There are two paragraphs of exposition that lead this post. However, this post is not a long story, the remainder is my argument (which is long).
Wednesday morning I woke up to find my internet service was not working. I power cycled my devices and released/renewed a few times to no avail, and finally called Comcast. The representative gave me another number to call, apparently they can't transfer in-house. I called the other number and talked with another representative who explained to me that I had exceeded a certain monthly usage limit on my account, and that should I do it again, my service would be suspended for twelve months. There are no fees, no higher tier plans, simply "two strikes, you're out", the end. When pressed, the representative explained that it is a policy that I agreed to in the terms of service, and that there are tools available through their website to track my usage and make sure I don't exceed the 250gb limit again. I thanked him for informing me and promised to be a good boy from here on out so please turn my internet back on. He said, "sure thing". Four hours and three more phone calls to tech support and my internet was back online.
At the end of the experience, I was feeling a little uneasy. The whole ordeal seemed a bit? shady. Set aside for a moment the fact that they shut off my internet and waited for me to call before they informed me of what was going on. Perhaps they lost my phone number or e-mail address... being my e-mail provider and all. The amount of time needed to perform something as simple as restore my service was not too concerning, I've been with Comcast for over four years now, that was the shortest it has taken them to resolve any issue. No, my concern lies in the implications of this policy, and furthermore the pricing model that Comcast uses.
Looking at the pricing model of Comcast: the user pays for bandwidth. While all analogies to describe internet traffic fail at one point or another, the best is perhaps that of a pipe. Common users think of bandwidth as "speed"; how fast the information moves through the pipe (latency would probably be the analogous term here, but that is beside the point). Bandwidth is actually like the width of the pipe (the etymology of the word even hints at that); how much information is flowing at once. When you pay for a 10mb connection, you are essentially paying for a pipe that is 10mb "wide".
Comcast essentially leases width of their pipe. However, each customer shares the pipe with their entire neighborhood. One customer has full access to the 10mb/s they pay for, if no one else is on. Let's say Comcast has a 100 megabyte "pipe" to one location. If ten neighbors are on with 10mb plans, they will all theoretically have access to 10mb/s. As soon as an eleventh neighbor connects, everyone has less bandwidth available than what they pay for.
It doesn't matter if all eleven neighbors use an average of 5gb or 5,000gb each over the course of one month, they are all equally "diminishing the experience of other customers" at that moment simply by using the service that they pay for. If twenty neighbors are on, with plans from 5mb to 50mb, they all have only 5mb available each. This means that the users who pay for the 50mb service are receiving the exact same quality as the users who pay for the 5mb service. With more users on at once, everyone is receiving less bandwidth than they pay for.
One might argue, then, that a user who is always on is effectively shrinking the amount of pipe available to all the other users. However, if all users are paying for a certain width of pipe, isn't the onus on Comcast to make sure there's enough pipe for everyone?
This is where the comparison of the usage cap to a utility (like water), breaks down. Utilities don't charge for the size of the pipe to the house, how much flow is available, they charge for how much water is consumed. They make sure everyone has enough pipe, and charge for the water that is consumed. Comcast charges for the pipe (mb/sec), not how much data you use. Even then, you aren't guaranteed the pipe size you pay for. On top of that, Comcast has put a limit on the amount of data as well. So what does a Comcast customer pay for?
I would understand the argument for a usage cap as a cost recovery method if I could see it being used to recover cost. There is no fee for going over; there are no "higher usage" plans (I'll cover business class later). The user is warned the first time, and has service cut off for twelve months the second time. How is cost recovery, even doing business in general, supported by charging no fee and then terminating customers?
If Comcast isn't using their usage cap as a cost recovery method, the assumption I would make is that they are using it to throttle competition. If a user subscribes to Netflix instead of Comcast OnDemand, Hulu instead of Comcast Digital cable, or Skype instead of Comcast Digital Voice, Comcast can diminish usage of these services by threatening to cut off their users should they go over a certain limit. This is speculative, but it is what I believe to be the case.
As for Comcast business class, as some may point out is the alternative: yes, it is a higher cost service that provides unlimited usage. However, the extra cost is not just associated with that usage. Comcast business class provides other items such as VPN services, Microsoft Outlook Exchange, SharePoint, ActiveSync, and domain name and website hosting services. Unlimited usage is not a bullet point on their business class specs. Users who need more usage will end up paying for several high-value services on top of the simple feature they need. Also of note is that businesses don't typically subscribe to services such as Netflix, Hulu, Zune Marketplace, iTunes Marketplace, Steam, or Skype.
Furthermore, Comcast usually holds a monopoly in their areas of service. Rarely are there competitors from which a user could choose should they disagree with the usage limit policy. Even so, most of their competitors have similar usage cap policies.
My first issue is how Comcast, and all ISPs, currently price service; by bandwidth. Every user pays for a certain level of bandwidth, but rarely do they actually have full access to it. This doesn't seem like an appropriate pricing model.
My second issue is with the usage limit, as implemented, on top of such a pricing model. It is not implemented for cost recovery; there are no fees or higher tier plans available. It appears to be a means to undermine competition. Some companies have one-time fees for going over each month. This is a better application, but again, representative of a broken pricing model.
Comcast does have a valid concern for recovering cost from high-usage users. If a user is downloading 100s of gigabytes of information per month, they are putting some serious strain on a network which will require extra effort to maintain. Even though it is a valid concern, they seem to be going about it all wrong if cost recovery is their motivation.
I don?t like to gripe just to gripe (though I do sometimes), so as far as solutions; I would think that Comcast and its customers would be better served to switch to a usage model rather than a bandwidth model. If cost recovery is truly their goal, this would provide the most equitable means of gaining it. Higher usage users that put more strain on their infrastructure would pay more, lower usage users would pay less. A flat per gigabyte model wouldn't scale well, either; low users would pay next to nothing or high users would pay ridiculous amounts. A tiered model would probably work well; usage allowance levels like 25gb, 50gb 100gb 250gb 500gb, with overage rates at per X gigabytes.
Some might say that in this model the user isn't guaranteed any bandwidth. This is true, however, to go back to my example at the start, on the current bandwidth-based pricing models, they aren't anyway. In this model, the twenty people on sharing the aggregate bandwidth with access to only 5mb/sec each would still exist the same. In this model, however, none of them would be paying for 10mb/sec, 25mb/sec, or 50mb/sec plans while only receiving that 5mb/sec.
Every other utility or service charges per volume unit; water, garbage, electric, phones, cellular phones, etc.: I believe that internet service providers should follow suit.
In my conversation with "Comcast Customer Security Assurance", they are the only division of Comcast that deals with the usage policy, and they only enforce it. There is no entity a customer could appeal to or question about it.
I know there have been many discussions in the telecommunications industry and regulatory bodies about usage caps and "net neutrality", but has a discussion of the failings of the current pricing model ever occurred? Why does no one use a usage based pricing model?
I know some people believe that a usage based model would violate "net neutrality", but I don't think so. If it only applied to data from competitors, that would be the case. More data moved through the network means more work for the ISP to maintain that network. Much in the same way 18-wheelers have more expensive registration than consumer cars; it doesn't matter what the truck is carrying, it puts more wear on the road. Charging for the amount of water used doesn't infringe upon what it is used for. Charging shipping by weight isn't impacted by the nature of what you are shipping, but the effort needed to ship it.
My argument isn't about net neutrality. My argument is about a fair and reasonable pricing model to allow users access to the amount of data they want, while allowing the provider to recover the cost of transferring that data.
Maybe I will go into the broadband business myself with this model; would someone like to front me some capital and technical expertise in ISP administration? Maybe then I will learn why the pricing model is as it is.
Wednesday morning I woke up to find my internet service was not working. I power cycled my devices and released/renewed a few times to no avail, and finally called Comcast. The representative gave me another number to call, apparently they can't transfer in-house. I called the other number and talked with another representative who explained to me that I had exceeded a certain monthly usage limit on my account, and that should I do it again, my service would be suspended for twelve months. There are no fees, no higher tier plans, simply "two strikes, you're out", the end. When pressed, the representative explained that it is a policy that I agreed to in the terms of service, and that there are tools available through their website to track my usage and make sure I don't exceed the 250gb limit again. I thanked him for informing me and promised to be a good boy from here on out so please turn my internet back on. He said, "sure thing". Four hours and three more phone calls to tech support and my internet was back online.
At the end of the experience, I was feeling a little uneasy. The whole ordeal seemed a bit? shady. Set aside for a moment the fact that they shut off my internet and waited for me to call before they informed me of what was going on. Perhaps they lost my phone number or e-mail address... being my e-mail provider and all. The amount of time needed to perform something as simple as restore my service was not too concerning, I've been with Comcast for over four years now, that was the shortest it has taken them to resolve any issue. No, my concern lies in the implications of this policy, and furthermore the pricing model that Comcast uses.
Looking at the pricing model of Comcast: the user pays for bandwidth. While all analogies to describe internet traffic fail at one point or another, the best is perhaps that of a pipe. Common users think of bandwidth as "speed"; how fast the information moves through the pipe (latency would probably be the analogous term here, but that is beside the point). Bandwidth is actually like the width of the pipe (the etymology of the word even hints at that); how much information is flowing at once. When you pay for a 10mb connection, you are essentially paying for a pipe that is 10mb "wide".
Comcast essentially leases width of their pipe. However, each customer shares the pipe with their entire neighborhood. One customer has full access to the 10mb/s they pay for, if no one else is on. Let's say Comcast has a 100 megabyte "pipe" to one location. If ten neighbors are on with 10mb plans, they will all theoretically have access to 10mb/s. As soon as an eleventh neighbor connects, everyone has less bandwidth available than what they pay for.
It doesn't matter if all eleven neighbors use an average of 5gb or 5,000gb each over the course of one month, they are all equally "diminishing the experience of other customers" at that moment simply by using the service that they pay for. If twenty neighbors are on, with plans from 5mb to 50mb, they all have only 5mb available each. This means that the users who pay for the 50mb service are receiving the exact same quality as the users who pay for the 5mb service. With more users on at once, everyone is receiving less bandwidth than they pay for.
One might argue, then, that a user who is always on is effectively shrinking the amount of pipe available to all the other users. However, if all users are paying for a certain width of pipe, isn't the onus on Comcast to make sure there's enough pipe for everyone?
This is where the comparison of the usage cap to a utility (like water), breaks down. Utilities don't charge for the size of the pipe to the house, how much flow is available, they charge for how much water is consumed. They make sure everyone has enough pipe, and charge for the water that is consumed. Comcast charges for the pipe (mb/sec), not how much data you use. Even then, you aren't guaranteed the pipe size you pay for. On top of that, Comcast has put a limit on the amount of data as well. So what does a Comcast customer pay for?
I would understand the argument for a usage cap as a cost recovery method if I could see it being used to recover cost. There is no fee for going over; there are no "higher usage" plans (I'll cover business class later). The user is warned the first time, and has service cut off for twelve months the second time. How is cost recovery, even doing business in general, supported by charging no fee and then terminating customers?
If Comcast isn't using their usage cap as a cost recovery method, the assumption I would make is that they are using it to throttle competition. If a user subscribes to Netflix instead of Comcast OnDemand, Hulu instead of Comcast Digital cable, or Skype instead of Comcast Digital Voice, Comcast can diminish usage of these services by threatening to cut off their users should they go over a certain limit. This is speculative, but it is what I believe to be the case.
As for Comcast business class, as some may point out is the alternative: yes, it is a higher cost service that provides unlimited usage. However, the extra cost is not just associated with that usage. Comcast business class provides other items such as VPN services, Microsoft Outlook Exchange, SharePoint, ActiveSync, and domain name and website hosting services. Unlimited usage is not a bullet point on their business class specs. Users who need more usage will end up paying for several high-value services on top of the simple feature they need. Also of note is that businesses don't typically subscribe to services such as Netflix, Hulu, Zune Marketplace, iTunes Marketplace, Steam, or Skype.
Furthermore, Comcast usually holds a monopoly in their areas of service. Rarely are there competitors from which a user could choose should they disagree with the usage limit policy. Even so, most of their competitors have similar usage cap policies.
My first issue is how Comcast, and all ISPs, currently price service; by bandwidth. Every user pays for a certain level of bandwidth, but rarely do they actually have full access to it. This doesn't seem like an appropriate pricing model.
My second issue is with the usage limit, as implemented, on top of such a pricing model. It is not implemented for cost recovery; there are no fees or higher tier plans available. It appears to be a means to undermine competition. Some companies have one-time fees for going over each month. This is a better application, but again, representative of a broken pricing model.
Comcast does have a valid concern for recovering cost from high-usage users. If a user is downloading 100s of gigabytes of information per month, they are putting some serious strain on a network which will require extra effort to maintain. Even though it is a valid concern, they seem to be going about it all wrong if cost recovery is their motivation.
I don?t like to gripe just to gripe (though I do sometimes), so as far as solutions; I would think that Comcast and its customers would be better served to switch to a usage model rather than a bandwidth model. If cost recovery is truly their goal, this would provide the most equitable means of gaining it. Higher usage users that put more strain on their infrastructure would pay more, lower usage users would pay less. A flat per gigabyte model wouldn't scale well, either; low users would pay next to nothing or high users would pay ridiculous amounts. A tiered model would probably work well; usage allowance levels like 25gb, 50gb 100gb 250gb 500gb, with overage rates at per X gigabytes.
Some might say that in this model the user isn't guaranteed any bandwidth. This is true, however, to go back to my example at the start, on the current bandwidth-based pricing models, they aren't anyway. In this model, the twenty people on sharing the aggregate bandwidth with access to only 5mb/sec each would still exist the same. In this model, however, none of them would be paying for 10mb/sec, 25mb/sec, or 50mb/sec plans while only receiving that 5mb/sec.
Every other utility or service charges per volume unit; water, garbage, electric, phones, cellular phones, etc.: I believe that internet service providers should follow suit.
In my conversation with "Comcast Customer Security Assurance", they are the only division of Comcast that deals with the usage policy, and they only enforce it. There is no entity a customer could appeal to or question about it.
I know there have been many discussions in the telecommunications industry and regulatory bodies about usage caps and "net neutrality", but has a discussion of the failings of the current pricing model ever occurred? Why does no one use a usage based pricing model?
I know some people believe that a usage based model would violate "net neutrality", but I don't think so. If it only applied to data from competitors, that would be the case. More data moved through the network means more work for the ISP to maintain that network. Much in the same way 18-wheelers have more expensive registration than consumer cars; it doesn't matter what the truck is carrying, it puts more wear on the road. Charging for the amount of water used doesn't infringe upon what it is used for. Charging shipping by weight isn't impacted by the nature of what you are shipping, but the effort needed to ship it.
My argument isn't about net neutrality. My argument is about a fair and reasonable pricing model to allow users access to the amount of data they want, while allowing the provider to recover the cost of transferring that data.
Maybe I will go into the broadband business myself with this model; would someone like to front me some capital and technical expertise in ISP administration? Maybe then I will learn why the pricing model is as it is.