Consolidated response Re: Will on-line backup be evil, too?

[David Farber <dave () farber net>]

Begin forwarded message:

From: Brett Glass <brett () lariat net>
Date: March 27, 2009 1:47:22 PM EDT
To: dave () farber net, "ip" <ip () v2 listbox com>
Subject: Consolidated response Re: Will on-line backup be evil, too?

[Dave: Here's a consolidated response to two related messages, to save  
traffic on the list. -Brett]

At 11:11 AM 3/27/2009, Ronald J. Riley wrote:

> While I am not completely unsympathetic about the situation that  
> small ISP providers are in I do think that at least some of their  
> problems are do to excessive sales hype.

What aspect of our literature do you believe to be "sales hype?"

The fact is that our ISP is very explicit and accurate about both the  
levels of service we provide and the limitations on each class of  
service -- so much so that we sometimes lose business to providers,  
such as the telephone and cable companies, which make inflated or  
misleading claims about their service. (We refer to this as the  
"megahertz problem," since it is reminiscent of the way that consumers  
used to evaluate computers based on the clock speeds of their CPUs.  
Intel reacted to this by creating the Pentium IV, a superscalar  
processor which had less processing power than the Pentium III at the  
same clock speed but could be clocked faster. It thus could mislead  
consumers into buying a processor that had a higher clock speed but  
worse performance than an equivalent AMD Athlon.) But unlike our  
competitors, we can refer customers to a third party "speed test" site  
and tell them that if they ever do not get the minimum guaranteed  
throughput, they should call us because something is broken.

> The truth is that buying internet connectivity is a lot like buying  
> airline tickets.  In both cases the sellers play games about what  
> they are delivering.

We and other ethical ISPs do not do that. The customer may not have a  
technical understanding of the terms (though we try our best to  
explain them), but we really do deliver what we say we will.

> Both oversell and then wonder why customers who come up short are mad.

Oversale is not a deceptive tactic, nor is it "sales hype." In fact,  
due to the very nature of packet switched networks and the high price  
of backbone bandwidth in rural areas, it is a necessary practice to  
maximize the value that consumers can get for their dollars.

The fact is that bandwidth costs money -- and upstream bandwidth is  
especially precious. Backbone bandwidth in our area costs $100 per  
Mbps per month -- and some of our colleagues pay $325 or more per Mbps  
per month. If we did not oversell, a 1 Mbps residential connection  
would cost substantially more than $100. But by exploiting the natural  
statistical properties of packet switched networks, and by basing our  
rates on duty cycle as well as raw throughput in our pricing, we are  
able to make broadband more affordable than that. This is good for  
consumers.

Currently, our ISP has P2P mostly under control but is being  
challenged by the fact that our users are maxing out our bandwidth  
during Internet "rush hours" (particularly from 5 to 7 PM, when users  
come home and attempt to stream television programs). We are working  
to find the most economical way to buy more. Yet, in these hard  
economic times, consumers don't want to pay more and our suppliers are  
seeking to raise -- not reduce -- their prices. In fact, the ILECs,  
encouraged by their recent victory in AT&T v. LinkLine, are seeking to  
drive competition out of business by raising the price of wholesale  
services ABOVE retail. While Congress and the Obama administration are  
wasting time and breath on Internet regulation ("network neutrality"),  
this is the situation they really SHOULD be addressing.

At 11:05 AM 3/27/2009, Geoff Kuenning wrote:

> This reminds me of the 80's, when people started making heavy use of
> dialup modems.  That played havoc with the the phone companies'
> statistical assumptions about how long phone calls lasted.  They tried
> various ways of punishing customers who stayed online for long  
> periods,
> but eventually recognized that another approach was needed and  
> deployed
> technologies like ISDN and DSL.
>
> In the long term, Comcast and everybody else, including our very vocal
> Brett Glass, will be forced to reevaluate their hardware needs.

The message above reflects a misunderstanding of the problem.

The issue is not, as some of the lobbyists are claiming, "hardware  
needs." I am an Electrical Engineer and have overdesigned our hardware  
so that it is more than equal
to the challenges of increased demand. However, users will have to  
expect to pay more to use such services, because the cost per Mbps of  
backbone bandwdth is increasing, not decreasing, due to  
anticompetitive practices and market concentration.

--Brett Glass

--Brett Glass





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