When Cablevision of New York announced this week it would begin offering broadband Internet service of 101 megabits per second for $99 per month, lots of people took notice. Which was the point.
Maybe the 101-megabit product is a good experiment. Maybe it will be successful. Maybe not. One hundred megabits per second is a lot, given today’s applications (and especially given cable’s broadcast tree-and-branch shared network topology). A hundred megabits, for example, could accommodate more than five fully uncompressed high-definition TV channels, or 10+ compressed HD streams. It’s difficult to imagine too many households finding a way today to consume that much bandwidth. Tomorrow is another question. The bottom line is that in addition to making a statement, Cablevision is probably mostly targeting the small business market with this product.
Far more perplexing than Cablevision’s strategy, however, was the reaction from groups like the reflexively critical Free Press:
We are encouraged by Cablevision’s plan to set a new high-speed bar of service for the cable industry. . . . this is a long overdue step in the right direction.
Free Press usually blasts any decision whatever by any network or media company. But by praising the 101-megabit experiment, Free Press is acknowledging the perfect legitimacy of charging variable prices for variable products. Pay more, get more. Pay less, get more affordably the type of service that will meet your needs the vast majority of the time.
Free Press has recently been criticizing other bandwidth caps, like Time Warner’s 250 gigabyte per month limit for standard users. But offering tiers of service — again, pay more, get more; pay less, get broadband more affordably — is just another type of bandwidth cap. You can’t pay $40 a month and demand the same bandwidth for which an Internet company pays tens of thousands of dollars per month. Tiers based on peak bandwidth (speed) or tiers based on total data consumed over some period of time are just different ways to divide capacity and differentiate products. Far from being anti-consumer, these varied rational pricing strategies, which charge more for more usage, axiomatically make getting basic broadband more affordable. More broadband products means more choice and higher consumer welfare.
The 101-megabit product is in itself a “cap.” Fast though it is, 101 megabits is not “unlimited,” which is what Free Press seems to want. Moreover, the new offering creates new “caps” at the 15 and 30 megabit levels, which are its existing products. Go to the last line in Free Press’s statement, and you begin to see through all the recent feigned outrage:
We also encourage companies like Cablevision to think about the other part of the value equation — price. These days, lower prices are just as important as faster speeds.
So. Unlimited service for ever lower prices. They want not just something for nothing. But, seemingly, everything for nothing.
In fact, if I remember, Free Press used to favor per-usage data metering and oppose tiered speed offerings. Just the opposite of today’s apparent position.
And can anyone tell me what this paragraph means?
It does, however, beg the question why Cablevision can offer fast access with reportedly no caps or overage fees, when others claim such a plan would cause the sky to fall and an exaflood to break the Internet. We hope this new announcement will put an end to the bandwidth bogeyman.
Backwards, again. We’ve always said companies would need to offer higher-end services — and charge more for them — to both drive and accommodate new bandwidth-intensive applications. It’s the type of inflexibility in prices, products, technologies, applications, and business plans that could squelch the crucial wired and wireless bandwidth investments that we need to deliver an exaflood of exciting new applications and services to an ever greater portion of the population.
When you come right down to it, Free Press’s “position” is inconsistent to the point of just not making much sense at all.
