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Report: Metered Broadband Bad For Consumers, Businesses

Study debunks "false choice" of content blocking or pay-as-you-go Internet

By Martin H. Bosworth
ConsumerAffairs.com

August 8, 2008

But a new report from Free Press debunks that notion, saying that not only is the choice between content blocking and metered broadband a false one, but that metered broadband is bad for innovation on the Internet and will only push customers away from companies that practice "pay-by-the-byte" plans.

“Consumers should not have to choose between secret and arbitrary blocking and the very unreasonable practice of metering,” said S. Derek Turner, research director of Free Press and author of the policy brief. “That is a false choice, one most providers don't even consider necessary or practical. These scare tactics shouldn't deter anyone from pursuing the policies we need to preserve a free and open Internet.”

Companies such as Time Warner Cable, Comcast, and most recently Frontier Cable have been rolling out metered broadband plans in certain markets to determine their viability. One principal some companies are considering metered plans involves reports that Internet usage will exceed its available capacity in just a few years--what some call the "exaflood." If companies don't control how much bandwith their users utilize, they argue, there won't be enough for everyone to go around.

Nonsense, Turner said. "Contrary to the exaflood hype, bandwidth demand increases are pretty predictable, on the order of 50-60 percent per year. And recent data from one of the world’s leading academic researchers on Internet use suggests that the traffic growth rate in the United States is actually slowing."

That researcher, Professor Andrew Odlyzko, director of the University of Minnesota’s Digital Technology Center, said that "There is still no sign of the threatened deluge that was supposed to clog the Internet."

Scare tactics

Metered broadband plans or caps on usage have actually been around for several years. Even before Comcast was caught blocking customers' access to BitTorrent, it was notorious for canceling or restricting customer accounts if they went over, or even near, an undisclosed "bandwith cap." Comcast refused to disclose the cap for fear that customers would flee for competitors who maintained the standard "all-you-can-eat" Internet plan for a flat monthly price.

Verizon Wireless similarly claimed that its wireless broadband service was "unlimited" until an investigation by ConsumerAffairs.com's Joseph Enoch found that usage even slightly higher than surfing the Web or checking one's email could get the account canceled. Verizon Wireless later stopped referring to its service as "unlimited."

As it became more likely that the FCC would punish Comcast for its content blocking, discussion of metered broadband as an alternative to content blocking grew louder in technology and communication circles. But Turner said that these discussions have been going on for years. "If this speculation were really a canary in the coal mine for a future of metering, broadband consumers might have cause for concern," he said. "But history indicates that these murmurs from industry are nothing more than trial balloons."

Morton's Fork

If companies were to adopt metered broadband plans, Turner said, it would be detrimental to their long-term business future. Internet users are taking advantage of high-speed connnections to not only share files, but create, upload, and view video content, and bandwith caps or limitation pricing would discourage usage by all except those who could afford to pay for exceeding the caps.

Some companies might implement bandwith caps or by-the-byte plans to discourage people from using video sites such as YouTube or Joost in favor of the company's own offerings, Turner said, which would make it a matter of breaching antitrust law. Both the FCC and Congress would be empowered to investigate and prevent any such violations.

"Making consumers choose between having applications blocked and limitation pricing is what economists call a Morton’s Fork," Turner said. "Neither path is desirable because they both have the same outcome: reducing the innovative power of the Internet."

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