Cable ISPs and Tiered internet: what’s really behind the push to switch?

The topic of net neutrality has been on the tongue tips of many technology enthusiasts and writers for the last few years.  In recent months, the topic has picked up steam as a few ISPs have begun to implement measures of internet tiering.  For example: in early January, Time Warner Cable (TWC) announced that it will be running “an experiment in improving network performance“.  TWC will be the first major U.S. ISP to set limits on bandwidth and charge users extra for going over them.  The cable ISP’s internet plans that are to be part of the experiment will range from $29.95 per month for a very slow 768kpbs with a minuscule 5GB bandwidth cap to $54.90 per month for a fast(er) 15mbps with a (larger) 40GB cap.  These limits, according to a company executive, will be “an experiment in improving network performance” since “5% of Time Warner’s customers consume as much as 50% of available bandwidth through heavy downloading.”  According to the cable industry, the reason for internet tiering is that doing so is the only way for said companies to keep quality of service high.  That’s a great goal, but it can also be achieved by upgrading the infrastructure used to deliver the service (the internet).  The companies argue that this is cost-prohibitive.  I think there is an underlying reason for such internet tiering – one that runs deeper than that provided by the “PR spinners” at TWC:

The real reason:

It is the goal of Big Cable to keep new media out of people’s lives for as long as possible.

Explanation:

For those not in the know, Time Warner Cable is a provider of cable internet (it’s in the name).  The company also delivers cable (TV) over the same infrastructure.  Let’s make an assumption a fact in our discussion: providing TV services for such cable companies as TWC is more profitable than delivering the internet.

What about phone companies that provide DSL internet service?  Well, glad you asked: “Phone companies are less concerned about congestion and are unlikely to impose metered usage on DSL customers, because their networks are structured differently”, writes AP Technology writer Peter Svensson.

Take a look at Time Warner’s bandwidth caps described above: 5GB for the low-end plan and 50GB for the plan with the most data transfer capacity.  In today’s growing trends of new media distributed over the internet, such bandwidth limitations would first affect content termed “new media”: podcasts, netcasts, and internet-based entertainment.

If you haven’t yet heard of or tried such content as is listed above, I suggest you do: it’s audio and video content brought to you for consumption on your schedule.  Some of the most prominent networks in “old media” (NPR, PC Mag, etc.) have their content available in podcast form for free.  This means their content comes to you as it is released and you can play it either on your computer or on a personal media player such as an iPod, Zune, or even iPhone.  The best part about podcasts (for me) is not the benefits described above, but the fact that the internet allows for the distribution of content that would not otherwise make it (by numbers, for example) on the big screen or to the TV because its ratings aren’t high enough, allowing very small yet interested niches to be reached.  (For full disclosure, we at TechNest Report are in the process of starting up our own podcast).  In any event, by imposing a limit on bandwidth and charging overage fees for using more than their alloted amount, ISPs will be pushing consumers toward consuming less “internet content” and more “traditional content” delivered by the cable company, mainly – the good-ol TV.

This sets up a perfect scenario for a conflict of interest, and here’s why:

1. Only cable companies have an interest in internet tiering.  DSL companies don’t because their networks work differently.
2. Cable companies carry TV signals over the same infrastructure as they do internet signals.
3. Being more profitable, cable companies need to figure out a way to push their customers toward consuming more TV.
4. What better way to accomplish #3 than to set restrictions on the way consumers receive content that competes with TV?  Answer: limit the way such competing content (like podcasts and other types of new media) gets to consumers by setting outrageous limits on how much of the competing content they can consume.
5. Higher profits and margins!

The fact that the “limitaton of internet content consumption” starts at the source – the ISP – is extra “perfect”.  Because of this, a Cable company like TWC can even begin to control the speed of podcast and new media delivery to the consumer.  So if I were to be living in an area with internet tiering and would be downloading/streaming a podcast, it might come to me at really slow speeds and make such content unbearably slow – rendering it unwatchable.  The ISPs are in a a position to implement this measure – they, afterall, “provide the internet”.

Now before you begin typing my email address in the To: field of your email client, let me say these few words:  I am completely in agreement that having 5% of the customers consume more than half of a service is not fair if everybody pays the same price.  If service is degraded for 95% of users because 5% of users are using more than half of available bandwidth something should be done.  In fact, I’m sure you’ve heard about internet services compared to cell phone service usage: use more, pay more; go over your allotment, pay extra.  The same principle can be applied to the many utilities we use today: water and electricity, to name a few more.  If, for example, everybody in South Florida pays $50 a month for unlimited water use and 5% of customers use more than half of available water, this would mean one of two things:

1. A certain portion of the remaining 95% would not get water, or
2. Those 95% would get water, but instead of water coming out of the faucet with good, constant pressure, it would trickle out in droplets.

That’s the argument I’m sure cable companies are to use in their quest to tier the internet.  I think that people should pay for what they use.  But if Time Warner is to succeed in its quest, they have to do a few things:

1. Make it crystal clear to customers what it is they are getting for the amount they are paying.
2. Provide customers with an easy-to-use and live-updateable service of measuring their usage (similar to how cell phone companies provide statistics on how many minutes and text messages customers have used to date.
3. Provide reasonable overage fees for those who go over.

Only after taking such steps will internet tiering work in a beneficial way for the consumer and for the (cable) ISPs.  Why will it be beneficial for ISPs?  Because they won’t be getting a call every thirty seconds from their customers asking the same question: “Why is my bill so much higher than that of last month?”

In the end… the real questions…

Why are ISPs so interested in providing internet tiering services?  That’s the underlying, million-dollar question.  Today’s economic pressures are enourmous: the growth imperative of publicly-traded companies is huge.  CEOs and other executives are required to bring their shareholders value, and the meaning of that “word that starts with V” is beginning to take shapes (multiple meanings).  In the end, what this is is hypercapitalism.  And it’s not so prominent in the scenario I described above.  It is, however, prominent, in other ISP-related stories.  More on this later, probably (since our growth imperative here at TechNest Report is not as high as that of ISPs and other publicly-traded organizations; thank God?  No, thank our founders – me).

Posted in Business, Decisions, Internet Service Providers

What about Microsoft’s “Exchange for the rest of us”?

These days, it seems like Microsoft’s business is getting attacked from every angle.  What’s most interesting, however, is that the software giant is being challenged the most in those areas that it holds a significant share of the market.  From the Mac going after Windows on the desktop, iPhone gunning for (and surpassing by years end?) Windows Mobile devices, Linux infiltrating the server market, and OpenOffice along with Google docs chipping away at the all-mighty Microsoft Office – the big M has many companies to pay attention to these days.  As of late, Microsoft has been so busy saying goodbye to Bill Gates chasing its competition, it forgot to show up to a scheduled fight with one of its most feared closest rivals.

“Exchange for the rest of us”:

Let’s see what Microsoft’s identifiable markets are: home users, business users, corporate customers.  In an interview on Windows Weekly a few months ago, a Microsoft executive in the online Live division explained how the company sees corporate users also as home users who want to enjoy their computers and have fun with them when not at work (my paraphrase).  He noted that it was Microsoft’s goal with Live to unify the experiences of such users.  That’s great and all, but just tell me one thing: how does a tech company that has been (incorrectly) relegated by the media to be the best choice for “home users” beat you in making “Exchange for the rest of us”, when Exchange is your own (Microsoft’s) product?  It’s so embarrassing that it overshadows Windows Me (the biggest flop to leave Microsoft labs).

Just in case you have been living under a rock for the last few months, that company with the “home user” target market goes by the name of Apple, Inc.  You know, the company who is known for turning certain industries upside down and re-inventing the business processes within them.  Apple announced MobileMe on June 9, 2008 and dubbed it “Exchange for the rest of us”.  That “exchange” reference, as mentioned earlier, is alluding to Microsoft Exchange – a corporate/large-business email and PIM tool/service.  MobileMe basically does Exchange but for the consumer – on a personal subscription level.  Herein lies the question: how does Apple, a company so focused on the “home user”, roll out something Microsoft should have been selling for the last five years?

You see, somewhere along the lines of Xbox breakdowns, Vista problems/negative PR, and chasing after copying Apple with Zune, Microsoft completely missed the boat.  For a nominal fee to the user, Microsoft should have created “Exchange Hotmail”: a paid-for part of Hotmail that “brings your data with you at the speed of *push*” (my marketing tagline).  It should have been the scaled down, personal version of Exchange that integrated with Hotmail/Live mail in the cloud, integrated with an Exchange-compatible mobile client, and pushed out to Outlook/Windows Live Mail on the desktop.  It would do push email, calendar, and contacts the way Exchange does it, only Joe User would be able to sign up for it himself.  But it wasn’t to be.  Apple brought it first because Microsoft was too busy defending its “server plays”.  Most likely, the big M felt that introducing a personal version of Exchange tied to Hotmail would in some way enroach on its own user base of corporate Exchange users.  But that’s just a load of bollocks, since the two markets using Exchange enterprise and my proposed Exchange Hotmail would be different (a corporation would still run an Exchange server for company-wide email and Joe the employee would simply subscribe to Exchange Hotmail for personal use).

On second thought, the company did roll out a scaled down version of its server product for home users dubbed Windows Home server.  Why could it not have applied the same type of thinking to an email and PIM system?  After all, the new Microsoft is all about software plus services (as described in the linked memo by new Microsoft chief Ray Ozzie).  Exchange Hotmail would have been a perfect play for Microsoft.  So in the end, Microsoft is left with a very popular online mail solution (Hotmail) yet has not made a significant effort to monetize it.  Apple, on the other hand, has beaten Microsoft at their own game and has brought out a kick-butt web service and, along the process, used Microsoft’s “Exchange” moniker in its description – almost as a mokery.

On triple thought, what has Microsoft really done to Hotmail and its consumer online services lately?  Sure, they have copied Yahoo! and made Hotmail “drag-and-drop”.  But what Apple is really great at doing is making an end-to-end solution, as the comapny has done with iPhone and MobileMe.  The latter is the perfect complement for the iPhone user.  Microsoft hasn’t seen the light at the end of this tunnel, and the jury is still out to see if it ever will.

P.S. Throughout the article, I put “home user” in quotation marks because for years it has been thought that “home use” was the best use of Apple Macs.  Though this opinion is beginning to change rather quickly – and as it should – many uninformed tech journalists, “experts”, and those in tech media still wrongly believe this to be the case.

Posted in Apple, Business, Cloud Computing, Companies, Decisions, Google, Marketing, Microsoft, MobileMe, Software

iBook G4 Surgery

This one falls under the “extreme geek” category: a few months ago I decided to replace the hard drive in my 2004 oldie-but-goody Apple iBook.  The iBook shipped with a 60GB standard Apple drive (probably a Hitachi).  With all the podcasts, music, and video I have been acquiring lately, the need for more storage presented itself in a similar fashion that a running deer presents himself to unsuspecting drivers when the creature runs across 8 lanes of the interstate.  I downloaded and printed the iBook hard drive replacement instructions and screw guides from iFixit.com, an excellent DIY site that has instructions and tips for projects from how to replace an iPod battery to any Mac-related project. Read more »

Posted in Exteme Geek, Mac, Notebooks, TNR tip