ISPs: Reclassify Us as Utilities and The Sky Will Fall

[dmcowen674]

5-13-2014

http://www.dslreports.com/shownews/ISPs-Reclassify-Us-as-Utilities-and-The-Sky-Will-Fall-128941

ISPs: Reclassify Us as Utilities and The Sky Will Fall

by Karl Bode 12:10PM Tuesday May 13 2014

One of the most common myths in the broadband industry (well, many industries) is that if you just stop regulating providers and let them do whatever they'd like, network investment will explode and we'll all be living in a Utopia of ultra-fast, inexpensive connections in no time. Of course time after time after time we're shown this isn't true, as shortly after deregulating a company like AT&T users wind up getting socked with higher rates and worse service than ever.

History and fact repeatedly isn't on the side of the "less regulation means greater network investment" argument, yet this doesn't stop carriers (and their massive armies of assorted paid mouthpieces) from using it every time they want government to do (or not do) something.

Industry CEOs today all got together and penned a very similar letter to the FCC insisting that a tough regulator with the authority to prevent anti-competitive abuses would somehow eliminate this spike in network investment -- that isn't actually happening.

Except, once again, if you actually bother to look you'd note that despite the industry being increasingly and dramatically deregulated over the last decade, network investment is actually dropping as the increasingly unregulated (or regulator-for-hire driven) markets get less competitive by design

AT&T and Verizon (also historically deregulated and in the midst of a massive new and successful deregulatory push) have frozen next-gen broadband expansion (despite some bunk promises about 1 Gbps). In fact, they're hanging up on tens of millions of DSL users they don't want to upgrade, making things even less competitive for cable across more than half of the country.

 

[dmcowen674]

Karl has been speaking the truth since the early days of DSL and a thorn in the side of the Corporate supporters like I am in here.

 

[realibrad]

Show me where actual deregulation happened and where it made things worse.

I would be the only examples you come up with are ones where it was not deregulation, but different regulation that was aimed at helping a very select few.

I'm from CA, and they never deregulated power, just changed the regulation that benefited a select few to make money.

Just because its called deregulation, does not make it deregulation.

 

[senseamp]

They should be classified as utilities. That's all they are and should be, common carriers.
But it's fun to watch the FCC chairman and former (and probably future) cable industry lobbyist twist in the wind on net neutrality, because he doesn't want to do the obvious and the people are not accepting what he's peddling.

 

[realibrad]

They should be classified as utilities. That's all they are and should be, common carriers.
But it's fun to watch the FCC chairman and former (and probably future) cable industry lobbyist twist in the wind on net neutrality, because he doesn't want to do the obvious and the people are not accepting what he's peddling.

For the love of god don't make them utilities. Making things utilities seems like a good idea, until the lack of a feed back loop raises the price of things and causes the whole thing to be ruined.

look up our aging power grid...

 

[sunzt]

Turning ISPs into utilities will change the whole cost model from pay-by-speed to pay-by-use (data tiers ala cell carriers). I prefer people who use data intense services (video and large downloading) to pay for them themselves, and not expect me to subsidize it for them.

 

[QuantumPion]

For the love of god don't make them utilities. Making things utilities seems like a good idea, until the lack of a feed back loop raises the price of things and causes the whole thing to be ruined.

look up our aging power grid...

The issue with the power grid is that when regulated power companies ask the government to allow a rate increase to pay for transmission improvements, they say no because they don't want the political backlash of making their constituents pay more money. As long as their lights are on, no one cares.

I'm not saying making ISP's utilities is a good idea, but I don't think this would necessarily happen. When everyone's internet is slow, they will complain and demand network improvements just like if their lights were flickering in their homes.

 

[senseamp]

Turning ISPs into utilities will change the whole cost model from pay-by-speed to pay-by-use (data tiers ala cell carriers). I prefer people who use data intense services (video and large downloading) to pay for them themselves, and not expect me to subsidize it for them.

Being utility doesn't prevent them from charging more for more usage. That's how electrical utilities work. It would prevent them from charging more for Youtube or Netflix video stream over Comcast's own video stream that has same amount of data.
Ultimately, they are a common carrier. When you sign up for Comcast internet access, you are signing up for access to the whole internet, not to browse comcast.net

 

[fleshconsumed]

Turning ISPs into utilities will change the whole cost model from pay-by-speed to pay-by-use (data tiers ala cell carriers). I prefer people who use data intense services (video and large downloading) to pay for them themselves, and not expect me to subsidize it for them.

They do pay more. The faster speeds they get, the more they pay.

 

[Newell Steamer]

The exec wouldn't be able to gorge on the profits any more - of course they are crying about this.

 

[sunzt]

They do pay more. The faster speeds they get, the more they pay.

You don't need 50 Mbps to go through 500+ gigs of data per month. You can easily do that on 10 Mbps or less. It's data usage that will matter and its the concern brought on by growth in video and audio streaming services, and downloadable software. Let these people who watch Hulu/Netflix, etc 24/7 pay for the data themselves.

 

[sunzt]

Being utility doesn't prevent them from charging more for more usage. That's how electrical utilities work. It would prevent them from charging more for Youtube or Netflix video stream over Comcast's own video stream that has same amount of data.
Ultimately, they are a common carrier. When you sign up for Comcast internet access, you are signing up for access to the whole internet, not to browse comcast.net

It wouldn't prevent, but it would give them less reason to just go to that model. If everyone's usage goes up by 100% or more in the next few years and infrastructure doesn't keep up then the ISPs may go pay per use anyway, but it's unknown at this point and may not be as expensive as forcing them to be monopolies.

We are just seeing Netflix right now doing these agreements. I'm not convinced this will be a huge issue if left untouched. Lets wait and see how the ISPs respond.

 

[fskimospy]

It wouldn't prevent, but it would give them less reason to just go to that model. If everyone's usage goes up by 100% or more in the next few years and infrastructure doesn't keep up then the ISPs may go pay per use anyway, but it's unknown at this point and may not be as expensive as forcing them to be monopolies.

We are just seeing Netflix right now doing these agreements. I'm not convinced this will be a huge issue if left untouched. Lets wait and see how the ISPs respond.

The ISPs are already screwing their customers:

http://blog.level3.com/global-connectivity/observations-internet-middleman/

 

[Genx87]

The ISPs are already screwing their customers:

http://blog.level3.com/global-connectivity/observations-internet-middleman/

Sounds about right. These local monopolies have been a detriment to the consumer experience. The question is how do we move past them over the next few decades? Most localities have long term franchise rights.

 

[fleshconsumed]

You don't need 50 Mbps to go through 500+ gigs of data per month. You can easily do that on 10 Mbps or less. It's data usage that will matter and its the concern brought on by growth in video and audio streaming services, and downloadable software. Let these people who watch Hulu/Netflix, etc 24/7 pay for the data themselves.

Except for two things.

One, 10Mbps is barely enough to stream Hulu/Netflix in HD. Sure, you can stream 1 stream, but two are going to be a stretch, any hiccup in the line quality or someone downloading a big email attachment will overload that 10Mbps line and netflix will stutter. From what I read a single Netflix 4K stream will require 17Mbps, that's not including what other household members might be doing. Those who use more data subscribe to higher packages already because lower packages do not provide enough throughput when everybody starts using internet in the evening.

And two, when it comes to cost, there is delivery/traffic cost and there is last mile/infrastructure cost. The last mile/infrastructure cost is fixed no matter how much data you consume and it dwarfs the data delivery cost. So even if someone downloads 10 times as much data as you, that person only costs couple of dollars more to the ISP to keep as a customer as opposed to you. As an example say it costs ISP $30 a month to put the last mile/infrastructure in per customer, and then another 5 cents to deliver 1GB of data. So a grandmother consuming 50GB will cost company $32.5, and a "data hog" downloading 300GB will cost $45. Is there a difference? Yes, there is but it's not 6-fold as one would assume given their data usage.

The whole pay per byte model is not about fairness or subsidizing anyone, it's about abusing the power of monopoly to milk captive customers who can't go anywhere else.

 

[sunzt]

Except for two things.

One, 10Mbps is barely enough to stream Hulu/Netflix in HD. Sure, you can stream 1 stream, but two are going to be a stretch, any hiccup in the line quality or someone downloading a big email attachment will overload that 10Mbps line and netflix will stutter. From what I read a single Netflix 4K stream will require 17Mbps, that's not including what other household members might be doing. Those who use more data subscribe to higher packages already because lower packages do not provide enough throughput when everybody starts using internet in the evening.

And two, when it comes to cost, there is delivery/traffic cost and there is last mile/infrastructure cost. The last mile/infrastructure cost is fixed no matter how much data you consume and it dwarfs the data delivery cost. So even if someone downloads 10 times as much data as you, that person only costs couple of dollars more to the ISP to keep as a customer as opposed to you. As an example say it costs ISP $30 a month to put the last mile/infrastructure in per customer, and then another 5 cents to deliver 1GB of data. So a grandmother consuming 50GB will cost company $32.5, and a "data hog" downloading 300GB will cost $45. Is there a difference? Yes, there is but it's not 6-fold as one would assume given their data usage.

The whole pay per byte model is not about fairness or subsidizing anyone, it's about abusing the power of monopoly to milk captive customers who can't go anywhere else.

I'm not advocating a pay-per-use model, i'm saying that turning them into utilities will lead to pay-per-use model in order for them to maintain margins.

I am saying that if Netflix is responsible for a high percentage (80%) of monthly data usage then let the ISPs work with Netflix to ensure their service, which may mean higher prices for Netflix subscribers. However, if i'm not a Netflix subscriber then don't charge me more cause Netflix is using so much data.

 

[zephyrprime]

Show me where actual deregulation happened and where it made things worse.

Banks and financial crisis. Electricity and enron.

 

[zephyrprime]

I think they are just like utilities. They provide a basic service and they are basically monopolies since there are never more than 2 reasonable choices for most people (cable and dsl). If they start charging on a metered basis, that's a good thing. It should lead to more efficient utilization. Look at traffic congestion if you want to see what inefficiency a uniform pricing model brings you.

 

[NoStateofMind]

The problem lies with the legal monopolies, not 'deregulation'. Allowing companies to compete will reduce costs for the consumer and increase speeds by way of competition.

 

[piasabird]

So does that mean I will getter better cell phone charges if I don't make that many calls. How did that work out for parents of teenagers? What about people that run game servers off of their home internet service or download databases from work? I think the real issue is these companies sold a bill of goods for "Up to 50 times faster than dialup", however they could not even deliver 10 times faster than DIAL-UP! They failed to be able to cope with success. "Up to 50 times Faster", also means up to 50 times the speed and 50 times the DATA, non-stop. This is called false advertising.

Instead of taking the blame when the customers do not get what was promised, they want to pass the buck back to the customer for their unrealistic claims. It is not so much that they lied but they promised more than what was even possible to deliver. Not only did they brake their word, they also purposely choked off the bandwidth during peak times and lied about what they were doing or purposely did not disclose this part of their business tactic. If there is not enough capacity in the network then the FCC should put them out of business for breach of contract.

 

[realibrad]

Banks and financial crisis. Electricity and enron.

I figured that would be the 2 examples someone would pick up on.

Ill start with Enron and electricity, because its easier.

Only wholesale power prices were deregulated, and not retail prices. Because retail prices were kept artificially low, people used too much power. Had prices been allowed to move, it would have caused a drop in usage, and no more outages. So, like I said, what you actually saw was "deregulation" in 1 small area aimed at making a few rich. It was a few companies using government to make themselves richer.

Now, onto banking. This one is very complicated, but the main causes are easier to explain.

We have had banking issues in the recent past. One was called Savings and Loan Crisis. http://en.wikipedia.org/wiki/Savings_and_loan_crisis

If you look through it, you will seem something very familiar. Banks over leveraged themselves with long term investments. The question was why would they do this? Was it deregulation?

The banks knew then what they know now, and that is they were too big to fail. Banks knew that if they got into trouble, they would be bailed out. How did they know this? Well, all you have to do is look back and see where the government had done it before.

See, when you tell someone the can do what every they want, but they run the risk of hurting themselves, they tend to not go too crazy. Some do, but most wont. If you tell someone to not be too crazy, and then show them all the ways you will try and save them, they lose fear and take the risk.

There is far more to it, but in both examples, neither was caused by deregulation, but other incentives that meant risk was taken out. Deregulation works when there is risk.

 

[dank69]

The problem lies with the legal monopolies, not 'deregulation'. Allowing companies to compete will reduce costs for the consumer and increase speeds by way of competition.

Right, if the gov just got out of the way these monopolies wouldn't exist.

 

[dank69]

I figured that would be the 2 examples someone would pick up on.

Ill start with Enron and electricity, because its easier.

Only wholesale power prices were deregulated, and not retail prices. Because retail prices were kept artificially low, people used too much power. Had prices been allowed to move, it would have caused a drop in usage, and no more outages. So, like I said, what you actually saw was "deregulation" in 1 small area aimed at making a few rich. It was a few companies using government to make themselves richer.

...

Right, a little deregulation was bad, more deregulation would have been good.

 

[Genx87]

Right, if the gov just got out of the way these monopolies wouldn't exist.

As of right now these monopolies exist because of govt.

 

[CitizenKain]

I'm not advocating a pay-per-use model, i'm saying that turning them into utilities will lead to pay-per-use model in order for them to maintain margins.

I am saying that if Netflix is responsible for a high percentage (80%) of monthly data usage then let the ISPs work with Netflix to ensure their service, which may mean higher prices for Netflix subscribers. However, if i'm not a Netflix subscriber then don't charge me more cause Netflix is using so much data.

Netflix isn't using so much data, its users who want the data that Netflix provides.