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Consolidated response Re: Will on-line backup be evil, too?
From: David Farber <dave () farber net>
Date: Fri, 27 Mar 2009 14:25:04 -0400

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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