The basic premise for justifying caps as a solution by Tobold, Jack and the Service Providers is that a small number of users consume the most internet bandwidth. In the various articles on this topic, the numbers floating around have ranged from 5% of users consuming 50% of bandwidth, to 10% consuming as much as 75%.
This type of reasoning is intended to misdirect our attention away from the fact that far more than 5% or 10% of the users will be impacted by a usage cap. You will note that at no point do they say that x% of our users use more than 40GB (the proposed cap by Time Warner). This is called a fallacy of composition because it infers that the only people to pay more under the new plan are the 10% of users who consume the most bandwidth.
However, the reality is that if Service Providers want to simply maintain current revenue levels, they need to get more money out of ALL of their Internet subscribers. Why? Because much of their current business model is failing.
Consider that in the US, all our service providers derive revenue from three areas:
- Cable TV
- Phone service
Cable TV is about control. They selectively choose which channels to offer you for various plans and charge you dramatically for premium services. Moreover, the Cable companies also receive significant Advertising revenue that is based on the number of Cable subscribers. What happens to that Advertising revenue when all the Cable subscribers turn to Online alternatives that offer a wider selection of content? It doesn’t disappear, it simply starts going to online advertising giants like Google instead. The thing that drives the Cable and Telecom giants nuts is that they can’t control that content any longer. A perfect scenario for them would be something like your cell phone network where they have complete control over what you can and can’t access through your cellular phone.
An $x per GB system allows them to start setting the groundwork for a payment plan that favors them in this new Internet age. My issue is that it is not about them offering more service, but about them being able to make the same profit in a changing market place. The market forces at play are destroying their business and rather than adapt, they want to use their regional monopolies to exercise control over it.
That being said... the article by Jack Schofield in the Guardian does raise three good points worth addressing:
- Digging up thousands of roads is expensive and takes a very long time.
- The whole idea that Internet companies need to charge more for services as more people use the Internet is related to this idea that it’s expensive. And while I agree with that sentiment to a point, I also know that our government (federal, state and local) have heavily subsidized the deployment of these networks. In many ways, we are already paying for these improvements in the form of sales, income and property taxes. In addition, more users means more subscribers which means more revenue. I don’t want to pay for the “losses” that are incurred by Telecom and Cable in other areas of their business which are in decline.
- If you provide more bandwidth, people consume more bandwidth faster. If they can download a 2GB movie in five minutes instead of 50 hours, more people will download more movies.
- True – but only to a point. One family can only download and watch so much content. Popular content can also be “cached” by providers to ease up on the overall burden on the network.
- The over-exploitation of shared resources, which can lead to the resources' usefulness being destroyed.
- This last point is an area in which we should be concerned. However, any solution should be addressed at the 5% (or 10%) that are actually causing the problem rather than the entire community. As Jack suggests, technology restraints designed to limit the effectiveness of Bit Torrent sharing would be an alternative that would meet a lot less resistance and be focused at the actual offenders.