide flatrate ($) "UNLIMITED" , either the rate($$$) will grow exponenially year after year, or capacity will rapidly be overwhelmed leaving a nearly useless traffic jam 24/7.

Which is why Verizon FiOS is so totally unusable and Verizon makes no money, right?

This is nonsense.

It isn't nonsense. Because you ignored the other theme that Karl keeps bringing up - cord cutters. The more people who end their TV service, but keep internet and start video streaming non-stop, the internet gets more jammed up and needs upgrading at the same time income goes down for the cable companies due to less TV revenue. As TV revenue goes down, the companies will charge more for internet access. And bill-by-byte is the best method to do that.
--
»www.gop.com/2012-republican-platform_home/
»www.gop.com/2012-republican-plat···onalism/

Alex J

@apexcovantage.com

Re: Almost there, Karl.

Nobody is debating that they're jacking up the price of data to offset the expected and inevitable loss in TV subscribers. Cord cutting is an incredibly, incredibly slow shift. If a company whose primary job is to build networks can't use the significant profits they're making to be ready for it with a ten year warning they deserve everything coming to them.
34764170

join:2007-09-06
Etobicoke, ON
said by FFH:

It isn't nonsense. Because you ignored the other theme that Karl keeps bringing up - cord cutters. The more people who end their TV service, but keep internet and start video streaming non-stop, the internet gets more jammed up and needs upgrading at the same time income goes down for the cable companies due to less TV revenue. As TV revenue goes down, the companies will charge more for internet access. And bill-by-byte is the best method to do that.

No, it's selling higher and higher speed tiers without having the appropriate network and/or upgrades in place that causes congestion. Do you ever have a clue?
nasadude

join:2001-10-05
Rockville, MD
Click for full size
yeah, those major ISPs are shelling out a bundle for connectivity (a little dated, but if anything that category may be smaller)

88615298
Premium
join:2004-07-28
West Tenness

Re: Almost there, Karl.

Amounts to 3/4 of 1%. They spend 4X as much on purchasing STBs.

Also let's se so they collect around say $6 billion a year from customers for internet service and only spend $40 million on internet connectivity. Sounds like they are doing just fine.

88615298
Premium
join:2004-07-28
West Tenness
said by FFH:

And bill-by-byte is the best method to do that.

except they don't really want to do that. that want to charge what they are charging now and add overages. That's not bill-by-byte. Bill-by-byte would mean someone that uses only 20 GB a month wouldn't be charged $50 like someone that used 200 GB. They'd only be charge $10 a month or something like that, but ISP certainly aren't going to do that because they would LOSE money.

Even a quasi bill-by-byte system should be more like $25 a month for service with say a 50 GB cap and $1 per 10 GB overage. But once again ISPs won't do that since most of their customers use less than 50 GB a month
iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
·Comcast
Then why does TWC still have unlimited?

How about Sprint? Or T-Mobile? If you say Sprint's network is overburdened, and discount their upgrades being done right now, take T-Mobile. TMo just started offering unlimited again, and they have hte network to support it, too.

88615298
Premium
join:2004-07-28
West Tenness
said by tshirt:

1}IF you go back to "UNLIMITED" useage WILL again increase at an uncontrolled rate, faster than the current plant "refresh" rate (hardware upgrade cycle) allows for.
2}it's great the price is plunging, but if you replace something today (say CMTS) expect a 5-year life-span, and "UNLIMITED" exceeds it's capablity in 2 years, CISCO does not upgrade it for free. It is cheaper, it's not cheap enough to run a 2 year replacement cycle at today's rates.
3}IF forced to provide flatrate ($) "UNLIMITED" , either the rate($$$) will grow exponenially year after year, or capacity will rapidly be overwhelmed leaving a nearly useless traffic jam 24/7.

Except ISPs are not really increasing caps. Charter has had the same cap for 3 years. Yes Comcast raised the cap. On their lowest tier it went up from 250 GB -300 GB in 4 YEARS. That averages out to a mere 5% a year. Surely you would agree ISPs can increase capacity by more than 5% per year. At that rate it will take until 2023 for the cap to reach 500 GB.

Even at only 15% a year the cap should 437 GB by now. Which you only get that or better on 50 Mbps or above. Which should have a higher cap than the lower tiers anyways. So logic dictates than the lower tiers should be 450 GB, 50 Mbps should be 600 GB and 105 Mbps should be 800 GB. And caps should increase at least every other year. Not every 4 years.

tshirt
Premium,MVM
join:2004-07-11
Snohomish, WA
kudos:5
Reviews:
·Comcast

Re: Almost there, Karl.

said by 88615298:

said by tshirt:

1}IF you go back to "UNLIMITED" useage WILL again increase at an uncontrolled rate, faster than the current plant "refresh" rate (hardware upgrade cycle) allows for.
2}it's great the price is plunging, but if you replace something today (say CMTS) expect a 5-year life-span, and "UNLIMITED" exceeds it's capablity in 2 years, CISCO does not upgrade it for free. It is cheaper, it's not cheap enough to run a 2 year replacement cycle at today's rates.
3}IF forced to provide flatrate ($) "UNLIMITED" , either the rate($$$) will grow exponenially year after year, or capacity will rapidly be overwhelmed leaving a nearly useless traffic jam 24/7.

Except ISPs are not really increasing caps.

Bing! Bing!Bing!Bing!Bing! we have a winner.

Karl's contention, which I know to be incorrect is

"One, these caps (and especially usage fees) are not technically or economically necessary whatsoever."
when infact some level of control IS NEEDED (because you can't rely on user self-control) for economic and technical planning purposes.

And no they have not increased caps before, because the exoflood caught them all by suprise Heavy user hit the wall and everyone suffered, then the last 6 years or so by locking down maximum use, they (well some of them comcast, and verizon for example) tried 2 very different approache,s Comcast( Leading the Cableco's) did a massive D3 rollout and reached the point where they feel comfortable increasing the cap, and may (depending on what they learn) be planning regular increases.

Verizon originally hoped for a massive footprint wide Fios response but learned the hard way that it was too expensive for the take rate to support, and is now left with a limited area with many times more capacity than needed and a large area with rapidly ageing copper/dsl which lacks adiquite capacity in most areas and would require a fios like investment many times over to improve. In the meantime have had to dump much of their footprint they changed their focus to wireless type technologies and investments.
FIOS is great for those few that will get it, and google fiber seems like it will server those limited communites well too.
But it's obviously not going nationwide as a private investment, even in cherry pick locations it may not be profitable in a reasonable time frame that would interest public or private equity.
You would need VERY deep pockets, AND a very long timeline AND a whole lot of faith to jump on that boat.
rdmiller

join:2005-09-23
Richmond, VA

Bring back Chairman Powell!

Karl yearns for the good old days of Michael "I don't understand any of this stuff. Do whatever you like." Powell.

Alex J

@sunwave.com.br

Re: Bring back Chairman Powell!

Powell was just as bad if not worse, and now he's the boss of the cable industry's biggest lobbying organization (NCTA). Going from two guys who denied there were any problems at all (Powell, Martin) to a guy who barely acknowledges problems and then does nothing about them (Genachowski) is barely progress.

FCC should be stocked with scientists and engineers, thinkers and boundary pushers. Not blathering, timid lawyers.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: Bring back Chairman Powell!

said by Alex J :

FCC should be stocked with scientists and engineers, thinkers and boundary pushers. Not blathering, timid lawyers.

The FCC is stocked with such types. But they don't make the decisions - the lawyers do.
--
»www.gop.com/2012-republican-platform_home/
»www.gop.com/2012-republican-plat···onalism/

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

1 recommendation

Meters aren't accurate? Fallacious Argument

The claim that bandwidth meters are inaccurate is not based on facts but on selected minimal # of claims.
quote:
Argument By Generalization:
drawing a broad conclusion from a small number of perhaps unrepresentative cases.

I'll add my selected minimal example. My Comcast bandwidth meter is accurate over the last year or so. Based on matching numbers from my router. But my example and others like mine don't prove the case anymore than a few posts at BBR prove they are inaccurate.
--
»www.gop.com/2012-republican-platform_home/
»www.gop.com/2012-republican-plat···onalism/
iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
·Comcast

Re: Meters aren't accurate? Fallacious Argument

My Comcast meter was accurate. My TWC meter is accurate. My Sprint, T-Mobile and Verizon meters are accurate, or close thereto.

AT&T and Suddenlink have inaccurate meters. Suddenlink no longer charges overages due to this meter inaccuracy. AT&T doesn't either for U-Verse. They'll start charging again when they think they can get away with it...when their meters are accurate.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

"In a competitive market."

Yes, because then consumers could make other choices if usage based billing was overpriced and expensive.

TOO BAD WE DON'T HAVE A COMPETITIVE MARKET.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
·Comcast

Re: "In a competitive market."

For wireline Internet? Depending on the area, yes or no. Generally no, or not very. But on the wireless side, as long as you're in a reasonably sized city, you've got four or so options (VZW, AT&T, Sprint, T-Mobile). All offer no-contract plans. Sprint and T-Mobile trade coverage for price, and both are upgrading their networks. AT&T and Verizon are upgrading their networks as well.

There are only so many ways you can split currently available wireless spectrum. You already have two unlimited-data-on-smartphone options on the wireless side. Do we really need more? Or should that energy be pushed into giving the "small two" enough economy of scale to keep their networks in decent shape?
rradina

join:2000-08-08
Chesterfield, MO

I must be thick...

I'm lost as this statement doesn't compute:

In short, Genachowski is saying that unnecessary caps and overages are just fine as long as they scale to modern usage trends...

If they scale with usage trends then:

1) As the package-and-broadcast content model dies, modern usage trends will include 200 hours of OTT VOD video for at least one television (30 days * 6.8hrs per day). That means caps need to trend to at least 1TB for just video, let alone the other HSI uses.
2) If CAPs increase with the herd such that only the 2% outliers pay extra (that's what we're always told by the ISPs), how can this ever provide the necessary revenue (again, as we've been told by the ISPs) they need to scale the network?

Drug pushers will give away product to get people hooked. I see CAPs and meters and similar because ISPs know our appetite is growing and as soon most of us start going over the initial monthly pittance, it's big money time. If the chief FCC head believes ISPs will keep raising the quantity of free as our appetites grow, the big money will never happen, right?
IanR

join:2001-03-22
Fort Mill, SC

Steve Wozniak would make a good Chair of the FCC

Please Steve put off your move to Aussie for one year and run rampant as Chair of the FCC. At least that way we would see people cut down to size and a lot of logic applied. For a year it might even be fun for you not caring what people think of you.
mlcarson

join:2001-09-20
Los Alamos, NM

False choice

The choices aren't simply caps/overages to capacity problems. How about we reduce the advertised speed? If there's a capacity problem, stop increasing the advertised speed options and selling something you apparently can't deliver anyway. Even if I have a 50Mbs or 100Mbs internet connection, most sites and downloads aren't going to go any faster anyway because of bottlenecks at the other end or along the way. It only makes a difference on concurrent connections. If I had a choice between caps/overages and reduced maximum speed, I'd take the reduced speed.
Wilsdom

join:2009-08-06

Re: False choice

Probably because the cable companies are increasing profits by degrading service. So they'd have to reduce speeds down to 1mb/s or something, which would make it obvious what an embarrassing backwater the USA has become. Similar to how the government can't let it be seen that residential homes only have 5-figure value so it just prints money until it looks like there is prosperity

ChuckcZar

@teksavvy.com

Meters make no sense at all

As the cost of machinery comes down it actually costs more to put the meters in place than it does to run the whole infrastructure or network without them. Proof of that is the internet system up in Canada. It costs much more just to meter everywhere than it does just to run the whole network without meters.