Tales of the Sausage Factory

Please Tell Idiots In Industry Wireless Broadband Is ALREADY Metered, So Stop Spreading FUD To Support Price Gouging.

If I had a dime for every article I have seen since AOL went to flat rate back in 1996 that foretold the coming end of flat rate internet access plans and the inevitability of metered pricing, I’d have so much money I could actually afford what wireline providers dream of providing as a monthly fee. Despite the “inevitability” of metered pricing for nearly 15 years, it hasn’t happened and I don’t expect it any time soon. Why? Because not only is it wildly unpopular with the customers (it is one of the few things powerful enough to overcome the switching cost for anyone with a choice), but the economics of it do not make a heck of a lot of sense. Heck, Comcast (the largest residential broadband provider) announced in its earnings call on 4Q 09 that it is reducing its capital expenditure on network capacity for 2010 because it has nearly completed necessary upgrades for DOCSIS 3.0, which gives it all the capacity it needs for the foreseeable future. “We don’t need to invest anymore in our network because we have all the capacity we need” is a might inconsistent with “we need to switch to metered pricing so we can afford to expand our network capacity and create incentives against ‘bandwidth hogs’ and other mythical beasts.”

I can forgive wireline providers for indulging in metered pricing fantasies, while admiting them for perpetuating the useful myth og limited capacity to ward off regulation. But when this article on the purported inevitability of metering wireless plans. This strikes me as “Keep The Government Out of My Medicare” lunacy.

As the article itself concedes without saying directly, wireless broadband plans are already metered. Blow past your monthly usage cap and you will pay per-minute charges. For those not old enough to remember, this was the old AOL metered pricing model. You got ten hours for free, then got charged on a per-minute basis. They abandoned it because customers hated it and moved to flat rate price plans. So what wireless providers apparently mean by “metered” is “find a away to reduce the usage cap further by pretending to call it something else.” I expect this will not catch on any better than the efforts to change pricing structure on the wireline side, and for the same reason. The economics don’t make sense.

Which brings us to the next lesson on network economics. The cost structure of building and maintaining the network is marked by high fixed cost and low marginal cost. That is to say, the vast majority of cost comes from building the network itself, regardless of how many customers use it. Once the network is built, the actual marginal cost of each customer is fairly low. Even an intense user does not “consume” very much of the network resources (the supposed “bandwidth hog” is a problem only because network capacity is ridiculously oversold). The argument that the majority of subscribers subsidizes the few “bandwidth hogs” is simply rubbish. The question is simply how obscenely high a rate of return can the network operator squeeze out of each customer.

Back in the old days, we used to require providers to prove cost. Sure we had metered pricing, but that was so that the very profitable areas could subsidize the high cost areas. Nowadays, we rely on “the market” to regulate cost, with the result that profit per customer for the major providers continues to rise. I’m cynical enough to wonder if that’s why we see this endless parade of speeches by network operators and articles by their sycophants about the “inevitability” of metered pricing — so we will thank our lucky stars that when we are outrageously ripped off that it is at the “bargain” of overpriced flat rates.

Stay tuned . . .

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Tales of the Sausage Factory

Wireless Bureau Wisely Decides To Not Play Referee In 3.65 GHz Band

I have a fondness for the 3.65 GHz band for a number of reasons. In the first place, I was heavily involved in the the fight over the rules. For another, it seems to be filing an important niche in the wireless broadband ecosystem. So I was pleased when the FCC’s Wireless Bureau resisted the invitation to get involved in interference disputes in the band. OTOH, it also highlights the value of having a referee with jurisdiction in case something does go wrong.

I know I’m getting to this late, as the decision came out at the end of December, but it’s been a busy time. More below . . .

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Tales of the Sausage Factory

“The Spring Spectrum Shotgun Wedding Fling” or “Sprint WiMax, the Wily Temptress!”

Was it really only last August that Sprint threw over its cable allies by filing for a messy divorce with Spectrm Co. and ran off giggling with Clearwire and Google for a happy WiMax menage? Ah, what a tempestuous summer of spectrum love was 2007! So full of bright promises and prospects for a wireless third pipe that could genuinely compete with cable or DSL speeds. But with the autumn frost, passions cooled. Like Fantine from Les Miserables, Sprint soon found itself abandoned by its spectrum partners and out on the street on its own — desperately trying to make its way in the cold and uncaring world while posting a loss of $30 Billion, and reduced to chanting the old Israeli spectrum folksong Xhom golly, golly, golly, Xhom golly, golly.

But a possible happy ending for Sprint awaits below . . . .

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Tales of the Sausage Factory

Oh yeah, the Skype Petition . . .

In addition to my pleas to save the 700 MHz auction, save postal rates, save internet radio, save the last dance, etc., etc., I almost completely forgot about supporting the Skype Petition. Comments are due Monday, April 30. You can file comments by going to the FCC’s website and filling out the fields. It’s pretty self explanatory except the docket number, which is RM-11361. Just click here.

Oh yeah, I should probably explain a bit about what this is and why you should care. For that, see below . . . . .

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Tales of the Sausage Factory

More Funding For CUWiN=Good News For Open Source Mesh Networking

As regular readers probably know, I’m a huge fan of the Champaign Urbana Wireless Network (CUWiN) and its co-founder and project coordinator Sascha Meinrath. I was therefore ecstatic to hear that CUWiN
received a grant from the National Science Foundation for $500,000.

I have pushed for support for CUWiN for years as one of the great hopes for open source mesh networking using unlicensed spectrum. To unpack that a little from geek speak, it means using non-proprietary code to create nodes that use unlicensed spectrum to form a network by speaking to each other rather than sending a signal point-to-point from a central “hub” (“hub-and-spoke”). You can find a good illustration of the difference between mesh and hub-and-spoke (and good general introduction to community wireless) on this Free Press page.

CUWiN has spent years developing useful open source software and other tools designed to make wireless networks cheap, ubiquitous, and easy to implement in multiple communities and environments. CUWiN software and methods have created networks in Ghanna, the North Lawndale neighborhood of Chicago, Champaign and Urbana, and the San Diego Tribal Digital Village in San Diego County. Their software is freely available and downloadable fromtheir website.
People who care about creating ubiquitous and affordable wireless broadband around the world should be throwing money at CUWiN hand over fist. Sadly, as with so many good and desperately needed projects, CUWiN has lived starved for funds and hand to mouth.

The NSF grant gives CUWiN much needed money to continue and expand its good work. I’m also hopeful that “money follows money” as they say in the grant world. With this level of support from NSF, I hope CUWiN finds it easier to open doors at other foundations and grant sources.

I reprint the CUWiN press release about the grant below.

Stay tuned . . .

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Tales of the Sausage Factory

Tales of the Sausage Factory: FCC on Wireless–Mostly Snooze But Some Stuff I Can Use

Lost in all the hoopla last week on the Multicast Must Carry Vote (which I can explain in a future column) was the FCC’s Broadband Wireless Report. It’s conclusion – Wireless Broadband Is Good. Policy recommendations: Stay the Course.

Well, it’s a _bit_ more than that, but not much. See below….

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