Paying By The Byte

For 4 summers, I worked for AT&T before the break up. The first summer I was a clerk in a telephone office that serviced a government agency. One day the manager came in and said the telephone world was going to change. AT&T was pushing for a break up of itself to allow it to get into the long distance game. In short, AT&T got what they thought they wanted.

When I first got an Internet connection, I had dial-up. I got a second line so I wouldn't miss calls while I was on-line. Then, Bell Atlantic (now Verizon), wanted to charge me a business rate for the second line because I told them the line was for the Internet. The person I argued with told me they really want the ability to charge by the minute because the telephone network was designed to handle calls that lasted, on average, for about 10 minutes.

Later, before cable Internet was available, I looked into getting an ISDN line. I decided not to do it because they charged by the amount of data transferred and, at the time, my consulting business was new I and wasn't sure if I could recoup the cost. But I remembered the discussion with the telephone person saying they wanted to charge Internet use by the minute.

Now, comes this and I think it is inevitable. Home users being charged by the amount of data transferred is going to happen:

Time Warner Cable Will Do Trial on Setting High-Speed Internet Charges
Based on Usage

NEW YORK (AP) -- Time Warner Cable will experiment with a new pricing structure for high-speed Internet access later this year, charging customers based on how much data they download, a company spokesman said Wednesday.

The company, the second-largest cable provider in the United States, will start a trial in Beaumont, Texas, in which it will sell new Internet customers tiered levels of service based on how much data they download per month, rather than the usual fixed-price packages with unlimited downloads.

Company spokesman Alex Dudley said the trial was aimed at improving the network performance by making it more costly for heavy users of large downloads. Dudley said that a small group of super-heavy users of downloads, around 5 percent of the customer base, can account for up to 50 percent of network capacity.

Here it comes but the cable company is going to be the first to really try it. When it sticks, watch Internet innovation come to a crawl.

Comments

[LLR]

It would be nice if they had the option to “pay by the byte” as well as have an unlimited plan. A lot of lower income people could get a low cost plan and the “power users” could get an unlimited plan.
But at the same time it has to balance out. There has to be more people that just watch a few videos, surf the web, and check email than people that run ftp servers and download huge porn videos.

[MIB]

You've hit upon one justification for Congress and local governments to require cable TV operators provide 3rd party access. As cable services like Comcast and TimeWarner are permitted to operate 'closed' systems, the resulting monopoly power will be leveraged against the average consumer.

A history note, however. AT&T didn't push for the breakup of the former Bell System. In fact, they fought against it. AT&T was ordered to divest itself as a result of an anti-trust case tried by the Justice Department.

[DarkStar]

MIB, that was the public perception, but what I learned that summer was that AT&T pushed for the breakup because they thought they would be free to make more money that way.

[MIB]

Ed... the forced divestiture of AT&T is no mere 'public perception', but historical fact. That is unless you're of the belief that AT&T spent years and millions of dollars battling against the Justice Department ordering them to do what they could have done -- by themselves -- at any time.

Whoever told you that nonsense plainly didn't know what they were talking about.

(Shaking my head...)

[DarkStar]

It was "forced" but the forcing was more about how not if. When the details were hammered out, the upper level managers were VERY happy.

[MIB]

That's not accurate, either.

As a direct result of the divestiture, AT&T lost a huge amount its market cap value due to its failure to penetrate the personal computing marketplace -- the primary reason the company finally agreed to settle with the Justice Department.

[rikyrah]

I'm confused. What to they mean by downloads? Is just surfing the net ' downloading'? I have to ask.

[DarkStar]

AT&T lost a huge amount its market cap value due to its failure to penetrate the personal computing marketplace

That was poor execution of the plan they had. They thought they would win the long distance market and didn't realize what competition would do to the market, PLUS no one foresaw cell telephones and what that would do to the telco market.

I'm confused. What to they mean by downloads? Is just surfing the net ' downloading'? I have to ask.

You are correct. Typical home users download more data then they upload. There is a small "request" sent out of the home computer to get some data. The "response" is the huge data coming down. In surfing, it's images. But with Windows, there are updates, the same for virus software, and add You Tube, porn sites, music sites, and the download dwarfs the upload.

[MIB]

"They thought they would win the long distance market and didn't realize what competition would do to the market, PLUS no one foresaw cell telephones and what that would do to the telco market."

Eh... that's not correct either.

At the time of the lawsuit, AT&T controlled 95% of the long-distance market. However, their bread-and-butter was in the manufacturing and leasing of telecom equipment, especially residential telephones through wholly-owned subsidiaries, like Western Electric. As part of the divestiture, AT&T was permitted to go into the PC business -- which they saw as an opportunity to leverage their expertise and resources in electronics.

[DarkStar]

True, they did get allowed to sell computing equipment. It wasn't just PCs. A government agency I worked with purchased AT&T's 3B series of computers. They were supposed to be known for their reliability.