Today a gem from the Ellis archives. I argued in the post below that applying bit caps to broadband service and demonizing heavy users was short-sighted, because some day we’ll all be bandwidth hogs. And that limiting consumption was a dumb business model for any ISP trying to upsell customers to broadband from dialup. Like, why would you want to make your new sub afraid to use her service? At the time, before the scary video exaflood that will destroy the Internet, the big ISPs were just trying to find more ways to feed the ARPU monster. Business as usual. They tried out capping, then withdrew for a few years because they couldn’t find a palatable way to rationalize it. Then along came traffic congestion and the CRTC helped turn traffic management into a revenue stream. Only in Canada. Did I mention I wrote this piece in June 2002?
Internet hogs handed Canadian ISPs a whole new revenue stream
How to Make Friends with a Bandwidth Hog
Broadbanders have been living in a fool’s paradise. We’ve been coasting on a nice value proposition: unlimited Internet access through a persistent connection for around 40 bucks a month. So nice we roared ahead of the U.S. by 2-to-1 on per capita penetration, making Canada home of the Broadband Internet.
But not for long. Just as broadband was giving Internet players a first shot at sustainable transactional revenue, the warring cable and telco camps discovered they had a common enemy: their own customers. Trial balloons in the press blamed “bandwidth hogs” for eating up margins and spoiling the fun for everybody else. Apparently the lure of “unlimited” access was a pig in a high-speed poke.
The ISPs, as everyone now knows, are going to protect themselves and their more reasonable customers by raising prices, a move intended to “curb” those bandwidth hogs. If this meant a few dollars a month more for unmetered service, there’d be no story. Even the introduction of different service tiers, including a new lite service for newbies, isn’t that big a deal, since tiering is inevitable as a technology matures. Think cable TV, which tells us a lot about what the Web will look like once the transactional revenue model takes hold.
No, what’s making headlines is bit-capping, which is turning out to be as popular as knee-capping. It’s also a huge mistake. Consumer advocates and other critics point out the ISPs are breaking their promise on unlimited access. And the fact the major residential broadband providers come exclusively from the incumbent telco-cable duopoly makes the increases even harder to swallow.
Worse than it sounds
But it gets worse. Tiering and bit-capping aren’t part of a classic battle between subscribers and ISPs. This is ISPs working hard against their own interests – killing the golden goose that will make the Internet the paying transactional proposition it’s destined to become. Continue reading →
