From Wired comes a report that AT&T’s 2nd quarter new installation results have cratered. What I mean by cratered is a drop of 90%. Give a read –

Att AT&T posted its second-quarter report this morning, and boy, was it a doozy.

The company added a modest 46,000 broadband subscribers during the quarter, a screaming decline from 491,000 additions in the first-quarter 2008; and down sharply from the 400,000 subscribers added in the second quarter 2007.

We’re not sure what the problem is, but there are two possible explanations: Either people are less willing to pay more than $30 per month for broadband service; or people are less willing to pay AT&T for broadband service.

Well that’s troubling. It will be interesting to hear what Verizon’s results will be. My gut says a combination of factors are in play here. 1) AT&T has plumbed all of its existing LATA territories. 2) Rap on poor service and subpar speeds. 3) Inept marketing. 4) and Finally, the economic conditions. Look broadband as the Duopoly sells it is treated as a premium alternative to off the air broadcasting services. In that guise, in the consumers eyes it gets labeled ‘Entertainment’, not ‘Information’. So when the times are tight the luxuries are turned off. What is happening to Starbucks is probably going to happen to some segments of broadband as well.

Yes Dear Reader, we are back to the Third Pipe argument of selling the consumer plain dumb pipe. So long as you wrap yourself in the ‘Entertainment’ category you the provider run the risk of being kicked to the curb. Give us transport only options, no mail, websites, or other goofy services like ‘The Fan’. Residential data cable, we buy the modem, $15/month. FIOS speeds, same conditions, for $30/month. Oh I can hear the roars, but our staff levels! RIF them. You were going to do it anyway and lumber on with crippled services. Dispense with the Land of OZ mentality. It will only garner you more bad press.

On a related note. Readers if you know of a good provider in the Plano Texas area that provides a good price for T1 or SDSL at 768kbps I would like to hear from you!

Linky.

More cracks appearing in the bowels of the Duopoly giants. First this one –

908-717-3115 is the number for the NJ Verizon Escalation Hotline. This is the number they’re giving out to Verizon customers in NJ who signed up for FiOs and are still waiting for their free LCD TVs. Leave your name and number and they’ll call you back.

Calling the regular Verizon customer care center won’t resolve the problem. So hey lets look like we are doing something. We’ll create a hotline for people to call, which we will dutifully ignore. But it sure looks good to the exec in the powerpoint slide.

Second –

After five weeks, 20 calls, a day off work and three visits that ended without any idea why Bayes couldn’t get service, Comcast found the solution to this head-scratcher of a problem: The company hadn’t run cable lines to Bayes’s house.

…Bayes, a membership specialist for the National Rifle Association, said his problem began before the first service agent came to his home. The new-home specialist should have been able to tell Bayes there was no service to his new home from the first call, he said. None of the many other service representatives caught that error for weeks.

Comcast installed a line from the neighborhood hub to his home almost six weeks after his first call.

“We went above and beyond for him,” [Spokeswoman Jenni Moyer] said.

But that wasn’t enough for Bayes. Last week, he switched providers.

Ya got that? Comcast could not understand why a customer could not get a connection. Ok. It would seem after the initial ‘ping’ to the modem, then another ‘ping’ to a head end they might figure out that “hey we have a break somewhere!” To consider that Comcast thought they had runs to the neighborhood but did not is at best laughable if I can only stop crying.

This ladies and gentlemen is what happens where there is no competition at the local level. Saving grace? Comcast is the provider of only resort for most of the metro Washington DC area. Heh.

HT: Consumerist

Noah Pepper over at Public Knowledge lays it out pretty well on the whole issue about network congestion and bandwidth caps. So without further adieu –

For example, lets assume we study two users on the network, lets call them Alice and Bob. Both are on the same service plan and network, which allow them 5mbps normally, but the network gets congested during peak hours (5pm - 11pm) allowing a user to use at most 2mbps. Alice gets online at 2 am and starts downloading large files, maxing out her internet connection until the next day at 2 pm. Bob gets home from work at 5 and hops online to watch streaming videos until he goes to sleep at 11pm, using only 1mbps. At the end of a month Alice will have downloaded a huge amount of data and doubtless be tagged as bandwidth hog, yet contributed nothing to the congestion problem. Bob will be considered a normal user at the end of the marking period - but has a far more significant impact on the lower quality of service during peak hours than Alice does.

Targeting these alleged bandwidth hogs for having large total usage by restricting network access or raising rates doesn’t get at the real problem, which is congestion during times of heavy usage. These penalties are essentially punishing consumers for gaining extra utility from the service, particularly at non-peak usage hours, at no harm to the ISP or other users.

Hogging implies taking much of some resource for one’s self and preventing others from gaining access to that resource. If a customer is able to do this, then the network is not being managed properly. If the network is so constrained such that 5% of users can cause congestion, even during off peak times, then the infrastructure is clearly due for an update or the ISP has promised much more bandwidth than it can deliver.

Throttling everyone during peak usage is the only sensible solution to this problem (besides upgrading the network). Getting online and finding speeds to be slow during peak hours is akin to trying to place a cell call during especially heavy usage and getting denied service, it is an unavoidable degradation in quality of service which should not pose a problem if it happens infrequently.

Now if throttling during peak periods solved the problem well that would be fine. But long term it won’t. Here is the reason why. Automation. I or anyone with the inclination could set up a cron job with a list of the files I want. Set the time for midnight and let it fly. It could drag file after file till exhausted. The bandwidth demand just shifted.

The only solution is that the ISP need to start investing to increased the bandwidth. Not by a little but by at least a factor of 10 from its current levels.

Linky.

Over the last year we’ve covered the promises of telcos and cable guys to deliver improved but second best technology at a premium price to American broadband customers. We’ve also heard from them the likes of AT&T that 6MBPs down and 768KBPS up is “adequate”, and that bandwidth hogs are ruining things for everyone. Recent polling may reveal that the consumer is not being so easily fooled:

The U.K. market research firm said 4.2 million high-speed Internet users received fiber in the first quarter of 2008 versus 2.5 million who received cable. “It’s a significant milestone for fiber-optic broadband,” Point Topic CEO Oliver Johnson said in a statement Wednesday. “Where it is available, consumers will take fiber over other broadband technologies.” 

The report removed all doubts that consumers might decline to install fiber because they think they don’t need or want additional bandwidth. The Point Topic report concluded that price is a significant factor in choosing fiber. The fast speeds of fiber also appear to be a factor in subscribers choosing the technology, according to Point Topic.”If you look at the cost per megabit, then DSL comes in at around $20 per megabit per month taking global averages. Cable does better at roughly $12, but they are both completely eclipsed by fiber where costs can get as low as 50 cents per megabit per month,” Johnson said in a statement. (Information Week)

We’ve been had, and we’re getting had, and we will keep getting had as long as we keep accepting it. No matter where you are in the world, the broadband  the bar is raising. It’s time to make some changes in the American broadband market. The customer’s wishes need to be heard and heeded. 

In the battle for broadband supremacy, at least how the duopoly define it, it very maybe that the majors are missing a large target market In a recent Pew Poll of broadband there were a few key points –

• 62% of dial-up users say they are not interested in giving up their current connectionfor broadband.

When asked specifically what it would take them to get them to switch to broadband:

• 35% of dial-up users say that the price of broadband service would have to fall.
• 19% of dial-up users said nothing would convince them to get broadband.
• 14% of dial-up users – and 24% of dial-up users in rural America – say that
  broadband service would have to become available where they live.

And of noninternet users….

When asked why they don’t use the internet:

• 33% of non-users say they are not interested.
• 12% say they don’t have access.
• 9% say it is too difficult or frustrating.
• 7% say it is too expensive.
• 7% say it is a waste of time.

Another words roughly 20% of the population that they could get to use broadband have not been provided with a compelling reason to swtich, even if it is available to them. When someone says that it is hard to use. Are they referring to the internet or possibly the website to figure out what the options are? When on says that the Internet is a waste of time. They could be right. Many is the day I have seen my daughter burn her life away on FaceBook. 7% say that broadband is too expensive, and they would be right it is.

What is most striking is that 24% of those dialup user polled said broadband would have to be available to them. That folks is the equivalent of the California Gold Rush. The firm that can tap into that market cheaply and at a profit will have a license to print money. The Majors are not going after that market. They are sticking with the urban/suburban markets.

Full report here.

The truce between cable and the telcos is beginning to erode and there are signs of competition in the small business market. The real catalyst in this arena is the continued enforcement of local loop unbundling in the the last mile to business properties. This has allowed upstarts like Speakeasy who has been aggressively competing for the telco’s T-1 class business. The disruption has forced telcos to compete with similar services, and the highly profitable segment also attracted the cable guys.

Today competition between cable and telephone companies for business broadband customers is red-hot. As of 2006, more small businesses had DSL (35 percent) than cable (25 percent), but that balance is shifting as cable companies ramp up the speed of their service and push business-oriented broadband/phone packages at compete very attractive prices.

According to Brian Washburn, network services research director for Current Analysis, business DSL plans used to be more attractive because they “bundled in a voice line, unlimited local/long-distance plans and wireless options, while cable was broadband Internet and not much else.” Now, however, “cable bundles [for small businesses] are starting to look like the long-established T1 integrated voice/data services from the telco side.” (PC World)

We hgold high hopes that new broadband offerings from Clearwire and potential overbuilds by Verizon outside of their traditional territory may loosen the grip the non competitive US broadband market.

We’ve heard a lot of bellyaching about high cost of providing bandwidth from the cable guys and the death star lately. For the small number of you that have bought the line that bandwidth caps and surcharges are necessary to pay for the “rising cost of providing service and insure a good user experience”, here’s a news piece for you to contemplate:

According to Telephony Online, Cogent this morning announced that customers who commit to three-year contracts and higher volume service provider customers will now get access to bandwidth at a flat $7 a megabit. Prices go as low as $4, for three-year contract customers who consume a 10 gigabit port. An interesting comment from the report: We have seen Internet traffic growth slow over the past year as measured by a couple of references,” Schaeffer said. “The rate of growth in percentage terms has slowed and that is because of a number of factors. The casual video and social networking sites that drive a lot of traffic are maturing and we have not seen the huge wave of displacement by professional video services that would cannibalize cable and satellite TV. (Broadband Reports)

I’ll let you do the math any way you want to. This is indelible proof that the cost of those precious gigabits they want to ration is pennies, not dollars. The bandwidth caps are just a sneaky way to raise prices. This is proof that the cost of wholesale bandwidth is declining rapidly and that there is no financial strain in providing more bandwidth at current uncapped price levels.

Here’s a little known factoid: In the early days of electrical power, you paid a monthly charge based on the carrying capacity of the transmission line entering your premises. Electric service began as a luxury, and prices fell rapidly as companies began to rush to connect new customers. Electric meters arrived after just about everyone was connected. There wasn’t really any lack of capacity, there was a lack of new revenue growth. The occasional massive power failures began long after the electric companies began to manage use. Yes, by then we had many more devices that used electricity, and capacity was necessarily increased. The electric companies had no competition, so while economies of scale were realized in adding capacity, lower prices for consumers never came.

While states like Texas are making efforts to encourage competition in electric service, we seem doomed to repeat the same mistake with broadband access. There is some level of service available to just about every easy to reach customer, and often there are two providers to chose from. New customer growth has peaked, and the tiered service level opportunity has already been employed to boost revenue. What’s left? Usage billing. The cable guys started it, and now AT&T has signaled they are ready to run with the pack rather than compete. Why? Competing usually means you have to lower prices and improve service.

From a Wired interview with AT&T’s new chief technical officer, John Donovan, he stated:

……. AT&T will begin testing usage-based pricing starting this Fall. That’s driven by the economics of building network capacity, he says, not by an attempt to make more money. According to Donovan, one percent of the company’s customers account for 20 percent of the network usage; the top five percent account for 40 percent of the usage. Because the network must be able to accommodate peak traffic loads, AT&T — like other network providers — finds itself building far more capacity than most users need, just support the most prolific users.”It’s almost a taxation issue,” Donovan said, comparing the overhead required to support the top 1 percent with the annual taxes the corporation must pay. “Traffic on our backbone is growing 60 percent per year, but our revenue is not,” he said.

Usage-based pricing trials will be, he says, an attempt to encourage greater efficiency in the way customers use capacity.

It would seem the death star is on board with the plan to charge us more with no improvement in service. The need for new cash to meet demand is a paper tiger. The cost of delivering service is tiny, maybe 10% of the retail price. The balance is more than enough to build a more robust network if only adequate competition existed to foster it. Plus, new network infrastructure requires less power, upkeep and fewer man hours to operate while delivering exponential increases in capacity.

With Time Warner, Comcast, and AT&T on board with this new effort to further bilk the customer, will Verizon join the party? Bet on it. If our esteemed representatives in Washington and the state capitals were not so well bought off by the duopoly, we’d see charges of the duopoly operating as an illegal cartel being made.

When a market lacks adequate competitive forces, providers will invest in rationing before they invest in more product. Here’s more proof that there is not adequate competition in American broadband access: Comcast has cooked up yet another network management AKA rationing scheme. This concept is as old as the service cue at any government office. It’s called take a number and wait. Comcast’s subscribers are going to love it!

Comcast CTO Tony Werner stated at the time that “the outcome will be a traffic management technique that is more appropriate for today’s emerging Internet trends.” According to an internal memo obtained by Broadband Reports, this more “appropriate” system will be tested in the Chambersburg, Pennsylvania and Warrenton, Virginia markets from June until July.

The memo indicates that the company will be testing several management techniques (I’d assume from different vendors) in the two markets over the next month, all of which solely target high-consumption users at peak congestion times. If you recall, Comcast’s existing system throttles the upstream BitTorrent traffic for all users twenty-four hours a day (something Comcast denied).

This new solution will ensure that heavy users are “temporarily placed behind other users until the congestion has passed.” Those users will be forced to “wait in line” while other customers’ data requests go through first. (Broadband Reports)

We’re always the first to report when the cable guy actually keeps a promise, just as we criticize them when he behaves badly. This post is a first, as I am reporting for both reasons. The promised metering in Beaumont begins Thursday.

On Thursday, new Time Warner Cable Internet subscribers in Beaumont, Texas, will have monthly allowances for the amount of data they upload and download. Those who go over will be charged $1 per gigabyte, a Time Warner Cable executive told the Associated Press.

Metered billing is an attempt to deal fairly with Internet usage, which is very uneven among Time Warner Cable’s subscribers, said Kevin Leddy, Time Warner Cable’s executive vice president of advanced technology.

Just 5 percent of the company’s subscribers take up half of the capacity on local cable lines, Leddy said. Other cable Internet service providers report a similar distribution.

“We think it’s the fairest way to finance the needed investment in the infrastructure,” Leddy said. (Google)

The press release goes on to say that metering is common in other countries. This in true in places like Canada, where there is virtually no competition. It is not true in MOST western countries. Time Warner already offers several service levels that in effect establish some limit on downloads. This is supposedly aimed at the top 5%, but the Time Warner sited “average” usage of thousands of pages and emails per month are for static content, not the rich media content of today’s net. It’s a safe bet that many “average” users will be seeing a few surprises in their future bills.

Since no one is providing a better / faster / cheaper service in Beaumont, this was inevitable. The fact is that if Time Warner had any real competition in, they would be investing in a more robust pipe instead of investing in a system to count and ration each customers downloaded bits.