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App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

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April 3, 2008 11:49 AM

The Trouble with Bandwidth Caps in Canada

It’s been interesting to watch telecommunications evolve in Canada. In some areas it’s almost like we’re able to watch the challenges that we’re talking about facing in the US already being played out up north of the border.

Take bandwidth caps, for example. In the US they’re pretty common in the wireless space but basically all talk and little action on the wireline side. Some broadband providers are cutting off access to their heaviest users but actually including a specific number as part of their service offerings is still unheard of it.

Yet Rogers in Canada already cites specific caps for all its packages, as found in this article. They range from 2GB up to 95GB, with an overage charge for each additional GB costing anywhere from $5 to $1.25.

While I applaud Rogers’ transparency, I find the actual caps themselves rather troubling.

For me, the next generation of the Internet is all about video, whether it’s watching, sharing, broadcasting, or anything in between, broadband enables video in all its wondrous forms.

But let’s think this through for a moment.

A DVD movie takes up roughly 5GB. And an HD movie on Blu-ray 25GB. Both of these numbers can be reduced through compression, but ultimately a smaller file size does mean lower quality. So if someday the Internet is going to be able to support the delivery of HD video to the living room, that 25GB should still be in play.

Comparing that against Rogers’ top tier and you see that if a subscriber to that service downloaded 4 HD movies in a month they’d have gone over their cap.

Then for each additional movie downloaded they’d incur an additional $30 just for the transfer, not counting what it costs to buy the movie itself. And that’s given the lowest possible overage rates!

With these kinds of economics, there’s no way online distribution will overtake on-disc.

Rogers does promise to cap any overage charges at $25, but that’s still a significant increase to someone’s monthly rates plus as more users begin relying on the Internet to watch HD video it wouldn’t surprise me if this cap on the cap begins creeping upwards.

I’m really torn on all this. I understand that there’s a cost for network operators associated with customers using more bandwidth and I support efforts to insure the economics of broadband stay viable.

But at the same time from a consumer perspective I can’t help but think that these caps and overage charges may curb usage of more bandwidth-intensive applications, and that worries me as I’m working hard on encouraging their adoption and use.

Fully metered bandwidth sounded like a possibility for me a while back, but that would likely only exasperate my concerns over these bandwidth caps and overage charges dissuading use.

Ultimately it seems like there are only two real options:

1. Educate consumers about the bandwidth demands for various Internet services and applications, and about the relative scarcity of bandwidth on these limited access networks so that they might ration their use or at least have a better understanding of why they’re being charged more when they use more.

2. Or get a whole lot more bandwidth into the system as soon as possible so we can drive down the prices and enable consumers to go about their merry way consuming bandwidth to their heart’s content.

In the end this isn’t really an either/or proposition; it’s both.

We need more bandwidth, and by getting more it should cost less per MB or GB. Everyone seems to agree with that.

But putting that bandwidth in place takes time, so the rise of bandwidth caps and overage charges seems unavoidable in the near-term.

And as such, it’s vitally important that consumers have a better understanding of how their use of the Internet relates to these bandwidth caps.

Because there’s nothing worse than falling in love with using something only to get unexpectedly punished for using it too much when it comes to dissuading use.

And the last thing the Internet needs right now is another reason for people not to use it.


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