AT&T Broadband, Charter Communications, Comcast, and Cox users beware...
 

There are changes afoot.

http://biz.yahoo.com/bizwk/020612/tc200206121108_1.html

BusinessWeek Online
Will Cable Unplug the File Swappers?

Technology: NEWS ANALYSIS

By Jane Black in New York

Jon, a computer programmer, is exactly the kind of music lover the Recording Industry Association of America has in mind as it tries to shut down music file-swapping services such as KaZaA. He has downloaded about 5,000 songs off the Internet in the past two years. The vast majority, Jon concedes, were pirated copies, including the latest album from rapper Eminem.
"I only do it because it's free," he says matter-of-factly. "I don't do it to sample new music before I buy, like Napster always used to say."

Jon may be heading back to his local Virgin Megastore soon. Not because of the music-industry's lawyers, but because he won't be able to elude the Cable Guy. A host of cable companies, including AT&T Broadband (NYSE:T - News), Charter Communications (NasdaqNM:CHTR - News), Comcast (NasdaqNM:CMCSK - News), and Cox Communications (NYSE:COX - News), are moving away from the old flat-fee pricing scheme that allowed users to download and transmit endless amounts of data [especially music, movies, and software] over high-speed connections. Instead, they're rolling out new pricing schemes that could put limits on bandwidth usage per month and charge users additional fees if they go above the limit.

"LESS SHARING"? Another option: tiered pricing based on bandwidth speed, rather than the amount of bandwidth used. Charter has had tiered pricing based on speed of service [the faster the download, the more you pay] for almost two years. It reports that 60% of its users choose a lower-speed plan.

These new pricing models could be serious trouble for the still-growing peer-to-peer [P2P] file-sharing movement, which is inextricably linked to cheap bandwidth. Indeed, the cable companies just might accomplish what the entertainment industries -- with their high-pressure legal tactics, copy-protected CDs and DVDs, and aggressive lobbying campaigns in Washington -- have failed to do.

"This is one of the greatest threats to peer-to-peer file-sharing," says Kelly Truelove, an independent P2P expert. "If a critical mass of broadband providers institute pricing structures that make people sensitive to the amount of data they transmit, there will be less sharing."

RUNNING FOR COVER. The cable companies' adoption of new pricing strategies has less to do with stopping piracy than with economics and business models. At an average monthly cost of $45, broadband is still perceived as too expensive by many consumers, and in recent months, prices have been rising, rather than dropping. That's slowing subscriber growth. According to market-research firm ARS, the rate of new signups for broadband in the first quarter of 2002 slid to 12%, the worst quarter on record.

Disappointing demand has left cable operators scrambling to cover the $60 billion they spent building and upgrading their networks over the past decade. At the same time, they've tired of seeing a small group of heavy users tax their networks while paying the same flat rate as everybody else. AT&T Broadband says on its system, 1% percent of users account for 16% of bandwidth consumption.

Cable companies have another reason for acting now: Because they can. AT&T, Comcast, and Cox have been freed from their agreements with @Home, the now-bankrupt high-speed Internet service provider. Under the old system, @Home controlled prices and speeds as well as customer relationships. Those deals expired at the end of 2001, and @Home ceased operations in February, 2002. "One-size-fits-all doesn't make sense anymore. As more people sign up for broadband, it makes even less sense," says Mark Kersey, a broadband analyst with ARS. "Now [the cable companies] are in complete operational control, and they can do what they want."

TWO-WAY TRAFFIC. Good news for cable companies, bad news for file-sharing services. Networks such as KaZaA, LimeWire, and Morpheus depend on cheap bandwidth. But hard-core file-swappers such as Jon might have second thoughts if they get hit with steep cable-bill hikes for downloading hundreds of music files that, even in compressed MP3 form, comprise several megabytes of bandwidth.

File-sharing programs work well only when users make the songs or movies on their hard drives available to other users, creating a better selection that draws more users, which then creates better selection ad infinitum. Since many broadband users leave their connections on 24 hours a day, every tune or film they've ever downloaded is available to the million-strong file-sharing community at all times.

Remember, file-sharing involves both uploading and downloading. What happens when big bills start arriving in the mailboxes of the "supersharers" who supply a disproportionate amount of the inventory to P2P networks? Would they be willing to pay stiff broadband fees for transmitting files to others on the network?

LOST APPEAL? If the supersharers don't want to fork over for merely being suppliers, they might be inclined to be less generous. If the services have less to offer, they could ultimately be less appealing. And broadband users who opt for slower-speed service would be less likely to use P2P networks since downloading and uploading would tie up their connections and slow down their Web surfing.

[In contrast, current versions of the label-backed services, pressplay and MusicNet, wouldn't be affected. Their users only download music or stream it. And the services' restrictive plans would keep users well within bandwidth limitations.]

The prospects of the cable companies' moves has the entertainment industry cheering. "Everything else in life has restraints -- except digital music and movies," says Ted Cohen, vice-president for new media at EMI. Cohen is optimistic that tiered pricing for broadband could introduce a "financial consequence" for piracy and cut down on sharing of pirated content. "Tiered pricing won't help artists or labels get paid, but it's a step in the right direction," he says.

BANDWIDTH BANDITS. It may be premature to count out the innovative file-swappers, however. P2P expert Clay Shirky points out that more efficient file compression and trading patterns could still make the cable companies' bandwidth charges irrelevant. Some cable hackers have already come up with ways to turn off bandwidth counters and grab as much download and upload capacity as they want. Even music execs concede that the new pricing won't completely eliminate piracy.

The cable companies are plowing ahead. Cox is pilot-testing a tiered pricing plan in Las Vegas. AT&T Broadband, which has yet to settle on a new pricing system, plans to have a new policy in place by summer's end. Spokeswoman Sarah Eder says it's considering charging customers based on the number of bits and bytes they send over the network.

That could leave swappers such as Jon with the choice of either getting his music the old-fashioned way -- or paying the cable companies a substantial sum for grabbing it off the Internet.

my isp, s.n.e.t., has unlimited broadband for $39.99, but it has unlimited dial-up for $9.99. if they institute capping and i find my p2p experience substantially degraded, i'll just switch to dial-up and save the 30 bucks. so will millions of other users.

file sharing has been and continues to be the killer app for broadband providers. it’s the tail that wags the big pipe dogs. they've got another thing coming if they think their 60 billion dollar investment will get paid off by people who just want the latest flash or their emails uploaded faster.

no file sharing = no need for high bandwidth. you’d think it’s obvious by now.

someone smart will come along pronto and sign-up all those lost ex big-pipers and figure out a way to give them what they want and make a pile off them too. if att can't do it they can get out of the way and watch those monthly checks go to some other outfit that can.

- js.

Well crap, that's not good. They better not do bandwidth limits otherwise it's bye bye attbi and hello dsl. I've already heard about tiered pricing a while ago. If DSL gets cheaper than cable, I'll probably get it. Or go to a slower cable plan.

yep; and that's precisely why they are now reworking their business models around it. they realize now it's how they are going to make serious money.

in this instance i see capitalism and lack of regulation as working out. they will reshape thier model around p2p; sure; but at the same time they will HAVE to keep it affordable.

sadly, they WILL figure out exactly just how much the average user will pay for unlimited bandwidth; and set the price at that. but i don't expect it to be the end of p2p at all; it will more likely end up with broadband pricing dropping to as cheap as $15 a month (with barely any bandwidth) while the price rising for the heavy users to around $60 instead of $40. any other plan they will quickly see will kill their business.

Amen to that. They bite the hand that feeds.

It's interesting how they think they can sell you a fat pipe and then charge you more if you dare to actually use it.

In the background is the reality that the available bandwidth isn't limitless, and what is available is getting filled fast. High demand and limited availability usually means escalating prices - and new opportunities for innovation.

It's a hazard of the digital age - a technology that grows too fast to become stabilzed.

It has already begun in Canada

5 Gig a month

$8 the Gig, above the limit

metered service
 

My service has been metered and priced based on volume for over 5 years. The last eight months I averaged in excess of 32 Gigs a month according to the bills.

I just pay for what bandwidth I use and forget it. At ~$120 a month for 4 mbit/s ADSL it is cheap. Plus I get a real NOC with real humans to call when there is trouble which happens on average of about every 18 months or so.

I can see the day coming when we will consume 100 gigs a month as simply a matter of course. The value we get from the Internet far exceeds the cost.

Why is everybody carping?

I found the usage stat really funny, it's like they just found this out and it's a huge shock to them or something. Just basic stats. It's the old 20/80 rule; 20% use 80% of resources, 20% make 80% of the money, 20% of drivers do 80% of all driving. Hey, how about this shocker: less than 1% of the population uses 100% of the skateboard parks, tax funded too. Better start cracking down on that.

It's just an excuse to charge more money.

nicely put hehe

as a loyal 56ker, i still say, that no matter how long, how hard, or how evasive a song...
nothing will stop me from getting me tunes!

charge away.
this doesn't matter to me, i think getting 30 songs all at once is a bit greedy. i say charge em' all.....muuuuwwwwhhaaaaaaaaa.
maybe it will stop these greedy folk from slowing my one-song download, so they can get 30.:f: