Thursday, April 23, 2009

ISPs' Greed Exposed

Does $49.95/month sound like a fair price for hi-speed access? It shouldn't; I worked for one of the major broadband providers back in the late 1990s and that was the price they were charging then! Yet some of today's major providers are not only still charging that amount, they are pushing for the chance to charge even more! But consumers, and even some members of Congress, are speaking-out against it, even as certain Internet Service Providers scramble to justify their greed.

According to the ISPs, people who pursue a lot of streaming media and/or trade files (watching shows, listening to music, downloading, etc.) use more bandwidth than those who do not, and should be charged more. The idea is to move to a "piecemeal" pricing model, where those who generally only use the Internet to check e-mail and maybe browse a few sites would pay less than those who are glued to Hulu and YouTube.

But experts note that ISPs' costs are not affected by netizens' use of the Web. In fact, the chief technical officer of Comcast blatantly acknowledges, "Just because someone consumes more data doesn’t mean they drive more cost." The reason is that the networks are built based on "peak usage." AT&T is said to have built its long-distance network based on the number of calls the company expected to field on Mother's Day. Comcast has been quoted as telling investors the cost of doubling Internet capacity in a neighborhood is less than $7.00 a home.

Meanwhile, Comcast is charging $140/month for 50-megabit-per-second service, compared to $45/month for 8-megabit service. This is compared to Japan's costs of $60/month for 160-Mb/sec. service!

While Japan's lower costs are at least partially due to more competition, US firms also cite the new Docsis 3 technology. However, Docsis 3 technology will actually increase the networks' capacity as well as allow much faster download speeds. And countries throughout the world offer lower prices as a general rule.

Congress has demanded an FCC report on the matters by next year, which has large ISPs quaking in their boots, because they already know they are ripping-off customers and they're worried about government regulations on pricing - which do not currently exist.

© C Harris Lynn, 2009

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