I Don’t Buy It


On the verge of the announcement of iCloud, Lion, unicorns, iOS 5, and magic fairy dust, there’s an issue I wanted to dig into a little bit, something that the increasing use of cloud services is going to come into direct contact with: bandwidth.

I came across this article on TechCrunch and felt like I was in some sort of twilight zone. Here are a couple highlights:

The report encourages mobile networks to offer integrated rate plans, while “providing a wide range of segmented postpaid and postpaid tariffs”. It also puts stress on the potential for escalating revenues in the cloud, machine-to-machine, and mobile financial services where networks can leverage their existing assets

and

The cause of the impending crunch? The report indicates that the dire situation is caused by market saturation and falling average revenue per user, which is causing core revenues to flatline, while the cost of handling mobile data traffic is skyrocketing. As one might expect from the growing use of smartphones (Nielsen predicts there may be 100 million by the end of the year), cellular data traffic doubled in 2010. And it’s expected to increase thirteen-fold by 2015.

If you’re half as confused as I am, then you’re plenty confused. What is all this jibba jabba? The rhetoric pitched to us by data providers (I’m lumping everyone together here, not just the mobile providers) is that “Bandwidth is getting more expensive, guys! You’re using a lot of data, and that’s really expensive! I don’t buy it. The thing is, all these internet providers, whether they’re mobile or otherwise, have seen this coming for a long time. The writing was on the wall back when WAP was the only way to get up-to-the-minute weather and MOVIE TIMES IN YOUR AREA. All these carriers and ISPs knew that people were hungry for more information, and so they started developing new ways to deliver bits and bytes to people’s eyeballs. The problem is that, as the number of subscribers grow, they aren’t making as much per person because people are getting wiser. Coffee shops offering free wifi and libraries with computer access have become the de facto standard. Even grocery stores offer free wifi these days. As in, I walked into a local Jewel and was greeted with a giant sign telling me that the whole store was blanketed in sweet, sweet 802.11b/g. That’s fantastic! I got the same thing when I walked into Nordstrom’s. If offering internet access was so expensive, you can bet that these businesses wouldn’t be offering it for free to anyone who wants it. “Come in and get you some interwebs here” has become this decade’s “FREE TOASTER” promotion. The toasters, as we all know, were cheap. Dirt cheap. People felt like they were getting a good deal because, hey, free toaster. Who doesn’t like toast? I don’t know of anyone. Who doesn’t like free wifi? *crickets*

Then there’s this regarding a recent dig into internet pricing in Canada:

Assuming an inflated cost of 10 cents per gigabyte, it means that Bell, Shaw and Rogers are charging consumers between 10 and 50 times what it costs them to deliver data. This on top of their regular monthly Internet pricing! While I agree that heavy users should be prepared to pay more once they have reached their bandwidth caps, a fair price would be much closer to 10 cents per GB than the inflated $1-to-$5-per-gigabyte charge sanctioned by the CRTC.

followed by:

The argument that the exponential growth in Internet usage as the primary reason for higher prices is a seductive one. However, it ignores the fact that the technology that drives the Internet has become more powerful and much cheaper in the past decade.

So, exactly what I’ve been saying. Our infrastructure is evolving incredibly rapidly, and companies continue to use outdated arguments and backwards-facing data to justify rate hikes and consumer-hostile practices. Now, this isn’t a problem. I talked to a friend recently about mobile internet usage, and how my internet usage is astronomical each month. He couldn’t understand it. Read my previous post “The Cap’s the Limit” on one of the possible models for Apple’s “music locker” service, and you can see how this is incredibly consumer-hostile. Not on Apple’s part, mind you, on the carriers and ISPs. They’re the ones that see the future of media being cloud-centric, and they want to sink their teeth into more money, despite the fact that they’re already making plenty. Correction: they want more profit. Even so, I have a hard time believing that ISPs will be hurting from the profit angle.

At any rate, this is going to come to a head sooner than later, and I hope we have some strong government officials on our side to help us fight off the behemoth businesses that clearly see themselves as big enough to make whatever rules they want at the expense of the consumer.

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