Broadband politics in Ottawa and Washington (Part 2)

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. 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, 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.

3 thoughts on “Broadband politics in Ottawa and Washington (Part 2)

  1. Although it’s only the 8th of May, I was warned by my parents this morning not to download anything – because they were warned by Rogers our monthly bit-cap of 90 gigs has already been used up. This was quite a shocker. Being a musician myself, I enjoy downloading music – the legal kind – so I can support other artists and their music, and support the economy in some small way as we endure these tough economic times.

    As the costs to run broadband networks drop, why not exploit the immense business potential of the Internet? Give incentives for people to join your network, Bell! It astonishes me that regulatory bodies don’t see the harm ISPs are inflicting by stifling the public Internet for the sake of their profits. Especially since we don’t really have the option of using a network that is in no way connected to one of the incumbents.

    As I sit here waiting for the CRTC’s website to stop timing out and load faster, I keep thinking about how nice it would be to live in Europe and subscribe to a network that doesn’t stress me out and empty my wallet at the same time. But this is Canada – where it looks like we’re going to keep on paying exorbitant amounts of money for pathetic Internet service.

  2. In addition, here are some interesting links to the topic:

    Stopthecap – Fight Back Against Usage Caps for Cable, DSL, and Fiber Optic Broadband

    Stopthecap – Bell Canada

    Stopthecap – Wired Broadband

    Gizmodo – Verizon: ‘We Could Offer 400Mbps, We Just Don’t Feel Like It’

    Gizmodo – Suck It, Fiber: America’s Fastest Internet 101Mbps Delivered by Cablevision

    Gizmodo – Google on How to Change the Internet: You Should Own Your Broadband Pipes

  3. After reading this post, I had to think about a little personal anecdote that I would like to contribute. From my experience as an exchange student from Europe, going to Canada has been one of the biggest disappointments in my life – at least in terms of telecommunications.

    Honestly, I think I should have informed myself a little better about the country everybody was praising as super-progressive, liberal and technologically developed. From gossip like “among the world leaders in telecommunications”, “most upcoming technology country in the world” and “not the United States”, I believed that I was on my way to the right country. As I thought that the US was already pretty regressive in comparison to Europe, I concluded that “not the United States” meant “not as bad as the United States”. Unfortunately – and to my total disbelief – I had to find out that Canada was even worse than the US when it comes to telecommunications. And believe me: I thought that this wasn’t even possible in the western world.

    As an avid Internet user who enjoys a $50-All-Inclusive-Triple-Play in my home country (18 Mbps broadband connection without caps or DPI, 2 phone numbers with unlimited landline calls and digital cable television with over 70 channels), I was used to using the Internet and all its conveniences to the full extent: File sharing, video streaming, VoIP telephony, online gaming and so forth.

    When I arrived to Canada and got into my first apartment in Toronto, my landlord (the typical working-class average Joe who has no idea about technology – hence the perfect UBB victim) told me that he “recently upgraded the Internet connection” and that it is “not the fastest, but more than sufficient for everyday use”. From the fact that the monthly rate was 40 bucks, the connection had been “upgraded” and from the standards I knew from Germany (where the “lowest speed” you can get in urban areas is around 2 Mbps), I estimated that I would have an available bandwidth of about 3 Mbps – not the fastest, but sufficient for calling your folks in Europe over Skype and a little online gaming. Downloading games over Steam would take a few hours longer, but who cares – I can be patient as long as I eventually get my games.

    I was aware of the fact that living in a different country (and continent) can lead to a Kulturshock, for instance when you have problems with the national habits, measuring systems or handgun regulations. I was prepared for all this – but not for what I was about to find out.

    Being a little suspicious, I used to find out the actual “speed” of my “broadband Internet” connection… and – TADAA – the speed-o-meter indicated 1Mbps! After realizing that there was no “0” missing after the “1” and considering the fact that this was already an “upgraded” connection, it dawned to me that people might have freakin’ lied to me when talking about Canada as leading in telecommunications. 40 dollars for a 1 Mbps-line, Internet only, when I pay 50 dollars for a high-speed-triple-play at home? I can’t even watch Apple’s trailers or a YouTube-video properly with that! Gaming lags terribly, not to mention the time it takes me to download a game!

    After recovering from this shock, I tried to look ahead and told myself: Well, then it takes longer to download a game, and I will have to watch videos in low-resolutions… but I will survive it. And I did… until one week and three downloaded games later my ISP managed to tell me inside my web browser (!!!) that had I reached the monthly 25 GB download limit and that every additional gig will cost me $ 2.50.

    I can’t remember if I was more baffled by the fact that my ISP could actually plug into my browser without letting me know or that my traffic was not only limited (which is insane enough), but limited to ridiculous 25 GB pr month. Both would be unthinkable in my home country, because a) the ISP would have been sued multiple times for privacy breach and b) nobody in Germany would stay with an ISP who makes traffic a scarce resource.

    I felt like being thrown back into the medieval times of telecommunications – a land before our time where many people just started to switch to DSL or cable from a modem (in Germany we got over this 10 years ago), where ISPs sell you 512 Kb lines as “broadband” and 10 Mbps as “blistering speed” ( and where you pay a month’s salary for a capped line which is Gestapo-like intruded and controlled by your ISP (in Germany, we got over such measures 20 years ago^^).

    A professor at Ryerson University once made the perfect statement about this situation: When it comes to telecommunications, Canada is like the GDR of North America. Everybody is jealously looking at the big neighbouring country, wants to get the cool stuff they have (and already gets it illegally) and is somehow not pleased with what they have at home – but most just don’t know better because they never looked over the big wall to see how life is beyond the own boundaries. The state of course supports this, because it is more convenient and profitable. They stay stuck in a past decade, pretending that everything is still perfect and neglecting the fact that the facade is crumbling and things are starting to fall apart.

    I am going back to Germany in three months – back to my broadband wonderland and an even more promising future, as our chancellor Merkel announced [in German: mod.] the establishment of a minimum broadband speed of 50 Mbps for 75% of the population till 2014. If Canadian officials and users don’t start opening their eyes and raising their voices, I fear that Canada’s future won’t be bright at all. And I would feel pity for Canadians, if I didn’t have the impression that it wasn’t (partially) their own fault.

    Yet I have one historical fact that might help Canada overcome that misery:

    In Germany, we tore down that wall and united the folks on both sides. Maybe Canada should do that too and join the US – at least communication-wise.

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