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Study: Limited Competition Results in Caps, Overages
Just Another Price Hike in Sheep's Clothing
by Karl Bode 08:48AM Tuesday Dec 18 2012
A new study by the Open Technology Institute (OTI) will surprise none of our regular readers, OTI finding that limited competition can be thanked for the rise in low caps and high overages on fixed line broadband networks.

Carriers have argued (lied, frankly) that such penalties are necessary due to network congestion or financial well being, despite the fact that flat-rate pricing has been perfectly profitable, the costs of delivering broadband continue to plummet, and most well-run fixed-line networks experience limited to no substantive congestion.

According to the OTI, caps and overages on fixed line networks simply act to raise the already high profit margins of broadband providers, while jacking up prices that are already high due to the limited competition that makes caps possible in the first place. As we've noted, most caps have been implemented to protect TV revenues from Internet video. Carriers can't honestly state this is just a cash grab, so they enjoy insulting consumer intelligence by insisting that more restrictions and higher rates are acts of altruism.

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"Data caps may be good for the short-term profits of broadband providers and please investors, but they are not benefiting innovation or access to the Internet," said OTI Policy Director Benjamin Lennett. "Costs for providing broadband connectivity are continuing to decline, yet Americans continue to face higher prices for a service that is no longer a luxury."

Carriers of course pay well-heeled academics to argue otherwise. In fact an NCTA cable trade show last week featured several speakers paid to insist that caps and overages are a healthy result of the "vibrant competition in the marketplace." The millions of customers stuck on capped AT&T DSL because they have no other options would likely have something to say about that.

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rradina

join:2000-08-08
Chesterfield, MO

Stuck on capped DSL!?

How about the millions more stuck on capped cable because the copper plant has been left for dead despite FTTN + short copper runs can still offer HFC some competition. It can even be profitable (assuming U-Verse is at least profitable for ATT).

I think we should figure out a way to allocate 100mhz for fixed-LTE startups. That could result in oligopoly++ or (hopeful) oligopoly+=2.
Sammer

join:2005-12-22
Canonsburg, PA

Re: Stuck on capped DSL!?

said by rradina:

I think we should figure out a way to allocate 100mhz for fixed-LTE startups.

While it's only 50 MHz, there are exclusion zones, and mostly WiMAX is used, isn't that basically the idea behind the lightly licensed 3.65 GHz band?
rradina

join:2000-08-08
Chesterfield, MO

Re: Stuck on capped DSL!?

That frequency is pretty high and would not penetrate well -- or are you thinking point-to-point, roof-mounted directional antennas? I guess that's possible since it's fixed but I was thinking more along the lines of Clear's 2.5Ghz frequency where a few more towers are needed but not so many that it's too cost prohibitive. I know there are frequency sweet spots but surely the government could move something it does somewhere else and let that be used for competitive last-mile providers.

If you are served by Clear, it doesn't require an outdoor antenna. The indoor modem doesn't look any different than a typical cable modem. I think that's the kind of consumer-friendly competition our current monopoly/oligopoly needs.

It should be this simple:

1) Go to Wal-Mart, Best Buy, Target, pick up a $99 standards-based wireless modem.
2) When you plug it into your WiFi router or directly into your computer and browse to any site, it interrupts your browsing session while it searches for available providers in your area.
3) Hopefully it comes back with an "App Store" of several choices. As you select each choice, that provider returns their packages and pricing.
4) Choose the provider/plan best for you, enter a credit card, checking account number, paypal or whatever and the service starts.
5) If the service stinks (either because poorly managed, oversold or that provider's signal is fringe for your location), by law all plans can be cancelled without penalty regardless of "contract" duration within 90 days.

For support purposes, the standards based modems keep extensive logs of signal strength, latency, congestion, link speed and whatever else might help and this data is instantly available to the provider. The modem also obeys a standard management interface that allows the ISP to manipulate its configuration as needed.

Now that we have the last-mile connection, on the store shelf right next to the modem is a standards-based streaming video device. Buy it for $99, plug it in and an App Store of service providers and packages appear. Buy the content you want, ignore the content you don't want. Buy as many $99 devices for as many TVs as you want. Eventually, these devices are just built into the TVs themselves. There's also a software version for desktops, laptops, tablets, phones, etc.

Why can't we do something like this?
devnuller

join:2006-06-10
Cambridge, MA

More concerned about wireless

If you REALLY want to talk about profits, forget the wireline side. The number of people that hit wireline caps has to be tiny. There is no REAL profit in that.

Now with a 2G cap on wireless broadband that has to be a CASH COW.
rradina

join:2000-08-08
Chesterfield, MO

Re: More concerned about wireless

Perhaps but I bet all it does is cause most of us to use their wireless connection sparingly until we can hop on WiFi.

I have a 4GB ATT cap on my iPhone (2GB data + 2GB tethering) and use my cell wireless sparingly and reserve my hotspot access as a last resort when there are no other options -- like when the hotel WiFi blows and I need to access Southwest.com to retrieve my herd position and print my boarding pass.

Every month I feel like I pay for a service that I avoid using because I don't want to get slammed with a $10 or $15 (whatever it is) per GB overage fee.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
Reviews:
·Verizon Broadban..
·Comcast

Re: More concerned about wireless

I avoid public public Wi-Fi hotspots like the plague as they are not secure. If I use my laptop at the public library or on the train, I use my Verizon Wireless mobile hotspot. When I use my iPad/iPad Mini/iPhone, I use the Verizon Wireless network as it is like having my own connection instead using a shared connection.

As for the cable ISPs, they are behaving much like AT&T/Bell System before they were broken up.

Packeteers
Premium
join:2005-06-18
Forest Hills, NY
kudos:1

Re: More concerned about wireless

get a $5/mo vpn service provider, then you can use any public hotspot without reason for concern.
jc100

join:2002-04-10
The REAL cash cow is on mobile data. The overages per GB are comparable to mortgaging your first born and life savings.

antdude
A Ninja Ant
Premium,VIP
join:2001-03-25
United State
kudos:4

Duh!

We need competitions.

baineschile
2600 ways to live
Premium
join:2008-05-10
Sterling Heights, MI

Re: Duh!

So start a wireless data company. There is obviously a large niche out there.

People are quick to compain, but rare to act.

antdude
A Ninja Ant
Premium,VIP
join:2001-03-25
United State
kudos:4
Reviews:
·Time Warner Cable

Re: Duh!

said by baineschile:

So start a wireless data company. There is obviously a large niche out there.

People are quick to compain, but rare to act.

I am just a consumer. I can't even build my own computer. :P
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: Duh!

You don't have to do it yourself. You can be a managing investor. Money talks

antdude
A Ninja Ant
Premium,VIP
join:2001-03-25
United State
kudos:4
Reviews:
·Time Warner Cable

Re: Duh!

said by openbox9:

You don't have to do it yourself. You can be a managing investor. Money talks

Yeah, mine talks with "bye".

Uncle

@ubiquityservers.com

who's listening

Oh another study, same as the one from ten years ago. So give this study to someone that can do something about it. Other then that its wasted space and time. About as relevant as "whats the weather like outside".

DaneJasper
Sonic.Net
Premium,VIP
join:2001-08-20
Santa Rosa, CA
kudos:9

Web hogs!

Yup. Switch!

»corp.sonic.net/ceo/2011/12/02/web-hogs/
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

"Study" ?

This "report" is void of fact. There is not one instance, in which they can cite a single carrier implicating caps as a means to enhance revenues.

An admission that caps work over the entirety of the billing period, versus peak hours, does not disqualify their utility in curbing abuse and shaping consumption.

Flat rate billing models are indeed, profitable, so long as they are not abused. Torrents and those who would intentionally max out their pipe, for no other reason than to max out their pipe, have ruined the "unlimited" potential for everyone, so some form of limits are required. Caps are just one.

Sonic doesn't sell its FTTH to businesses, Google doesn't permit servers on theirs.