[ NNSquad ] Re: NYT: Differing views on Time Warner's Bandwidth Cap Experiment

[Barry Gold <bgold@matrix-consultants.com>]

I wrote:
> If the slowdown is based on
>    a) endpoints
>    b) how much bandwidth the user has consumed this month
> then it meets _my_ definition of transparency.  The idea is that the ISP 
> shouldn't care about what's _in_ the bits, only about _how many_ bits 
> are being transmitted.

A recent comment made me realize that there _is_ a NN aspect to charging 
for bits.  Assume an ISP charges you $1/Gigabyte.  You can get a 
video-on-demand movie that takes up 5GB from the ISP for (say) $5.  Or 
you can get the movie from a website for (say) $4.  Logically, the 
external website is a better deal.  EXCEPT -- your ISP doesn't count the 
VOD movie as internet traffic (even though it moves over the same wires 
and consumes the same bandwidth on their network).  So if you download 
it from the website you will pay $4 + $5 (5GB) = $9, but if you get via 
your cable box VOD control, it costs you $5.

Something is fishy here.

This needs a little more analysis.  As I see it, there are three kinds 
of users involved in this scenario:

1. Those who use only a tiny fraction of their allocated bandwidth. 
Downloading a movie from the website costs them just $4 - there is no 
surcharge because the bandwidth they use is included in their monthly 
allowance.  So these folks are better off getting the movie externally 
-- if they're web-savvy enough to find it and download it there.

2. Those who regularly use most or all of their bandwidth.  Downloading 
the movie will cost them the full $9.  They will be better off with the 
ISP/CableCo's VOD offering.

3. Those who use a significant part, but not all of their bandwidth. 
Say your monthly allocation is 20GB, and you usually use 18GB.  You 
download the movie from the website and suddenly  your usage is 23GB, 
and you get hit with an extra $3 on your bill.  In effect, the movie 
cost you $7 instead of $4 (or $5 from the cableco).  This is likely to 
lead to some angry calls to customer service.  Or maybe instead they 
just downgrade your speed for the excess bits, so your internet access 
slows down for the rest of the month.

I dunno, it looks like this is equivalent to the cableco giving the 
heaviest users a weird kind of discount on the price of the movie. 
Trying to figure otu the effects of this, and whether it's really the 
kind of anti-competitive move that needs government attention -- is 
frankly beyond me.  I have a good understanding of Econ 101, but I'm 
certainly not an economist.  Nor a specialist in regulatory law.  Hmm... 
but I do know one of the latter.  I think I'll see what he has to say.