"Did the FCC Just Bless a Capped, Two-Tier Internet?"

[jayfish]

http://arstechnica.com/tech-policy/news/2010/12/did-the-fcc-just-bless-a-capped-two-tier-internet.ars

You like the idea of Internet data caps and overage charges, right? And the prospect of paying your ISP separate fees for "the Internet" and for "managed" IP services like voice, video, VPN, telehealth, and smart grid applications, even when these directly compete with similar Internet-delivered services?

Okay, you probably don't—if you're a business or home Internet user. But if you're a major Internet provider, you love both of these ideas a lot... and you found support for both of them in Wednesday's "net neutrality preview" from the Federal Communications Commission.

"Broadband rationing"

When FCC Chair Julius Genachowski previewed his net neutrality proposal this week, he mentioned "usage-based pricing" and failed to mention "managed services." Neither item was accidental, and it didn't take long for interested observers to read the tea leaves.

Craig Moffett, an influential Wall Street tech analyst, said after the speech that "broadband rationing is now the order of the day" once Genachowski gave his support to the idea. It's something of a strange comment, since usage-based pricing has not been either regulated or illegal, and in fact data caps are now common even though many are high (such as Comcast's 250GB/month limit). Still, the FCC's endorsement of the idea should provide a bit of cover to wireline ISPs who want to try it.

Jesus Christ! I've had just about enough of capitalism. ...period! For some layman level discussion about this implications of this, check out the reader comments at the bottom of the page.

[MikeFoxtroters]

1. FCC is endorsing the tiered pricing?

I'm not happy about that. Speaking of capitalism. It's not so bad as long as the consumers stand up for themselves. For example, I'm with AT&T and got grandfathered in on the unlimited data. When my contract is up I will be leaving AT&T because they no longer provide unlimited data plans. If more people did that and let these companies know that policies like that will not fly then the companies will be forced to provide us consumers with what we want.

[jayfish]

2. Churn & monopolization.

"If more people did that and let these companies know that policies like that will not fly then the companies will be forced to provide us consumers with what we want."

Companies are now to big for that to work. They can afford to piss off a lot of customers because they know they will pick up sufficiant numbers to create a wash.

[Xithras]

3. And, thanks to the USSC, we won't have any alternatives this time.

Many of us around in the early 90's remember the bad old days. Back then, they simply limited the number of hours you could be connected to it. Now, they want to limit the amount of data you can move. It's just a new twist on a very old model.

Back in the early days of the Internet, I used to pay for about 50 hours a month of Internet usage. If I exceeded that, they charged me about a nickel a minute (and believe me, that could REALLY add up).

Usage based pricing didn't die because of regulation. It died because the big companies were suddenly confronted by thousands of smaller ISP's who offered unlimited access for the same price. It's was death by a thousand price cuts. Eventually the big guys were forced to go to an unlimited model as well, which eventually put the little guys out of business and left us with the market we have today.

Sadly, the USSC overturned part of the Telecommunications Act of 1996 in 2004...the part that required local telephone companies to make their networks available to competitors at wholesale prices. Unlimited pricing appeared because the Telecom Act created CLEC's, which brought competition to the market. Unlimited pricing will now vanish, and the law no longer requires competition to counteract it.

[onenote]

16. are you referring to TELRIC pricing?

Because the SCOTUS upheld the FCC's TELRIC pricing rules over the objections of the incumbent LECs in Verizon v. FCC.

[Edweird]

4. Now look for new smaller ISP's offering unlimited to pop up.

If they don't, I'll work on doing it myself.

[intheflow]

6. Although, per the article,

it may be hard to be competitive with the huge ISP's. They could easily pull a Walmart move, lowering prices to below profitability just long enough to run your small local business out of business. :(

But I'd get my wireless from you, if I could.

[jayfish]

9. Where are they/you going to get bandwidth from?

Whether wired or wireless you have to deal with last mile (wired) and/or backhaul (wireless)issues. A small provider rolling out their own last mile infrastructure is a non-starter. I don't even want to imagine the pricing games backhaul providers could play with small ISPs either.

[Xithras]

11. Much harder to do nowadays. Nearly impossible to do cheaper.

In the 1990's, it was exactly that kind of competition that brought about unlimited pricing in the first place. The problem is that there's only one set of cables running into your house. Back in 1996, the Telecom Act required that ILEC's (the big communication companies) open up their networks and make them available to third parties at wholesale prices. The result was an explosion in smaller ISP's that undercut the major carriers pricing. When you could get your telephone service or Internet access from ANYONE, it undermined the major players ability to dictate the terms of the market. Anyone who wanted to open an ISP could do so, and the local carriers had to open their networks to them at "nondiscriminatory" pricing. The FCC interpreted this as meaning that services had to be offered at cost, and that the unbundling requirement dictated that ALL telco services be made available to third parties.

In 2004, the USSC overturned those provisions in 'USTA v. FCC'. Few people noticed at the time because the big guys had already gone unlimited, and third party ISP's were already rapidly vanishing. It was a major ruling, but it was widely ignored because it only impacted a small portion of the public.

Telecom companies are now allowed to charge any "competitive" rate they choose, and the rates that exist today guarantee that no third party can undercut THEIR rates. More importantly, the USSC also ruled that the Telecom Act only applied to copper, and didn't cover fiber. That's a showstopper for a modern ISP. Not only will you be more expensive than the big guys, your service will be far slower too.

[intheflow]

5. K&R n/t

[L0oniX]

7. Another Obama failure. He said he would stand up for net neutrality.

[krabigirl]

10. Obama is a corporatist. Of course this is what he meant by "net neutrality."

[BzaDem]

8. You do not have a constitutional right to unlimited bandwidth. Charging people who use lots of data

is completely fine. I should not have to subsidize my neighbor who watches HD video online 24/7.

There are some other problems with the proposal (such as lax protections for wireless), but data overage charges are not one of them.

[jayfish]

13. That's not really the issue. Let me see if I can give a coherent example.

Lets say you buy and unlimited access plan from CableCo/ISP A for $50/mo. You love to watch Netflix over the internet, use Vonage for your phone communications and you use an online only banking service. Now CableCo/ISP A comes along and says "in order to watch video with your internet connection you have to pay us an additional $5/mo". "If you want to use your connection with a phone service you pay an additional $10/mo". To use a secure socket for online banking we need an additional $3/mo. "Oh, BTW, but if you use our streaming service phone services those additional fees are waived." It's not about the amount of traffic (important in its own right) it's about the service types used.

[TBF]

18. This is not about bandwidth, it's about control of the Internet. nt

[NashVegas]

12. If I Drive a Jetta and You Drive a Hummer, You Would Expect to Pay Higher Gas Bills

So why should this be different?

[jayfish]

14. See #13 -NT-

[Go2Peace]

15. They don't care about the bandwidth. *CONTROL* of it is the real money maker

Our society is so freaking naive. I can't believe people still don't understand that the most profitable market is the one where they control the resource or access to the resource. I can't believe anyone really believes that this is about bandwidth costs. If that were the case companies can simply create bandwidth tiers.

[NashVegas]

17. Oh, No , I Understand That Very Well

So do many of my friends with longstanding careers in the creative professions, who are losing their means of supporting themselves and their families, thanks to those seeking ego gratification and the social media-driven short-cuts of web 2.0.