Thursday, March 27, 2008

The Broadband Salad Bar

The Wall Street Journal reports this morning (article, paid subscription required) on talks between Comcast (CMCSA) and BitTorrent, Inc. to make nice over Comcast's admitted blocking--excuse me, "delaying"--of bittorrent generated traffic.

At first glance it seems a rather ham-handed attempt to mollify Comcast critics. The WSJ and others are reporting it as a fairly straight up development, if something of a backpedal by Comcast. But these miss the point, I think, sidetracked by conspiratorial discussions of "net neutrality" and how the big bad telecablecos are angling to limit our choices, take over the world, and generally do evil.

Do I believe the big ISPs want to control content (or access to it) as well as the pipes? Absolutely. There's gold in them thar hills! None of them want to be limited to connectivity or bit delivery services. But will they succeed? Is the above fictional ad to be our broadband future? I doubt it. Anyway, it's beside the point.

There's another motive for ISPs to manage bandwidth on their networks--it's a finite resource. No, Virginia, there is no unlimited bandwidth. You can talk all you want about Moore's Law, etc. Bandwidth ought to be cheap. In a perfect world--or Asia--it is cheap. But not here, not without real competition.

The telecablecos have promised this always-on, flat-rate, high-speed internet access. It was a fiction created by the need for market share, and by consumer demand for a broadband salad bar. All-you-can-eat, with a fixed price. Sounds wonderful. But it could never have lasted since the infrastructure is largely shared and was built on the expectation that demand would be low (or at least intermittent).

Now the growth of video is stealing the condiments, and file sharers are sneezing in the salad.

There's no free lunch. So you do one of two things. Limit how many trips each patron can make for salad. Or charge them for each trip. Comcast has tried the former. My bet is on the latter.

You believe it's a fantasy? That no one will go for tiered or bit-based pricing? Think again--Time Warner (TWX) is already trialing it. And the more successful we are at regulating the ISPs to ensure net neutrality (in the absence of competition), the more likely it is we'll see pricing by the byte.


Davis Freeberg said...

Comcast could have put in fiber as well, but they've always been too worried about the the market's reaction to their capital expenditures. Verizon at least bit the bullet and took the time to put in a system that wouldn't be constrained by too many video bytes. It wasn't nice for their shareholders at the time, but they should be sitting pretty now that they've spent the money. If we didn't have the bogus franchise rules, Comcast wouldn't have been able to get away with throttling the traffic to begin with. I remember when consumers were still jumping off of dial-up and Comcast used Bit Torrent as a carrot for people to upgrade to the faster service. Now it's telco's turn to use this tactic on the incumbents.

Until we can open up the local franchises to competition though, we'll still be at the mercy of the cable companies. In Alameda, they have a government run cable provider that competes with Comcast and not only do they not throttle, but they charge less than Comcast as well. In fact, because of the competition, Comcast offers a package that is $10 less per month, then the rest of the Bay Area.

It was pretty cool while I lived there and I got to know a lot of the Alameda employees. They told me there was real bad blood over their competition and that Comcast tech guys would slash their cables all the time. I think Comcast even had to pay a fine because they slammed about 10% of Alameda's customers during the summer that I lived there. One day I'm supporting the local government and the next, I was receiving Comcast cable without every giving any authorization. At first I thought Alameda went under and sold it off to Comcast. It was really bizarre when it happened, I went bonkers.

Even with Alameda's unthrottled bit-torrenting, it still wasn't as cool as when I lived at Zooomr's HQ's for three months and got to tap into fiber for the first time. Not only could I download large files in nothing flat, but when I seeded my own videos on Bit Torrent, they spread like wildfire. I've never gotten that kind of exposure with cable or DSL. I'd pay twice what I'm paying to get access to fiber now, but Comcast locked the rest of the Bay Area into an exclusive deal, so that the local governments could solve short term budget problems.

Scott Berry said...

Competition. Aye, there's the rub. If there was any, everyone would have rushed to put in more capacity. Especially if they saw themselves as being solely in the pipes business.

These guys are the only industry I know where they promote use of the service and then restrict how much you can use. Silly, really.

Only Verizon seems to have fully understood the game--first fiber to the home wins.

(Back in my Metromedia Fiber days, there were plenty of stories about Verizon techs sabotaging other carriers' fiber runs in NY subway conduits. I suspect they weren't the only ones who got "careless" with other people's cables.)