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Archives for December, 2010

Yesterday Verizon finally unveiled their LTE pricing and caps, which were fairly underwhelming: $50 for 5GB of usage and $80 for 10GB of usage -- and a whopping $10 per additional gigabyte. Sascha Segan at PC Magazine has been giving the service an early run, and notes that speeds on the network with nobody on it are quite impressive at 21 Mbps. Segan also notes that were you so inclined, you could burn through your 5GB cap in around 32 minutes under impractical sustained use, or a few hours with just one long HD film viewing:
My tests maxed out at an impressive 21Mbps. If you were downloading 5GB at that speed, it would only take you 32 minutes. Since the LTE network currently has almost nobody on it, I got average speeds around 15Mbps; Verizon estimates you'll be able to get around 8.5Mbps with a loaded network. But very few applications actually use those speeds consistently, so I also checked out some more common uses. Downloading some files via BitTorrent, I registered 5.6Mbps, which could use up the cap in about two hours. Standard-definition Netflix video is kinder to your data cap; according to Netflix, they encode at 1500 kbps, so it'll take you 7.4 hours to burn through your monthly allotment. That's fewer than four movies.
While we've posted leaked screenshots highlighting how Verizon may be testing a residential home LTE hybrid solution, their initial LTE service clearly isn't aimed at residential, video-hungry users -- it's initially aimed at business users whose companies won't blink at higher prices. Still, since Verizon appears dedicated toward marketing LTE service as a premium service, it makes sense to ask whether Verizon's 5-10GB caps are reasonable given the improvements LTE brings to the mobile broadband table. We'll turn your attention to something long-time industry analyst Dave Burstein noted earlier this year, after talking with network engineers about how LTE advancements should impact caps:
Two of the best engineers in the U.S. tell me wireless congestion (on 3G networks) can be almost eliminated except at Katrina type emergencies with 5 and 10 gigabyte caps. Models from Adtran suggest 20-30 gig caps (or higher) are practical in the LTE generation. There's nothing wrong with caps if they are economically sensible.
So, do you think Verizon's cap and overages are economically sensible? read comment(s)
The last twenty-four hours have seen a renewal in the cap and meter billing debate, after investors like Craig Moffett proclaimed the FCC's new neutrality rules are a giant green light for the kind of low cap, high overage pricing models cable execs have lusted after for years. As we noted this morning, the cable industry wants people to believe these kinds of pricing models are "inevitable." They also want people to conflate real usage-based billing (which might actually be good) with the kind of punitive, high per GB overage models investors and execs would like to implement. Not coincidentally in lock step with Moffett's missive, cable's top lobbyist Kyle McSlarrow today took to the National Cable And Telecommunications Association blog to give perhaps his last sales pitch for the cable industry's dream broadband pricing paradigm. McSlarrow takes industry rhetoric to new heights, insisting that imposing new, expensive per gigabyte overage fees isn't about making more money, it's about best serving customers and "innovation." McSlarrow goes so far as to suggest that the cable industry's experimentation with such pricing, which thus far has included high flat rate pricing with overages up to $5 per GB layered on top, is about helping the poor:
The key point is that that we need to focus on what best serves consumers. With all this change, it is necessary to have the flexibility to test new business models and perhaps new pricing plans in order to see if they make sense. A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder. As Sanford Bernstein analyst Craig Moffett noted in a report issued yesterday,"{u}sage-based pricing for broadband would have profound implications. At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers."
This is, with no hyperbole intended, all a coordinated con. For lack of being redundant given our last two posts, I'll just reiterate the fact that ISPs are very profitable under a flat-rate pricing system, they're just not profitable enough to please investors, who demand quarter over quarter improvements. McSlarrow's love letter to consumers is disingenuous dreck. Neither Moffett or McSlarrow have any interest in offering lower cost broadband tiers, because the significant majority of cable broadband users (who just check e-mail and twice a day) would downgrade to it, costing the industry billions. The industry has repeatedly shown they have absolutely no interest in offering low cost alternatives. What Moffett and McSlarrow want is to artificially constrict the pipe and jack up costs with a complete disregard for the falling cost of bandwidth and hardware. What they want is to further monetize every bit and increase the per household cost of already expensive U.S. broadband, providing cable operators with economic protection from Internet video -- and massive new leverage over the content ecosystem. Of course McSlarrow can't just come out and say this is simply a money grab and protectionism, so what we get instead is phony altruism, which as we saw with Time Warner Cable's failed metered effort doesn't pass the smell test among consumers -- and only adds insult to injury. read comment(s)

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