Whiny Techies or Dishonest Salesmen?

I cannot help but add a coda onto my latest article. Steven Pearlstein, econ columnist for the Washington Post, has written this piece on the recent complaints wrt to Comcast. To quote Mr. Pearlstein:

The latest rallying cry is “network neutrality.” This campaign started out with the legitimate goal of making sure that consumers could continue to access whichever services or content they want, rather than having to take those offered by the cable and phone company duopolists. But lately the campaign seems to have morphed into a broader demand that all consumers should be able to pay the same monthly fee for using the Internet, no matter how much bandwidth they use or how much their movie downloads and video chats are slowing service to everyone else in the neighborhood.

Perhaps this is the kind of economic illiteracy we should expect from people who get their information from “The Daily Show” and the Daily Kos. But isn’t it time for the rest of us to move on and acknowledge that the days of the online free lunch are over?

As you may imagine from my recent post, my complaint is not with charging more for more bandwidth, but for dishonestly promising me an “always on all you can eat” connection, then cutting me off when I use it all the time for all I can eat. I sent Mr. Pearlstein the following reply, reproduced below….

Dear Mr. Pearlstein:

I read your blurb wrt network neutrality and economic illiteracy with great interest.

I would frame the argument somewhat differently than you have chosen to do. I would say that many are asking why broadband companies are allowed to advertise a service as “always on” with a promise of a specific speed, then cut off customers for using the service as advertised. Sure, there’s a little asterisk warning that speeds are dependent on network conditions and a provision in the fine print of your user agreement warns that your broadband provider can cut you off if you use “too much” capacity. But how much is too much? After being bombarded with advertisements for a “Comcastic” connection that will provide me with an “always on” pipe of a defined capacity, why is anyone surprised that people use the service as advertised — or that they are annoyed when their provider cuts them off for violating some unspecified limit?

If broadband providers want to offer metered pricing — let them. But they will not, because doing so explicitly would prove enormously unpopular as a marketing move. While you may consider techies “economically illiterate” to resent the choice of broadband providers to resort to chicanery rather then metered pricing, I must respectfully disagree.

I invite you to explore my lengthier discussion on this issue at my blog, “Tales of the Sausage Factory.” Specifically, I direct your attention to the following entries:

Of Bandwidth Hogs, QoS, and Regulatory Chameleon’s

The Economics of ‘Whitacre Tiering’

You may also find my testimony at the Federal Trade Commission of interest (follow link to Panel 5: Current and Future State of Broadband Competition).

Sincerely,
Harold Feld

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4 Comments

  1. John says:

    Harold,

    You’re a rock star. Keep telling it like it is.

    Thanks.

  2. jim says:

    Harold,
    Thanks for keeping them honest, hope Mr. Pearlstein takes your kind invitation to fill in his knowledge gaps — did his piece happen to mention that his paycheck comes from a company that owns 350 cable communities in 19 states?
    Hat’s off to you, sir!

  3. Harold says:

    I had thought about mentioning that, but it seemed unnecessarily hostile. (For those unaware, Washington Post Co. also owns CableOne and a number of broadcast television stations.)

  4. bj says:

    The irony here is that your google adsense ads are featuring Comcast prominently on this post.

    I was shocked to see you’ve yet to gift us with one of your inspired analyses on the Keisler appointment. Bring it on, Harold!

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