This is a situation where additional regulation will only help those adept at manipulating the regulators. (Additional comments inline)
On 11/1/2005 10:10 PM, Tom DeReggi created: > The truth is services like VOIP and IPTV are going to challenge end > user's connections, and they are going to learn what over subscription. > And end users are going to kick and scream about how their service > provider is ripping them off, and service is poor because the video is > choppy, while they are using their 3 mbps link that they are paying $30 > a month to. In most cases their service provider lured them in with the hype of an "Unlimited use" 3Mbps connection and then told them that they can't use all of it[1]. Where else in life are we handed something and then told that we can't use it[2]? If we could prevent the providers from misleading their potential customers this problem would fade away. All of my access plans are charged for usage in some way. Most are based on monthly Gigabits allowed to pass through my network. It's easy to understand and so far I've never had a client surpass the bandwidth included in the plan. If they get close I let them know and provide them with a way to gage their usage more accurately. If usage patterns change substantially, then I lower the maximums or change the plans. If a contract is in place, nothing changes for the length of the contract. > The bottom line is no Internet provider on the planet is selling speed > pre-allocated for sustained throughput of speed sold. [...] Over-subscription is based on a business model where your customers typically consume 1% of what you are selling them. That doesn't change the fact that you sold them 99% more than a typical customer uses. If usage patterns change, then contracts need to be updated and marketing needs to change their tune. There is no basis in law (IATNAL) for retroactively changing a contract because one side realizes that their business model was based on flawed assumptions[3]. Providers will definitely have to rethink how their products are marketed and sold. Legislating usage restrictions independent of marketing's messages to consumers is a foolish way to correct an oversight because it makes it nearly impossible for consumers to determine what exactly they are purchasing. > If we turn it around, VOIP companies like Vonage are no different. One > time I setup a Fax server on a pool of 4 or 5 of their VOIP lines. [...] This is yet another example why it should be illegal to advertise 'unlimited' when that is clearly not the case. "Unlimited" has a very specific meaning in the English language and it doesn't include the possibility for restrictions. While the fine print of your contract probably told you that it wasn't acceptable to actually use what you were sold, the marketing messages certainly didn't. > This is a time bomb waiting to happen. Worst of all it sets the stage > for market pressures to force ISPs to sell under cost, because marketing > has to over state the capabilities of the network. [...] Marketing has absolutely no reason to overstate anything if we have a competent oversight mechanism in place to prevent companies from misleading consumers about the products that they are selling. I think that a much better solution to this problem would be to force all companies to be completely transparent about their services and provide consumers with a simple way to accurately compare similar items. For example, if I were selling 3Mb/384kb DSL I would have to state that the average available bandwidth for my customers last month was 1.2Mb/150kb, average packet loss was 5%, latency was an average of 100ms across the network and you are limited to continuous bandwidth of 512kb/30kb and daily restrictions of 300MBytes of traffic[4]. This type of information would allow consumers to make an informed choice instead of blindly choosing the $14.95 (plus $40 for the phone line that they don't tell you about) 3Mb DSL that can barely move 256kb/s of information in either direction. Yes, I know that this is difficult to implement and to enforce, but we would be much better off if we put our government's resources into this instead of having them pretend to protect consumers by compelling megacompanies to wait three years before they begin to pillage the industry. > Laws will have to be put in place to compensate those that incur the > costs, or the quality goes to crap. I'd hate it if broadband stuped to > the low level of PC hardware and electronics. I remember I used to be > able to buy an original IBM PC, and that bad boy would last 10 years > without a hickup. Now I'm lucky to have PC hardware outlast the first > year. Consumer electronics typically come with only 90 day warrantees, > its rare that they last over the first year either. BUtits a commodity > market, forcing lowest price and features, with reliabilty nd durability > forced right out of the equation. I completely disagree. Laws are supposed to internalize natural externalities, not to force certain companies to fit into the business models of other companies. Product quality suffers when consumers are uneducated about the goods available and not able to vote with their feet. The recently approved mergers have definitely facilitated the latter. Now is the right time to enforce fair trade practices so that the former has an opportunity to take hold before choices are so limited that no amount of consumer knowledge will allow them to make any choice much less an informed one. I am slowly realizing that the 'differentiate your product' lessons taught to marketing students will ultimately lead to the collapse of capitalism through irrational consumer behavior due to misinformation. > Its not just SBC that needs compensation, its independant ISPs. What > going to happen when a huge marketing engine like an AOL or Google, or a > Comcast, or SBC starts selling their IPTV and VOIP over every ISP's > network for free? Hopefully, the non-oligopoly ISPs will have 'seen the light' by then and realized that there is no such thing as an unlimited service. Simply charge for usage like most other services out there. Let the consumer decide how they would like to use their bandwidth. One of the primary reasons for the success of the Internet was that it was independent of the artificial limitations of the circuit-switched pay-per-connection-minute network. Add these limitations back and content providers will migrate to a new Internet. Why do you think that Google just bought a substantial number of fiber miles? > One view is that it will force consumers to buy more bandwidth from > ISPs. Another is it will just cause lots of bad will between ISPs and > there customers, when they learn they are going to get charged more. Its > deceptive the the end user. We need a "truth in lending " type rule for > ISPs. Exactly. We already have it. It's called the "Prevention of Unfair Methods of Competition Act" (15USC) [5]. It just needs to be enforced. > And an ISP should get compensated for the use of their network > based on their cost to operate their network, not the average cost that > others may pay. I completely disagree. An ISP should be compensated however they would legally like to be compensated. Companies should not be allowed to sell at a loss, however. If they are compensated through advertising revenue from pop-ups, fine. If revenue comes from per-bit accounting, fine. As long as the consumer is clearly told what they are purchasing as prominently as the price, things will work out[6]. This works for 'wholesale' network providers too. The 'NDA to see a realistic price list' thing has to be stopped because it prevents 'consumers' from being able to easily compare their options before the purchase. [...] > And what makes it worse, is how do you tell whose network gets used and > how much? [...] I'm a believer in 'charge at the edges and manage the middle.' I admit that it's more of a faith than a science, but I can't imagine a world where I need to pay CableCo-C $2mc (micro-cents) and ILEC-A $3mc every time someone visits my web site. Managing the relationships simply takes too many resources. Sure you could only charge the 'big' players, but the scaling issues are still unnecessarily expensive -- especially if they are legislated and regulated by the government. > I think what needs to be important is that companies are forced to make > policies that are not discriminatory. For example, its also to charge of > a $1 to take a packet from network 1 as long as you also charge the same > $1 to take a packet from network 2. In other words, If you set a price > for passing VOIP, VOIP is VOIP regardless of who provides it, and the > cost to the ISP is the same, and therefore should be compensated the > same. But not in a way that inforces that one prvider will have a lower > competitive advantage over the other. [...] This makes little sense to me. Why would I charge someone who is moving 10Mbps through my network the same rate as someone moving 10Gbps through my network? The 10Gbps player would probably be woefully over-charged. It just gets too complicated to regulate this way. Do I charge $1.5mc/call-sec for G.711u and $1mc/call-sec for G.729a VoIP sessions? The inefficiency of the payment structure would most likely overshadow the cost of the bits. The potential for competitive advantage is essential for any competitive market. It is impossible to legislate that away without creating a different market. In the past few years the major ILECs realized that they had a difficult time competing within the current technical environment and decided to use the government to change the playing field. So far they have been extremely successful and will probably cost consumers a considerable amount in the long run. Our best option in this country has almost always been a level playing field for competition instead of strict, specific regulation in a potentially competitive environment. - Tony [1] Yes, there are probably limitations spelled out in the user agreement, but who can actually read and understand them in a way that allows them to compare two or more options? [2] Ok, so there are examples, but my point was that it's an inefficient way to do business because the consumers are unable to make an informed choice about the services they purchase until after the sale (when they were kicked off for 'abuse.') This only leads to the type of 'competition' that we have in the cell phone industry where there are choices but there isn't much difference in the services offered and actual costs are so buried that we need multi-year contracts to 'cover the costs involved.' [3] Except for the dreaded black space on the "Wheel of Fortune" of course. [4] These numbers don't even remotely reflect the stats on my actual network :) They may anecdotally fit those of certain DSL providers, however these numbers in no way reflect any real network in the past or present. [5] http://caselaw.lp.findlaw.com/casecode/uscodes/15/chapters/2/subchapters/i/toc.html [6] Yes, there are DOS attacks and other non-obvious issues that consumers can't predict, but we don't deal with this sort of thing very well in any model. At least a per-bit model would give consumers additional incentive to make sure that their PC is either protected or off the network. -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
