GigaOM White Paper: The Facts & Fiction of Bandwidth Caps

Beginning on Wednesday, Comcast, the largest broadband service provider in the U.S., is going to start capping the total amount of data you can transfer using their broadband connection — to 250GB per month. With this move, the cable company will become the symbol of a new Internet era, one that is both monitored and metered. It is an era that threatens to limit innovation and to a large extent, the possibilities for new startups.

I have been very vocal about the short-sightedness of this decision being made by Comcast (and some other carriers), and along with my colleague Stacey Higginbotham, have been covering the story pretty closely. It is a clear and present danger to the way we use the Internet in this country. 

In order to give you a better understanding of the issues at hand, I have teamed up with my old friend Muayyad Al-Chalabi, an alumni of Bell Labs and until recently an analyst with The Monitor Group, to release this white paper, “Broadband Usage-Based Pricing and Caps Analysis.”

In this paper, we aim to highlight the possible unintended consequences of such policies, among them the stunting of growth and innovation of web-based applications. And of course, higher costs. Plus:

  • The strategy ignores the high degree of dependency “interactions” between power users and the rest of the network. The power users don’t act in isolation and in fact represent the hubs in any scale-free network; sequestering them and overcharging them will result in either low usage or worse, higher costs.
  • Given the growth trend due to consumers’ changes in content consumption, today’s power users are tomorrow’s average users. By 2012, the bill for data access is projected to be around $215 per month.
  • Strategic pricing involves the recognition that changing prices alone cannot solve the challenges facing carriers. Carriers are taking the easy way out trying to protect the “walled garden” rather than figuring out how to innovate in service delivery and harvesting more value from the overall content and applications opportunity.

If you’re interested in getting a PDF copy of this white paper, please enter your email address below. Otherwise, I have embedded a copy (using Scribd) for you to read it online.

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