Interesting djf Rogers intercepting Google- another problem

[David Farber <dfarber () cs cmu edu>]

Begin forwarded message:

From: Dave Burstein <daveb () dslprime com>
Date: December 9, 2007 1:09:22 PM EST
To: dave () farber net
Subject: Rogers intercepting Google- another problem

Dave

Lauren's right. This is probably the ugliest intrusion on privacy I've  
seen in this whole controversy. Similar equipment is in place, I and  
others have reported, at Comcast, Cox, Deutsche Telekom and most of  
the UK ISPs. That's the gear that's being used to block p2p, etc. and  
also is helpful against malware and DOS attacks. I never imagined ISPs  
would use it to intercept and change web pages.

    Also on Lauren's remarkable screenshot I noticed a 75 gigabyte  
cap Rogers is putting on. This is inappropriate in 2007, and the $1.50  
overage price contains a 1500% percent markup. It becomes an effective  
cap on how much video someone can watch delivered in competition to  
Rogers' own video offering, and should be knocked out on competition  
issues. I've reported that the cost to a large carrier like Rogers is  
about 10 cents per marginal gigabyte.  That counts transit, peering,  
routers/switches from the peering point, and the cost of upgrading  
some of the on network fiber.  The bandwidth costs per broadband user  
are now typically $1 or so, because few use even 10 gigabytes/month.  
Bandwidth isn't free, but it's very cheap. 90% of broadband costs are  
identical per user (line, DSLAM, support, marketing ...)

     There's nothing immoral about charging for bandwidth, but the  
economics of the $30-50 bandwidth service can easily handle a cap of  
150 gigabytes or higher.Those costs are dropping rapidly with Moore's  
Law, halving in 2-4 years.   A 1500% markup on the bandwidth over the  
cap suggests the market isn't working well, as the cable and phone  
companies wink and nod to keep prices up.

     I'm cutting the cord, dropping my cable TV service and watching  
over the net. That's easy for me, because I watch far less than the  
typical U.S. household (130 hours+). I believe it's anti-competitive  
to cap broadband at a rate that prevents switching to an Internet  
service for TV. That's at about 150 gigabytes today. It will go up to  
about 400 gigabytes as HD takes over, but Moore's Law will probably  
bring the costs down fast enough to cover that.

    A typical standard definition TV show uses about a gigabyte/hour  
(2 megabit stream). HD requires three times the bandwidth, about 3  
gigabytes per hour. 130 hours therefore requires  130 gigabytes today,  
and 390 gigabytes somewhere around 2012 when HD kicks in. Add a little  
for less applications less intensive than video, and you reach 150 and  
400 gigabytes. (If we need to count upstream p2p serving, that goes  
higher.)

    As Hulu and the BBC are proving, it's practical to watch all your  
TV with broadband + a rabbit-eared antenna to get the over the air  
stations. (Better signal quality than cable in most locations.)     
Carriers with a video program to protect may limit use; as Bell Canada  
starts there own video rollout, they are restraining unlimited service  
more than previously. Rogers and Bell could be doing this because they  
aren't keeping up their network. Their very low capital spending may  
in fact be causing congestion, but the right answer to that is to  
maintain your network so you can provide decent service. AT&T capex is  
currently 30% less than depreciation. I don't know the Canadian figures.

    Of course the pricing and cost questions are more complicated  
than this brief note covers, but I'm highly confident my sources are  
accurate. A 75 gig cap may have been perfectly reasonable in 2003,  
when bandwidth cost more and web video used low bandwidths with lousy  
quality. It's inappropriate today, and more so in 2009.

Dave Burstein
Editor, DSL Prime










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