James Mowery: Technology and Social Media Journalist
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Are ISPs Harming America’s Economic Growth?

Posted on June 24, 2008 by James Mowery

Things used to be different back then, but nowadays, it seems that good things are no good at all. Apparently, making plenty of money is a bad thing for consumers in the corporate world. Quite a few internet service providers believe they should charge more and offer less. Now I might not be a rocket scientist, but I thought the price of internet was supposed to decrease with time—you know—just like the rest of the world.

Comcast’s total revenue went up nearly 24%, Time Warner Cable’s total revenue went up nearly 36%, Charter Communications’s total revenue went up nearly 9%, Verizon’s total revenue went up 5%, and AT&T’s total revenue went up an amazing 88% in 2007 from the previous year. These statistics are aimed at each company’s entire business revenue (including television, telephone, and internet), but the fact is that all of the aforementioned—even the struggling companies—are making an increasing amount of revenue.1 2

Nice job internet service providers! But wait, what’s this: you want to charge us more money for our internet data, you want to enact tiered internet services, you want to sell our private information to advertisers, you want to harm web-based content producers who rely on this data for their user’s (like TWiT Live and Revision 3), and you want to limit the expansion of the internet in America?

Well, that does not sound like the typical “thank you” which I would have expected. Clearly, there must be some issues here.

Problems

Regardless of whether or not you believe what internet service providers are saying, it is quite understandable that there are certain people who are regularly abusing internet services.3 Some are doing this intentionally while others simply have huge demands for legitimate uses.

You might pay for an all-you-can-eat buffet, but if it was really all-you-can-eat, making money could, understandably, become much more difficult. Well, subscribers to internet services should realize this as well, but some people just don’t get it. After all, it is easy to feel invincible while sitting behind a computer screen.

People should follow fair use guidelines, but unfortunately, there are none. Really though, how can someone possibly determine what is excessive? How could it be enforced? Is 50 GB of data usage per month acceptable? How about 500 GB per month? If an arbiter must be called in to determine what is fair and what isn’t, the system itself is a failure. It is a messy situation.

Then again, should everyone be penalized because of what a few peer-to-peer power users do online?

It is also fair to believe that running fiber to new areas is an expensive thing to do. Although, since more people are getting wired to the web (and also getting wireless), this should not be a problem as the money will be made back with time.

Steve Lohr reports in the New York Times about data centers’ inability to keep up with demand:

There is no letup in the demand for data center computing. Digital Realty Trust, a data center landlord with more than 70 facilities, says that customer demand for new space is running 50 percent ahead of its capacity to build and equip data centers for the next two years. “We’re building the railroads of the future, and we can’t keep up,” said Chris J. Crosby, a senior vice president at Digital Realty.

For every new center, new data center administrators need to be hired. “It takes us eight months to find a guy to run a data center,” said Mr. Crosby.

So, our country could combine the East and West with the First Transcontinental Railroad within 10 years in the 1860s, produce military vehicles, ships, and weapons within months in the 1940s, and place a man on the Moon within nearly 10 years in the 1960s, but we can’t wire up some homes?

Time for a twist! If you are one for conspiracy theories, some folks believe that cable companies are raising internet prices to protect television services. The theory itself, while being questionable, must empower a few people to put their thinking caps on.

If you consider the possibility that people are going to be traveling less due to rising oil prices, many people are going to be staying at home. If you take a family of three, you should consider the costs incurred just to do a few things: movie theater—$15; dine out—$30; and transportation—$10. These are relatively conservative estimates.  People are going to want to get online while they are at home; it is common sense really—it is actually cheaper to simply stay home and find your entertainment on the web. Why are ISPs denying themselves of these customers?

Maybe the conspiracy theory is true.

Solutions

These problems can be fixed, but it requires more brain power. I don’t have the answers to solving this problem; I don’t own an ISP company. There are far too many factors to take into consideration. I know that a company needs to make money, but the company needs to be fair on how it approaches these issues.

However, I know what internet service providers can’t do to their users. No matter what, they can not place a hard limit on data usage. It is absolutely ridiculous to cut someone off of the internet entirely these days. Many people, like me, make a living on the internet.

Charging extra for every gigabyte you go over a certain limit is also a rip-off; it would be like dealing with a cell phone company. I don’t know about you, but I would gladly pass the opportunity to deal with all those extra hidden fees and charges.

Finally, ISPs can’t discriminate against certain types of traffic. Net neutrality must be maintained. If I pay for my bandwidth, I want to be able to do whatever I want with it. Content providers should be able to provide their content to me without having to pony up to an ISPs demands.

The perfect solution would apply to everyone equally, always allow access (no matter how much data is being used), and encourage legitimate uses of the internet.

If companies have to charge more for the internet, then so be it—charge more money. As bad as that sounds, I’d rather have my data how I want it at a higher cost than have all these limitations placed upon my connection to the digital world.

America is not running out of bandwidth. If anything, America is running out of competition. America is technologically backwards in this respect as a result of these huge companies that control the internet. It isn’t fair to the consumers, it isn’t fair to our country, and it isn’t fair for those who see America as a place of expansion and growth.

In the end, it is just disappointing.

  1. Source of financial data is courtesy of Google Finance.
  2. Disclosure: I am currently a Verizon DSL and Verizon Wireless subscriber.
  3. I admit that I had my days when I would download gigabytes of data within the span of a few hours. I don’t do that quite so often today. However, I learned—through underground communities—that my upload and download numbers weren’t all that impressive. Let’s just say that I was able to confirm that there are massive bandwidth hogs who’s download/upload numbers I’ve never gotten close to.

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