Why are incumbents so afraid of being truthful? (part 2)

How fast is your broadband?

Six reasons North Americans are going to stay trapped in connectivity hell

#1 – Rates. Retail rates for broadband, wireless and cable-TV aren’t regulated. How about some form of re-regulation of wholesale and/or retail rates? Any such initiatives would land the CRTC in a never-ending morass of appeals to Cabinet or the Federal Court, or both. Too bad incumbents aren’t nearly as good at their day jobs – providing retail communication services – as they are at litigation.

#2 – Competition. Competition is almost non-existent – except the inter-modal competition between the duopoly from hell, the telcos and cablecos. Now even that bad thing is going to get worse. Thanks to its industry-wide DOCSIS 3.0 platform, cable providers are becoming the leading providers of ultra-high-speed connectivity – i.e. in the range of 50 to 100 Mbps. I remember way back in 1998-99, cable led the telcos in penetration, briefly, by a margin of nearly 10 to 1, in both Canada and the US. Now that xDSL is running its course, and FTTx is way more expensive than cable upgrades, Rogers and Comcast may soon start looking like the territorial monopolies they were in the good old days.

#3 – Common carriage. The once powerful concept of the common carrier has vanished. Now “carriers” can be in the content business, no matter how egregious the conflicts of interest (and reclassifying cable modem service in the US as Title II instead of as an information service isn’t going to bring back a meaningful content-carriage distinction). Does this mean carriers will attempt to get away with undue preference? Does all power tend to corrupt? Imagine if Toronto cab drivers started turning down fares from, say, visible minorities. Or white folks. Or anybody. There’d be a shitstorm.

#4 – Contracts. Service agreements with providers are one-way. Once you sign, you generally owe the sum total of fees for the life of the contract. Your ISP, meanwhile, can change agreements at will, without notice. Note to self: Try to figure out who I have to be to write contracts which I can change and you can’t.

#5 – Truth. Service providers are not held to any reasonable standard of truth in advertising. That may change in the US, because the Americans have an agency whose job is to look after consumers – the Federal Trade Commission. Another note to self: Try to figure out what exactly Industry Canada does to protect us from statements like: the Turbo Stick will run “anywhere” – except in the many, many places where it won’t.

#6 – Technophobia. The telecomm and cable businesses are horrendously complicated, in both their technologies and how they’re regulated. Incumbents sell services whose functionality and performance are mystifying. Ask anyone – except maybe an electrical engineer – what “speeds of up to 21 Mbps” means. In fact, ask your friend or neighbor what “21 Megabits per second” means. You’ll find they have no idea. Nor any idea what bandwidth is, or uplink, or DSL, or ISP, or bytes. The incumbents have a huge advantage over 99.99% of their customers: ignorance. And they play that card beautifully.

Your mileage will vary – a lot.

Others see a big problem here. On Wednesday The New York Times published an opinion piece entitled “How fast is your broadband?” They argue that broadband has become too important to too many of us to let the ISPs keep getting away with their weak commitment to the truth:

“There are many ways for marketing professionals to bamboozle customers into believing they are getting a better deal than they actually are — notable among them “as low as” pricing come-ons and offers that promise to deliver “up to” some standard of service.”

Naturally the folks who do the bamboozling beg to differ. They have two strategies. One is to make truth in advertising seem too tough to deliver. Alternatively, when confronted by data that makes them look like lying, cheating bastards, they pull out that perennial favorite, flaws in the research:

“Broadband providers argue that their dazzling promises of “up to” speeds are not a gimmick. The National Cable and Telecommunications Association, a lobby group, is protesting a Federal Communications Commission report that says the typical speeds experienced by American consumers are less than half the “up to” speed advertised.

“In a report last month, the F.C.C. reprinted the results of a study by comScore that found that the typical download speed into American homes is only 3.1 megabits per second, less than half the median advertised rate of “up to” 7 Mbps. The cable association says comScore used flawed methods. It argues that the slow downloads are because of factors beyond providers’ reach — from the traffic on the Internet and the distance a download must travel, to the speed of a user’s home network or computer.”

Is that the best the NCTA can come up with?

Think about cars for a minute, as The Times suggests. North Americans drive thousands of different makes and models, on thousands of different roads, in all kinds of weather, in a million different ways. None of which prevented some clever engineers from devising a way of calculating average fuel economy for all those vehicles. Imagine if Ford started selling next year’s models by claiming that they get “up to” three times as many miles per gallon as the competition.

10 minutes and a bill for $3,000

When I went looking around the Web for some information about the Turbo Stick, I discovered that Bell has high charges for roaming with the Stick outside Canada (we’ll stick to the US here). The weird thing is that on one of its Web pages it says the charge is $3/MB – while on another the charge is twice that, $6/MB.

What are meaningful price points to compare this with? Well, if you stay in Canada and you’re on any of the Stick plans, usage over the maximum allowed is charged at 5 cents per MB – meaning data roaming in the US is 120 times more expensive than data roaming in Canada.

Let’s say you’re on the $45 plan, which allows you from 500 MB to 1 GB of data. Bell says: “When you travel in the U.S., your rate plan’s included data will not be used. Instead, there are special roaming rates, depending on your device.” And let’s say you step across the 49th parallel. Then your 500 megs would theoretically set you back… $3,000.

How much is 500 megs? An average feature film in .avi format is 700 megs. If like me you prefer saving photos in tiff or png, instead of as highly compressed jpeg’s, then a pic from a good digital SLR will easily run 2 megs. In other words, if you sent or received 50 such photos they would cost you a cool $600.

Now, how long would it take you to run up a bill of $3,000? A 21-Mbit/s device, running at a fraction of its rated speed, should easily get throughput of 1 MB/s. So in one minute you could download about 60 megs of data. Meaning you could reach 500 megs in 8 or 10 minutes. I can’t think of a lot of things you can do for 10 minutes and then get a bill for $3,000.

And that my friends is where the shit hits the fan. You can’t deploy broadband networks running at HSPA speeds and charge for data like we’re all still on dialup.

How much for 140,000 terabytes, please?

In a story from the Financial Times, Benton’s Communications-related Headlines reported on March 24 that data traffic has exceeded the volume of voice calls across the world’s wireless networks for the first time. The crossover occurred in December when 140,000 terabytes of data content was handled by mobile carriers, according to Ericsson, the world’s largest network equipment vendor.

The FT says this crossover has highlighted “the challenge facing mobile phone operators as they struggle to adapt to surging demand for mobile Internet services.” Next time, the FT folks should ask Bell, TELUS and Rogers how the data traffic struggle is going in Canada.

D.E.