If you’ve really been paying attention, you may have noticed Bell Canada is trying to institutionalize user-based billing, UBB, by making 60 gigabytes the bandwidth cap that defines the Internet experience.
This wouldn’t be such a big story were it not for the fact they want this cap extended to all of us who get our DSL in Ontario and Quebec from a reseller. If you really must know, clicking here will take you to the CRTC page where you can download the Bell tariff filing in question, TN 7181, a stunning piece of technocratic obfuscation that guarantees any “public” comment will be pretty much confined to the Beltway boys. The substance of this anti-competitive grab for money, and the closed-door way in which we handle these issues in Canada (witness said tariff filing), are a national embarrassment.
The TWC blowout
Meanwhile, down south, another happy-go-lucky ISP, Time Warner Cable, has been trying to pull the same stunt – though at least the damage they wanted to inflict was confined to their own customers. And they had the guts to tell their subs publicly, on a company blog no less, that they intended to screw them with UBB. And that story has had a more or less happy ending: they had to back off, after a shitstorm of public – and political – outrage. And therein lie the two reasons why our American friends will win back their once glorious position as Internet leaders – and Canada won’t.
- One: the Yanks conduct these mission-critical debates about broadband in a very public way.
- Two: they’ve stopped pretending they’re still “global leaders” in broadband.
TWC began doing “tests” of bandwidth caps in Beaumont, Texas on June 5, 2008. Maybe they were actually testing something, like the ability of the CMTS equipment at their headend to do the metering thing. But it doesn’t require much ingenuity to see that what they were really doing was floating a trial balloon – i.e. testing public opinion. The test didn’t go well. The criticisms began before the tests began and covered a remarkably wide spectrum of opinion – from the usual suspects like the geeks at Ars Technica, all the way to Business Week, not exactly a bastion of anti-capitalist, pro-consumer advocacy.
Fast forward to April, when TWC announced it was planning to expand its knee-capping bit-capping trials to several other markets in Texas, North Carolina and New York. Overnight, the trial balloon turned into a lead balloon. In a brazen, or maybe brave, attempt to assuage furious customers, COO Landel Hobbs posted an open letter explaining why tiered broadband is such a great deal for customers, plus TWC is so broke, bla bla. Then on April 16, the company caved. In his public statement, CEO Glenn Britt took the usual don’t-blame-us position when he said it was “clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans…” Yeah, our plan was great, too bad you customers, journalists, public interest advocates, regulators, politicians, webheads and bandwidth hogs are just too fuckin dim-witted to understand how great it was.
The fallout from this fiasco provides a set of object lessons that go way beyond one cableco’s retreat on capping. Pay attention, Canada:
Price-gouging. Ars Technica senior editor Nate Anderson demonstrates in both this column and this one that “TWC’s math doesn’t add up.” All the ISP talk about big costs is disingenuous given that i) most of TWC’s infrastructure is already in the ground; ii) upgrades to DOCSIS 3.0 are cheap; iii) the company’s profits are up; iv) the cost of purchasing bandwidth – i.e. transit – is dropping steadily. Wired.com reached the same conclusion about TWC’s financial logic:
“For 2008, the most recent period available, Time Warner Cable reported that its high-speed data costs actually declined by 12 percent to $146 million. Meanwhile subscribers increased by more than 10 percent to 8.4 million, and high-speed data revenues climbed to more than $4 billion.”
All that speed – for what? Over at App-Rising, Geoff Daily does a different calculation to draw out the inherent absurdity of TWC’s strategy. In a post entitled “Time Warner’s Higher Speeds And Lower Caps Collide,” Daily constructs the example of a TWC sub who has the highest cap and the highest speed TWC advertises: 100 GB/month and 100 Mbps:
“Now let’s consider some time in the not too distant future where someone invents an application that requires 50 Mbps of constant throughput. Let’s put aside the fact that there are no apps like that today, and that cable networks have trouble sustaining their maximum throughput. Instead let’s assume an app with these requirements exists.”
So the question is – how long will it take to use up the 100 GB cap? Answer: less than 4.5 hours. Daily says the takeaway “is not that what Time Warner’s doing is wrong and evil but that this all highlights the limitations of the current broadband paradigm.” I disagree with this qualifier, though certainly not with Daily’s big agenda, which is promoting the Full Fiber Nation.
Competitors scared off. On April 15, Siliconvalley.com ran a Reuters story about the reaction to the shitstorm at Frontier Communications, TWC’s DSL competitor in Rochester, NY. “We have gotten hundreds of calls from Time Warner customers into our call centers,” said the head of Frontier’s Rochester unit. And in a choice understatement, she adds: “I guess it’s been a public relations crisis for Time Warner.”
Politicians speak out. But the most astonishing reactions in the US came from politicians – in both houses of Congress and at the state level in New York. Senator Chuck Schumer of New York seems to have had a hand in persuading TWC to shelve their plans, on the rationale he was looking after the interests of his constituents. They shrieked, he listened. Schumer spoke to CEO Britt, to “discuss the overwhelming opposition,” to a test in the Rochester area, and said he would be “working with Time Warner Cable going forward to make sure that any future changes in internet pricing are in line with what the community wants and needs.”
Over in the House, freshman representative Eric Massa has gone one big step further and drafted a bill called the Broadband Internet Fairness Act, whose main purpose is to outlaw UBB. Time Warner Cable has “yet to explain how increased Internet usage increases their costs,” Massa said, adding “while I favor a business’s right to maximize their profit potential, I believe safeguards must be put in place when a business has a monopoly on a specific region.”
Enough about outraged American politicians. I have a question for not-so-outraged Canadian politicians. Where are you?
Back in Bell’s court
And finally, I have a piece of shrewd advice for Bell CEO George Cope. Mr Cope, you lost 10% of your wireline subs last year. This year your mobility business will face well-financed, non-incumbent competition for the first time, making it a buyer’s market. Your satellite TV business will never shake the grey market and even if it did, the TV business is dying. Your Sympatico portal is a partnership with Microsoft, the people who brought us Vista and the Zune. Meanwhile, cable is starting to kill DSL because DSL will never reach the speeds of 50-100 Mbps offered by DOCSIS 3.0. You can follow the lead taken by US telco fiber offerings like Verizon’s FiOS – except you know FTTH means you can no longer use bandwidth scarcity as a way to leverage your ownership of last-mile facilities.
So the big plan your advisors came up with was: squeeze your ISP subs even more, raise prices again, double the leasing cost of the modem, while whacking all of us with even more draconian UBB? Even if it helps you temporarily stomp out some of the DSL competition, how is this possibly going to make you look more attractive than Rogers, when cable is taking away phone business from telcos a lot faster than telcos are taking away cable’s TV business? What you should be doing is exactly the opposite of filing for UBB tariffs. Make Rogers look like the bad guys by offering unlimited usage. Meanwhile, get your heads around the concept of enhancing the user experience as a business model, as opposed to the music industry let’s-punish-our-customers business model.
And btw, demonizing Web-delivered video and those video bandwidth hogs looks suspiciously like an attempt to save your BDU business from extinction. It also looks stupid and short-sighted, since in five years we’ll all be video bandwidth hogs.