re: At Stake: The Net as We Know It

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: December 17, 2005 5:35:22 PM EST
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] re: At Stake: The Net as We Know It
Reply-To: dewayne () warpspeed com

[Note:  This comment comes from reader Thomas Leavitt.  DLH]

> From: Thomas Leavitt <thomas () thomasleavitt org>
> Date: December 17, 2005 2:28:55 PM PST
> To: dewayne () warpspeed com
> Subject: Re: [Dewayne-Net] At Stake: The Net as We Know It
>
>
> > As broadband use grows, the Bells and cable companies say that
> > intensive users aren't paying their fair share. File-sharers swapping
> > music and movies account for 60% of North American residential
> > broadband use, estimates Dave Caputo, CEO of Sandvine in Waterloo,
> > Ont., which sells technology to manage network traffic. "Your
> > overeaters get preferential treatment over weaker ones," he says.
> >
> > IT'S OUR NET.  Carriers could raise their prices for consumers who
> > clog the network. But when Korean phone giant KT noted that 5% of its
> > users accounted for half of its traffic and floated the idea of
> > volume pricing earlier this year, the public outcry quickly quashed
> > any plan.
>
> This is B.S.
>
> I built a multi-million dollar self-service web hosting business (web
> Communications, LLC) based on the core insight that bandwidth hogs
> should pay up - that you can't let 10% of your users degrade  
> service for
> the other 90%... the business was started after we observed that  
> 80% of
> Netcom's FTP connections and bandwidth were being consumed by "Charlie
> Tuna" and his pron archive, blocking out access to the other 1,500  
> small
> business "web sites", and making their operators extremely unhappy.
>
> Netcom refused to do anything about this, and refused to install an  
> HTTP
> server, and dropped the opportunity of a lifetime in front of my late
> partner, Chris Schefler (who was operating the "Netcom FTP report" and
> mailing access log extracts/reports to 1,000+ Netcom customers -  
> another
> service Netcom was not interested in providing), and myself.
>
> We put a web server up, promised that we'd provide as much  
> bandwidth as
> people could consume - as long as they were willing to pay for it, and
> had people breaking down the doors to get on, even during our beta
> pre-launch phase. Positive cash flow from day one... Netcom could have
> owned the web hosting business, if it had listened to its  
> customers, and
> not been obsessed with becoming the AOL of the Internet.
>
> If bandwidth hogging was a genuine problem for the DSL and Cable
> providers, and not just an excuse to lobby for walled gardens,  
> you'd see
> consumption based pricing models being put in place - they have the
> equipment in place to identify high consumption users, and I'd bet  
> that
> 95% of the consumption would disappear the moment such a system  
> were put
> in place - even if it only affected 5% of their user base.
>
> To be honest, I'm somewhat astonished they haven't done this before...
> if a business could shed 80% of its marginal costs, and affect less  
> than
> 5% of its user base (all of whom pay the same rates), why wouldn't  
> it do
> so? Unless the true costs of providing the bandwidth are almost
> neglible... how much "damage" could the negative PR cost?
>
> That said, of course, consumption based pricing has a negative  
> effect on
> broadband innovation, and it is really easy, as a business, to neglect
> to adjust your quotas (it does produce increased revenue) upwards over
> time and wind up having a large number of people invisibly elect to
> either not access bandwidth intensive services, or switch providers.
> Witness the Alternative Minimum Tax debate... if not managed so as to
> simply retard bandwidth consumption at the margins, to keep the  
> network
> from being overwhelmed, then they are likely to be a drag on  
> innovation
> and a long term sedative for business growth.
>
> Perhaps these dangers could be alleviated by some real-time pricing
> metric that makes bandwidth consumption pricier when there is network
> congestion, and conversely, that adjusts bandwidth limits upwards and
> mandates network upgrades when they start affecting more than, say, 3%
> of your post-implementation customer base...
>
> Regards,
> Thomas Leavitt

Weblog at: <http://weblog.warpspeed.com>



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