Comcast, Time Warner: The Broadband Salad Bar

The Wall Street Journal reported yesterday (paid subscription required) on talks between Comcast (CMCSA) and BitTorrent, Inc. to make nice over Comcast's admitted blocking--excuse me, "delaying"--of bittorrent generated traffic.

At first glance it seems a rather ham-handed attempt to mollify Comcast critics. The WSJ and others are reporting it as a fairly straight up development, if something of a backpedal by Comcast. But these miss the point, I think, sidetracked by conspiratorial discussions of "net neutrality" and how the big bad telecablecos are angling to limit our choices, take over the world, and generally do evil.

Do I believe the big ISPs want to control content (or access to it) as well as the pipes? Absolutely. There's gold in them thar hills! None of them want to be limited to connectivity or bit delivery services. But will they succeed? Is the above fictional ad to be our broadband future? I doubt it. Anyway, it's beside the point.

There's another motive for ISPs to manage bandwidth on their networks--it's a finite resource. No, Virginia, there is no unlimited bandwidth. You can talk all you want about Moore's Law, etc. Bandwidth ought to be cheap. In a perfect world--or Asia--it is cheap. But not here, not without real competition.

The telecablecos have promised this always-on, flat-rate, high-speed internet access. It was a fiction created by the need for market share, and by consumer demand for a broadband salad bar. All-you-can-eat, with a fixed price. Sounds wonderful. But it could never have lasted since the infrastructure is largely shared and was built on the expectation that demand would be low (or at least intermittent).

Now the growth of video is stealing the condiments, and file sharers are sneezing in the salad.

There's no free lunch. So you do one of two things. Limit how many trips each patron can make for salad. Or charge them for each trip. Comcast has tried the former. My bet is on the latter.

You believe it's a fantasy? That no one will go for tiered or bit-based pricing? Think again--Time Warner (TWX) is already trialing it. And the more successful we are at regulating the ISPs to ensure net neutrality (in the absence of competition), the more likely it is we'll see pricing by the byte.

Comments

[grishick:]

Quite a conundrum. They are advertising more bandwidth and more speed but squeezing out anyone who dares to use it. Comcast's service became horrible in my home several months after I started telecommuting and using a lot of bandwidth. Ever since then, they keep coming up with fake reasons for why my service goes down every day :) When it looks like they are just dropping my modem from the line from time to time. Haven't had two days of continuous service in last two months, had 6 technician appointments two of which got quietly canceled by Comcast with no notice to me... but have no choice, since DSL offers only 1.5M here.

2008 Mar 28 01:24 PM

[Chancer:]

If Chinese ISP's are cheap, my question is can Americans sign up for cheaper foreign ISP's, as in global competition against U.S. near monopolies?

2008 Mar 28 02:49 PM

[Scott Berry:]

chush.net: The telecablecos have to be the only companies I've heard of that try to get you to use less of the thing they're selling. But that's what happens with a fixed price model.

chancer: Only if the Chinese have a wire (or radio) that reaches your house.

2008 Mar 28 03:06 PM

[martymefurst:]

I get a little tired of the Asia comparison. There are a hundred reasons that some places in Asia might have faster and cheaper broadband, and off the top of my head I'd say the main reason is that we had it first. Just as some people shelled out $5,000 for an HDTV set a few years ago when a better one can be bought at WalMart for $500 today, early adoption has a price tag. Legacy equipment that hasn't yet paid for itself is not going to be replaced unless it's broken. Another reason: regardless of the brand, where is the hardware made? (Hint: it's a four letter continent beginning with the letter A.) What about labor costs? Something you don't think of when watching a Youtube clip is how much work went into bringing you the experience and keeping it all reliable. Finally geography, and the economy of scale - there are rural people in Asia, sure, lots of them... but do they have access in the same way that people in Tokyo, Seoul, Bangkok, or Singapore are accustomed to having? Or at all? I doubt it. Meanwhile only a tiny percentage of Americans live outside of the reach of a cable TV system, giving a resident of Tupper Lake, NY the same experience and priceline as someone in Manhattan. I think Americans should be pretty grateful for what we have.

2008 Mar 28 06:05 PM

[bck136:]

The problem is that these companies have been overselling capacity for years, and now it's finally catching up with them. Instead of rolling out fiber in the 90s like the tax payers paid them to, they pocketed the money and offered us DSL and cable over the existing copper wires instead.

www.newnetworks.com/Sh...

Now that video on demand is taking off, at the same time as the BitTorrent protocol made P2P infinitely more efficient than it ever has been, their oversold capacity is becoming brutally obvious.

So what do they do? If you ask me, they have 2 choices here:

1) Do the job they were already paid to do, and lay out a publicly owned fiber to the home network, accessible to everyone and open to competition OR

2) Blame the mess on net neutrality, manipulate the public into believing it's bad for competition, and try to get it repealed. Once it's done and neutrality is dead, open the floodgates of Deep Packet Inspection and protocol filtering. Over saturation isn't an issue if you can simply block packets of data at will.

Clearly, the telecom industry is choosing option #2. I find it rather upsetting, though not at all surprising.

2008 Mar 29 04:23 PM

[bck136:]

I suppose a third option would be to simply stop promising speeds they can't effectively deliver, but we all know that won't work. All of a sudden lowering people's Internet connection speeds would make the age of our nation's communications infrastructure impossible to deny.

So, the communications companies look for scapegoats...

2008 Mar 29 04:33 PM

[Scott Berry:]

bck136: I don't think option 1 will ever happen; wall street won't let them backpedal at this point. I'm saying it's option 2 as you suggest, but that their net neutrality ploy will largely fail, leaving option 2a (tiered service). 2a is sort of a half-assed version of your option 3.

2008 Mar 30 07:49 AM