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
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.
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.
There was a recent incident over the border with our friends in the north regarding internet usage and the billing thereof. Those silly Canucks thought it would be appropriate to put ridiculous data caps (50 GB? seriously?) in place to make sure their customers were doing anything cRaZy, like using the internet they paid for. No, silly person! You can’t watch streaming video on the internet or rent movies from online providers! That’s silly! You need to drive out to a video rental store and take home a physical disc so you can watch it in your deeveedee player. What’s that you say? All the video stores are shutting down because all of these super awesome streaming movie companies are putting them out of business? Pish posh. Less talking, more driving to video stores. They don’t have what you want? Just rent something anyway. Rent it. Just shut up and rent something.
Before I get too carried away, this is what I’m referring to:
Canadian cable provider Shaw hit back at mounting complaints of restrictive bandwidth caps by unveiling a new set of Internet plans with much looser caps and increased speeds.
The whole thing is ridiculous, and honestly degrading to consumers in general. There is no need to be imposing these types of restrictions on the average consumer. If there’s a problem with a few users eating up hundreds upon hundreds of gigs of data each month, then address the issue with them. Otherwise, putting data caps in place, even large ones, as listed below, is asinine.
Starting June 7, capped plans will start with at least 400GB of data per month at 50Mbps down, 3Mbps up at $59 per month for those with a Legacy TV package, moving up to 100Mbps down, 5Mbps up and 750GB of data for $79 per month.
A second phase in August will add a 250Mbps download, 15Mbps upload plan with a 1TB cap for $99.Both phases will have genuine unlimited plans. In the first phase, a 100/5 unlimited plan will be available for $119 on top of the TV plan. From August onwards, this plan will be replaced by a 250/15 version for the same price. Existing 1Mbps, 7.5Mbps, and 25Mbps plans are getting an immediate boost from 15GB, 60GB, and 100GB caps to 30GB, 125GB, and 250GB respectively.
It sounds all fine and good, right? To be honest, I don’t think I’ve ever hit anywhere near that amount of data in all the time I’ve been using the internet, so I’m not complaining about the size of those limits, I’m complaining about the idea that caps need to be instituted on a large-scale basis. It’s condescending and hostile towards consumers. The article then taps into the ongoing discussion going on in the United States right now:
Internet providers in North America have regularly tried to claim that the rapid growth in online video has raised the costs of maintaining their networks and that they allegedly need to institute low caps to keep these costs check. Critics, including smaller providers and advocacy groups, have shown evidence the claims are often false since the cost of bandwidth has often gone down. They have at times accused companies like Bell and Rogers of using low caps to either delay network upgrades or to discourage competition from nimbler rivals to traditional TV, such as iTunes and Netflix.
The fact of the matter is, Internet usage is increasing, and telecommunications companies are shaking in their boots because their fat paychecks are going to start dwindling. I’m all for making money, but not when it comes at the expense of customer satisfaction. The trend here is, as I said before, hostile. No company should treat its customers like they’re harming its business. Your customers are the reason that you’re here to begin with, and don’t you dare try to justify your actions by pointing the finger at innovation and progress.