Re: When "free" is no longer free DO LOOK AT THE 20 QUESTIONS djf

[David Farber <dave () farber net>]

If the cost of non isp video is 3 to 4 $ higher than the carriers, most folk with go the cheapest route. djf
________________________________________
From: Brett Glass [brett () lariat net]
Sent: Sunday, August 03, 2008 3:08 PM
To: David Farber; ip
Subject: Re: [IP] When "free" is no longer free

At 10:09 AM 8/3/2008, David Farber wrote:

> ...and competition to Video on Demand will vanish

Dave, with all due respect, I disagree. Video on demand from your local cable company will never match the variety of 
material that's available from other sources. That material is often unique and valuable, and readers will likely 
download it even if it costs more than a mundane PPV movie.

That being said, I am nonetheless opposed to "metering by the bit" by broadband Internet providers. Our users tell us, 
overwhelmingly, that they want their bills to be predictable and love the fact that the bill is always what we say it 
will be. (Were we to shift to metered billing, they would leave in droves.)

Our ISP's bills also lack the unexpected surcharges, taxes, and fees that so often appear on DSL and cable bills -- the 
ones that Bruce Kushnick of Teletruth.org has justly condemned. Our $30 broadband is REALLY $30 broadband. Customers 
can tell their banks' respective bill paying services to issue a check each month for a fixed amount and forget about 
having to review a cryptic bill.

Flat rate service is also fairer than metered service because, to some extent, users are not in control of how much 
bandwidth they use. Do they dare refuse security updates and service packs for Windows? Virus checker updates? Updates 
to the tax rules in Quicken? No -- and we don't want them to, even if they know how to stop their machines from 
fetching these updates automatically (most don't).

But flat rate service comes with a catch. If the price paid by the user is fixed and affordable, there must be an 
implicit limit on how much bandwidth the user can consume; otherwise, the cost of the bandwidth he consumes may exceed 
what he pays. Our ISP's residential class service prohibits and blocks P2P, and also has a more general prohibition 
against exceeding a particular "duty cycle." That is, the user can get data at very high speed, but cannot run at that 
speed all the time. The resulting "statistical multiplexing" allows him or her to pay less than if we had to buy enough 
bandwidth for the user to run at that speed 24x7. This is necessary to provide most residential users with rates that 
are attractive to them. We couldn't offer a $30/month plan that ran much faster than dialup without this restriction.

We also have "business class" connections, for which the user pays enough to be able to saturate the connection all the 
time. (In other words, the duty cycle may go up to 100%.) There is no need to prohibit P2P on such connections, because 
the user has really paid for the full capacity of the pipe. If he or she deigns to give away that bandwidth to a 
content provider; that's fine. It's paid for. (The residential user has not paid to saturate the connection or to 
create the duty cycles which P2P will create.)

We at LARIAT believe that this is a fair and reasonable plan. But is it contrary to the unwritten rules and vague 
principles -- some of which appear to be in conflict with Federal law -- on which the FCC acted last Friday? No one 
knows. The order has not been released, and some have been known to be delayed for up to 6 months for editing and final 
approval. Also, since there was not a formal rulemaking process which considered "all of the angles" and all of the 
possible scenarios, it is doubtful that the order will cover many common situations. Our small Internet provider is 
thus thrust into the realm of uncertainty -- and so are our investors and potential investors. We expect no new 
investment (or even loans) until the order issues, and maybe not even after that.

In an attempt to communicate to the FCC the large number of logistical, engineering, and business questions it is 
raising with its recent decision (setting aside, for the moment, the jurisdictional and due process concerns it 
raises), I sent to all of the Commissioners' chief aides a list of 20 questions. (Since this constituted an ex parte 
communication regarding the ruling, I filed it in the docket as per the FCC's rules; it's at 
http://tinyurl.com/5gfn6p.) Readers of IP may want to view this list to get a sense of just how much confusion and 
uncertainty has been created by Friday's ruling.

--Brett Glass





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