I want to talk about the sledgehammer of usage-based billing.
I take no pride in saying that I’ve been talking about it for years. The sledgehammer is not something I welcome, and I would have been happy if my fears about it never materialized. After all, the sledgehammer could cost internet users billions of dollars, enrich monopolists, and defeat the spirit — if not the law — of net neutrality. In a big way, the sledgehammer will also beat down our economic growth. This is one evil sledgehammer.
And it sounds so innocent! Usage-based billing. Kind of like paying for what you use, right? Don’t be fooled. The usage-based billing playbook was developed by the mobile wireless industry, which itself is nothing more than a duopoly (Verizon Wireless and AT&T) with a fringe of a few other firms with similar business models. I’ve been predicting for years that usage-based billing will be used as a sledgehammer by other internet access providers like Comcast. Unfortunately, it looks like I’ve been proven right.
The sledgehammer (as employed by the mobile carriers) is a part of a complex scheme designed to hijack the development of a fast, cheap, competitive, unlimited-capacity data communications systems — like the one our country should have.
It begins by announcing a data cap that’s set high enough to affect only a small percentage of current users who routinely hit it. Justify it by saying you’re only targeting the “hogs” who gobble up everybody else’s bandwidth. Say you’ll charge for data usage that exceeds that cap. Then sit back and wait. Eventually, increased usage by more Americans will bring millions into the fold. And presto: without lifting a finger, dominant players can charge more people more per month — on every side of every transaction, content sources as well as consumers — without expanding their facilities, much less upgrading to the communications capacity we need.
Why did this happen on the mobile wireless side? Because no one stood up and complained early enough in the game. And there’s no real competition to prompt better behavior.
That’s bad enough. But the sledgehammer’s use does not stop there. Now the country’s local cable monopolies feel emboldened to open up the mobile carriers’ playbook and set this scheme in motion. They are brash, unapologetic, and fearless — they are feeling their power. Usage-based billing is the sledgehammer they’ve been patiently weighing in their hands for a long time. Forget that they have lots more bandwidth than the mobile carriers —they will employ the caps not because they need to, but because they can get away with it.
What a great deal — for them. The scheme as a whole allows them to make the use of services that compete with their own businesses feel expensive to consumers. Today, these include streaming TV; tomorrow, the squeeze will come in home security, telemedicine, distance education, or anything else that requires modern-day levels of data capacity. It allows these giants to pick and choose among the providers of new businesses that will be allowed to reach consumers effectively. It allows them to charge differently for uses of their network that feel identical to consumers. And it’s unclear whether the FCC has retained the power to do anything about any of this.
The bottom line is that employing the sledgehammer of usage-based billing allows a cascade of practices that will make a mockery of net neutrality — allowing cable to pick the winners and losers among apps and services in the future. And it’s happening now.
Earlier this month, Comcast announced that it would be launching a $15 per month streaming pay TV service — cleverly named Stream TV — that wouldn’t count against the 300GB data plans (that number is the cap) it had already introduced in several states.
To understand why this matters, it’s important to realize that Comcast has intentionally architected the last-mile connections within its network pipe to allow for two different “lanes.” Traffic is either in one lane or the other. A rough way to describe it would be one lane for digital services that Comcast controls or has a relationship with, and the other for high-speed internet access.
I take no pride in saying that I’ve been talking about it for years. The sledgehammer is not something I welcome, and I would have been happy if my fears about it never materialized. After all, the sledgehammer could cost internet users billions of dollars, enrich monopolists, and defeat the spirit — if not the law — of net neutrality. In a big way, the sledgehammer will also beat down our economic growth. This is one evil sledgehammer.
And it sounds so innocent! Usage-based billing. Kind of like paying for what you use, right? Don’t be fooled. The usage-based billing playbook was developed by the mobile wireless industry, which itself is nothing more than a duopoly (Verizon Wireless and AT&T) with a fringe of a few other firms with similar business models. I’ve been predicting for years that usage-based billing will be used as a sledgehammer by other internet access providers like Comcast. Unfortunately, it looks like I’ve been proven right.The sledgehammer (as employed by the mobile carriers) is a part of a complex scheme designed to hijack the development of a fast, cheap, competitive, unlimited-capacity data communications systems — like the one our country should have.
It begins by announcing a data cap that’s set high enough to affect only a small percentage of current users who routinely hit it. Justify it by saying you’re only targeting the “hogs” who gobble up everybody else’s bandwidth. Say you’ll charge for data usage that exceeds that cap. Then sit back and wait. Eventually, increased usage by more Americans will bring millions into the fold. And presto: without lifting a finger, dominant players can charge more people more per month — on every side of every transaction, content sources as well as consumers — without expanding their facilities, much less upgrading to the communications capacity we need.
Why did this happen on the mobile wireless side? Because no one stood up and complained early enough in the game. And there’s no real competition to prompt better behavior.
That’s bad enough. But the sledgehammer’s use does not stop there. Now the country’s local cable monopolies feel emboldened to open up the mobile carriers’ playbook and set this scheme in motion. They are brash, unapologetic, and fearless — they are feeling their power. Usage-based billing is the sledgehammer they’ve been patiently weighing in their hands for a long time. Forget that they have lots more bandwidth than the mobile carriers —they will employ the caps not because they need to, but because they can get away with it.
What a great deal — for them. The scheme as a whole allows them to make the use of services that compete with their own businesses feel expensive to consumers. Today, these include streaming TV; tomorrow, the squeeze will come in home security, telemedicine, distance education, or anything else that requires modern-day levels of data capacity. It allows these giants to pick and choose among the providers of new businesses that will be allowed to reach consumers effectively. It allows them to charge differently for uses of their network that feel identical to consumers. And it’s unclear whether the FCC has retained the power to do anything about any of this.
The bottom line is that employing the sledgehammer of usage-based billing allows a cascade of practices that will make a mockery of net neutrality — allowing cable to pick the winners and losers among apps and services in the future. And it’s happening now.
Earlier this month, Comcast announced that it would be launching a $15 per month streaming pay TV service — cleverly named Stream TV — that wouldn’t count against the 300GB data plans (that number is the cap) it had already introduced in several states.
To understand why this matters, it’s important to realize that Comcast has intentionally architected the last-mile connections within its network pipe to allow for two different “lanes.” Traffic is either in one lane or the other. A rough way to describe it would be one lane for digital services that Comcast controls or has a relationship with, and the other for high-speed internet access.
by Susan Crawford, Backchannel | Read more:
Image: Backchannel
