The chilling effect of bandwidth caps on Entrepreneurial Culture
April 14, 2009
Coming soon to a city near you, imagine this scenario:
Your city, one of the first to be wired with Roadrunner cable has a highly concentrated available pool of engineers, software programmers, business owners, small businesses and over 6 excellent, nationally known schools pumping out hundreds of entrepreneur-ready highly-educated students. The region has enjoyed the ability to use Broadband internet for reasonable though not inexpensive prices through Time Warner Roadrunner. When initially introduced the service was rolled out at 10mb/s but that was quickly scaled back to 1 (the speed of DSL at the time) and then slowly increased to remain competitive with the local DSL provider - always one step faster than they were. A higher bandwidth option was offered, which restored the original 10mb/s speed at a higher price point, but most people settled for just slightly faster than DSL.
Then suddenly - your cable company, who now has essentially a lock on anything faster than about 4mb/s down, announces a new policy: They are going to cap usage and make users pay not only by the speed of their connection but by their consumption of bandwidth. Various “tiers” are offered in which users get a “bucket of usage” which, if they exceed, they pay between $2 and $1 per gigabyte of usage over the amount. Your bill, currently at $40-50/month, could easily max out at over $150. The “buckets” are so small that even with the largest, fastest plan an advanced user family of 3 could easily blow through the entire $150 in bandwidth in the first week or so of usage. 100gb (3gb/day) would cost over $75/month and 150gb or more would cost $150. The cable company isn’t offering this “tiered usage plan” to people outside your region, because outside your region they have competition like Verizon FiOS to keep it in check. But here - a monopoly on the high speed Internet prevents penetration by other vendors. They justify this tiered usage plan by blaming users for their consumption and claiming that their pricing wouldn’t support necessary costs of providing the bandwidth.
The time for this to happen is - now. As of August Time Warner Cable will institute tiered pricing with bandwidth limits in 1, 10, 20, 40, 60 and 100gb increments. They are generously offering unlimited bandwidth (at any speed) for “only” $150/month (that’s not a 3-in-1 plan, that’s $150/month for Internet alone). If they aren’t doing this in your area, and they are your primary provider - you may want to prepare for a fight. They are planning to roll this out everywhere that they don’t currently have competition that would cannibalize their user base.
So what is the effect that this has on entrepreneurs specifically, and the region in general?
- Most entrepreneurs these days are “heavy users” of the Internet. Between developing their software, creating distributed development teams, uploading and downloading information to servers, twitter, website updates, video presentations, and all the other myriad ways that entrepreneurs market themselves - they almost all will fall into the high bandwidth usage scenario. Many do this sort of work from home, either during work hours, or just during off hours. This means that they will typically be paying between 3 and 4 times what they are now for Internet access - times as many employees or collaborators as they currently have. This additional cost will not only discourage the average money-conscious entrepreneur, but also discourage their collaborators, their users (for after all if they develop a high-bandwidth application like HULU, or NETFLIX , or even medium bandwidth services like BLIP.FM, or they will be trying to get users in this city as well, and their financiers (what venture capitalist will take seriously an investment developed in a city where they know that everyone is watching their “Internet gas meter” to see if they go over). They’ll simply move on to invest in other areas that are more tech-friendly.
- Students and new, young minds are the core to successful entrepreneurial ventures. New ideas come from youth, and the more we can encourage our youth to come to Rochester to learn their trade, and stay here once they have learned it, the more competitive our city can be in attracting and retaining young hard-working bright men and women to our area. But if their first impression when they arrive in Rochester is to get a bill for a 10mb/s connection for $150/month(because believe me - college students are probably the definition of high-bandwidth users) which they get at home in a combo bundle form Verizon FiOS for$60/month which includes phone, TV, and Internet at a blazing 20mb/s down and 10mb/s up - are they going to stick around here after they graduate, or move to a more progressive area with more reasonable Internet access. I’ve already gotten tremendous feedback from the RIT campus here in town that students en massse’ (and especially the deaf and hard of hearing students at NTID who use video streaming) are up in arms about this latest proposition form Time Warner. So, as a region, we have to decide - do we tolerate this monopolistic pricing scheme, or do we legislate it away?
- Collaboration depends on a highly connected community. According to this study made by the state of South Carolina, a highly connected, inexpensive to access broadband infrastructure is one thing that can make a region more competitive and connected to the future. Having this strength available makes the collaborative process easier to manage, results in more ideas, creates those ideas faster and brings them to market. Adding high price or being unable to access high speed broadband on the other hand puts a community at a definite disadvantage, because the oppressiveness of monitoring and paying for the bandwidth cap drives collaboration down and highly skilled employees and technical people away from the community to areas where they can get these features.
- Driving prices up in an already suffering economy hurts our residents, whether employed or unemployed, ability to recover quickly, and adds to inflation. A full package of internet, phone, and cable television services could easily run into the $300-400/month range depending on features selected. A marginal price increase would be painful, but doubling or tripling the rates for many users renders them impossible to bear.
- Price caps selectively punish your most tech savvy and powerful users - the ones who help all other users, the ones that drive change and innovation on the internet. It selects against young people, active business people, and the businesses that they drive.
- It selects against tech-savvy small businesses who use the web to their advantage to market their products and services. Ah you say, businesses themselves won’t be bandwidth limited, while this is true (for now - I wouldn’t bet on it being true forever if we let price caps enter the market), its not the business use of bandwidth that is at issue, it’s their end users. Am I as likely to search for houses on www.nothnagle.com if I find out that each house I look at and all the attached pictures represent over 1MB of my precious bandwidth? Am I likely to create www.webhomeusa.com if I know that the pictures and map mashups my users download are chomping bandwidth as I browse for houses? Both of these interesting and innovative sites started here in Rochester - pre-cap. Would they be as likely to be invented in the future if we knew we were penny-pinching every download and web page?
- The very fact of bandwidth caps subtly changes our Internet usage - and reduces the power of the internet to entertain, increase productivity and provide better services to our clients and end users. People have become dependent on “instant access” - it’s now EXPECTED in the business world. If we have to watch every gb of usage though, we’re more likely to “Skim the surface” of the Internet, rather than dive in head first. That is doing a disservice to our high school students, college students and others across the region.
- What about companies that have moved to a more distributed “work from home” environment. Many companies (I know of one local Rochester top 100 company at least) have eschewed large installations of capital investments in buildings, leases, and office space, in favor of a distributed environment. Their “workers” work from home and are paid based on their productivity. Typically these work from home users are vpn’ed into the central office machines during work hours - happily performing their tasks. They used to pay one flat fee for the privilege - but if they now have to pay metered bandwidth rates - what happens? Do they pass that cost up to their employer, who then passes it to the customer - yet again we run into an inflationary situation.
So what can the Rochester (or other region) entrepreneur do to protest these caps? Fortunately the Rochester Community - recognizing the peril this puts our region in - has stepped up to the task. Here are specific things that you can do - right now - that are listed on my website. Bringing FiOS to Rochester (www.verizonfiber.com ) is a long-term plan - they have no plans yet to enter our market. If we continue to let Time Warner own this market then it will be difficult to bring other competitors in. I strongly suggest you take action on multiple fronts:
- Visit other websites like www.stopthecap.com and www.dslreports.com and look for ways to resist the tiered billing system.
- Spread the word - get 5 people you know to sign up for www.verizonfiber.comsurvey, or post some flyers around campus, or tell your neighbors and co-workers. Most people BELIEVE TIME WARNER that their bills will not go up. We know otherwise and we should spread the word to all who we know that they can expect to pay more for internet under the new plan.
- Support Congressman Massa who has taken up this cause as his own. Senator Massa is the REAL DEAL and has gone out of the way to hep us in this quest. Please take time to visit his website or write a supporting letter.
- Take time to write Time Warner and tell them how you feel. Also engage Time Warner’s PR mouthpieces in as many venues as you can - ask them the hard questions. The more they don’t have an answer the worse they look in the eyes of the media and the public. We’ve slowly been turning the media’s attention around from just reprinting their press release to seeing it from a user’s eyes.
- Attend the protest April 18th and let them know IN PERSON you are not going to take this lying down.
- If you have connections in the media, talk this issue up. Ask them why they’re not giving it more attention and coverage.
- Take time to write the Attorney General and let him know that you believe that this new tiered pricing is a discriminatory policy and is based on Time Warner’s monopoly in our area. Insist that if Time Warner wants to implement tiered pricing it do so in competitive markets as well. They never will because they know that Verizon Fiber and others would eat them alive.
- Help me with writing content - if you have a link to share, or a profile to post, or a blog post to register, I would love to have help and input. Writing content is very time-consuming and I do have a company to run. Any help anyone would like to lend would be welcomed.
You can find all these resources at: http://www.verizonfiber.com/TWCProtests/tabid/57/Default.aspx
Thank you for your support - please spread the word,
