AT&T announced a few days ago that beginning May 2, it’ll be instituting Internet usage caps to all its broadband customers: 150 GB/month for DSL users and 250 GB/month for U-verse folks. Go over that, and you’ll be charged an extra 10 bucks per 50 GB of excess usage.

The evil empire claims that this change will only affect 2 percent of its users. Maybe so. Doing a quick estimate, I don’t think our household will be in danger of hitting the cap, at least not in the foreseeable future. I use about 80-90 GB from my computer, but that’s the bulk of our usage. We also stream Netflix movies a lot, but at about 1.5-2 GB per movie (SD, through the Wii), we would have to watch a ton of movies to put us in danger.

But that’s not the point, is it?

The point of usage caps is to change the behavior of customers. As I noted a while back:

When something (anything) is unlimited, it has no value. If it’s wasted, it’s wasted, no big deal. There are no opportunity costs because it’s not costing you anything. After all, you’re gonna pay 30 bucks a month for data access whether you use it or not.

But once the concept of scarcity is introduced, all of a sudden that resource takes on real value. If you’re on the 200 MB plan, then you’re acutely aware that you only have 200 MB to last you the whole month, and you’ll naturally begin to conserve this now-limited resource. That’s basic human nature, and it’s what differentiates an inefficient allocation of resources from an efficient one.

However, what’s most interesting about this announcement (and again, not surprising at all) is that U-verse’s video on demand is exempt from these caps. In other words, you’re not penalized for streaming a pay-per-view movie (even in HD), but you are for streaming a movie from Netflix, Hulu, or YouTube. I don’t know about you, but that seems like a violation of net neutrality. Not that Congress is actually willing to enforce that sort of thing.

Such a move on AT&T’s part echoes the efforts of Comcast, Time Warner, and others to kill off Netflix in favor of their own much more profitable services. And the movie studios are firmly in the ISPs’ corner. What that ultimately means for Netflix — and by extension their loyal customers — is unclear since Netflix currently owns about 61 percent of the video streaming market.

But whatever the outcome, it’s clear that ISP customers are ultimately on the losing end of the deal, whether they hit the usage caps or not. Unlimited Internet access in the U.S. is dead, and that fundamentally changes the nature of the Internet from here on out.

Previously:
The death of unlimited
The evil genius of AT&T MicroCells
Metered broadband vs. cloud computing

The much-maligned phone company and sole provider of iPhone voice and data service (when you can get it), has decided to put the kibosh on its $30/month unlimited data plan. From now on, new users must choose between a $15/month plan that allows for 200 MB of data usage, or a $25/month plan that allows for 2 GB (with fees for going over, of course).

And if that wasn’t evil enough, they also agreed to let you pay them an extra $20/month for tethering service so that you’ll hit your data usage caps even faster.

Of course, you can always save your iPhone internetting for wi-fi hotspots, which would presumably not count against your quota while simultaneously making you less mobile and possibly much more open to security threats. Or you can fork over $150 for a MicroCell doohickey, which would let you funnel your 3G browsing through your home Internet connection (although again, it’s not clear whether that would count toward the quota or not). (Plus, once your ISP begins implementing broadband usage caps, that may not be an attractive option, either.)

Confused yet?

Now, before we go any further with the pitchforks, it’s probably worth checking into how much data people actually use currently. According to AT&T, 65% of smartphone users use less than 200 MB per month, and 98% use less than 2 GB. So theoretically, this change will save all but 2% of its customers at least a little money.

I went back and pulled my bills for the last 9 months, which is most of the time I’ve had my iPhone. The most data I’ve ever used in one month was 147 MB, and the average was 75 MB. Not once did I even come close to hitting that 200 MB mark.

But here’s the deal: This change of policy by AT&T isn’t about the money. They’re not trying to save some customers money or extort others. It’s solely about changing the behavior of its customers.

When something (anything) is unlimited, it has no value. If it’s wasted, it’s wasted, no big deal. There are no opportunity costs because it’s not costing you anything. After all, you’re gonna pay 30 bucks a month for data access whether you use it or not.

But once the concept of scarcity is introduced, all of a sudden that resource takes on real value. If you’re on the 200 MB plan, then you’re acutely aware that you only have 200 MB to last you the whole month, and you’ll naturally begin to conserve this now-limited resource. That’s basic human nature, and it’s what differentiates an inefficient allocation of resources from an efficient one.

I noted this same phenomenon a couple of years ago when I monitored my own bandwidth usage during a month-long experiment:

Something really weird has happened since beginning this experiment. Even though my ISP doesn’t currently set any usage limits, just knowing that my usage is being monitored has drastically affected how I think about the Internet. I’m hyper-aware of every song or video I download, every website I visit, every desktop application that polls the Internet for updates.

It used to be in the early days of home Internet access that a dial-up account included a limited number of minutes. As you used it, you unconsciously counted each minute spent online so that you wouldn’t hit your limit before the end of the month. Now imagine that same scenario but with a limit based not on minutes but on megabytes.

So the real evil here (if you want to call it that) is not in the actual elimination of the unlimited data plan but in AT&T’s use of price tactics to affect its customers’ behavior. Which of course is something companies do every single day, often without us realizing it.

Previously:
Choosing bars over batteries
The evil genius of AT&T MicroCells
Metered broadband vs. cloud computing

Both complaints are valid, but at least give AT&T credit for offering something. Yes, it’s a band-aid, but it’s better than what we have now. Personally, since I would qualify for free service, I’m thrilled; my house is one giant dead spot.

Still, knowing AT&T, I can’t help but to imagine a roomful of executives laughing maniacally over their latest offering. First, they attract hoards of data-hungry customers with the iPhone, who willingly fork over $30 a month for a data plan in addition to voice and texting fees. When the service is less than ideal, they then offer them MicroCell service, which routes cellular traffic through your Internet service. Then when they decide you’re using too much Internet bandwidth, they either throttle your service or institute bandwidth caps.

OK, so that last part may be speculation on my part, but it’s not that unrealistic. AT&T already throttles Internet traffic of its U-verse customers in order to provide HD video. And they’ve already experimented with bandwidth caps. So it’s not unreasonable to expect that heavy MicroCell usage would help push those endeavors further along. It also gives the telco additional ammunition to fight against new net neutrality regulations coming from the FCC.

Previously:
Bandwidth experiment, day 2: Throttled?
Bandwidth experiment: The final results
Media finally reporting on broadband caps
Metered broadband vs. cloud computing

I installed DU Meter on my home computer and then just used it as I normally would. The results were pretty surprising.

The total usage for the month came to 21.4 GB, using a whopping 4.3 GB the first day alone.

Admittedly a big chunk of that 21 GB came from downloading video podcasts and a 2 GB documentary using Miro. But even if you take out all that traffic, I’m still way over Frontier’s 5 GB limit. Other bandwidth-hungry activities include downloading some songs from Emusic, and watching videos on YouTube and Hulu.

But the biggest surprise was not the numbers. As I mentioned on August 5th, it’s really the psychology that changes once you know that the Internet is no longer unlimited. As I wrote:

Something really weird has happened since beginning this experiment. Even though my ISP doesn’t currently set any usage limits, just knowing that my usage is being monitored has drastically affected how I think about the Internet. I’m hyper-aware of every song or video I download, every website I visit, every desktop application that polls the Internet for updates.

It used to be in the early days of home Internet access that a dial-up account included a limited number of minutes. As you used it, you unconsciously counted each minute spent online so that you wouldn’t hit your limit before the end of the month. Now imagine that same scenario but with a limit based not on minutes but on megabytes.

With a limited number of bits you can push or pull over the wire, are you going to waste them downloading a movie from Netflix or uploading the pictures of your kid to Shutterfly? Are you going to use them to watch your favorite TV show on ABC.com or Hulu, catch up with your friends on Facebook, or talk to a loved one over Skype?

I think Comcast understood that when they decided to impose a 250 GB limit for their customers. It’s unlikely that many households will hit that limit, but just knowing that it’s there will almost definitely change the behavior of those users affected, at least temporarily.

It’s for that reason, primarily, that I remain opposed to bandwidth caps, more now than before I started my month-long trial. Coercing your customers to use less of your product not only is a poor business model, it’s a quick way to stifle communication and innovation, while also hurting so many other companies who depend on web advertising dollars to stay in business.

Here are the reports from DU Meter. Click to enlarge.

Previously:
Metered broadband: An experiment
Bandwidth experiment, day 2: Throttled?
Metered broadband vs. cloud computing
Media finally reporting on broadband caps

It’s about time.

The phone company, Frontier Communications Corp., is one of several Internet service providers that are moving to curb the growth of traffic on their networks, or at least make the subscribers who download the most pay more. This could have consequences not just for consumers — who would have to learn to watch how much data their Internet use entails — but also for companies that hope to make the Internet a conduit for movies and other content that comes in huge files.

Meanwhile, ISPs such as AT&T, Verizon, and Comcast are starting to get behind the push for P4P as a way to reduce the load on their networks while speeding up traffic. (Overview of P4P here.) That’s good news.

Previously:
Metered broadband: An experiment
Bandwidth experiment, day 2: Throttled?
Metered broadband vs. cloud computing

“Cloud computing” is one of those fancy Web 2.0 (or is it 3.0?) buzzwords for software that runs from a web server on the Internet instead of your local computer. It extends beyond web-based email or even blogging. Google has a whole suite of web-based applications (Calendar, Google Docs, Picasa, etc.). Adobe has rolled out Acrobat.com as a web-based collaboration tool that integrates with their Acrobat products. They also have Photoshop Express, an online photo storage and editing portal. And Microsoft has their Office Live online application suite. Those are just a few examples.

And then there’s Midori, Microsoft’s experimental web-based platform that could possibly one day replace Windows.

Where do all these things fit in a world of metered Internet access?

The answer is, they don’t. You can’t move your applications, let alone your OS, to the web if the meter’s running every second. It’s gotta be one or the other. The Internet of the future will either populated by web-tethered applications and appliances, allowing for a seamless integration of data across multiple platforms; or it will resemble the Internet of the past, with its dial-up connect-on-demand limitations.

Something really weird has happened since beginning this experiment. Even though my ISP doesn’t currently set any usage limits, just knowing that my usage is being monitored has drastically affected how I think about the Internet. I’m hyper-aware of every song or video I download, every website I visit, every desktop application that polls the Internet for updates.

It used to be in the early days of home Internet access that a dial-up account included a limited number of minutes. As you used it, you unconsciously counted each minute spent online so that you wouldn’t hit your limit before the end of the month. Now imagine that same scenario but with a limit based not on minutes but on megabytes.

With a limited number of bits you can push or pull over the wire, are you going to waste them downloading a movie from Netflix or uploading the pictures of your kid to Shutterfly? Are you going to use them to watch your favorite TV show on ABC.com or Hulu, catch up with your friends on Facebook, or talk to a loved one over Skype? (NBC has already warned visitors about viewing Olympics coverage online if their bandwidth is metered.)

The irony of this metered bandwidth crap is that the same companies pushing for it (AT&T, Time Warner, etc.) are the ones that have the biggest vested interest in keeping it wide open. AT&T, for example, is heavily promoting its U-verse service as a way to compete with Verizon’s FiOS and “triple-play” services offered by many cable companies. If AT&T then put a cap on that Internet usage, that doesn’t exactly fit in with their “Your World Delivered” mantra, does it?

Metered bandwidth may become a reality through much of the U.S. at some point in the near future, but cloud computing is already here and growing. The two are not compatible. Which side do you think I’m on?

Updates (both via Ars Technica):

1. AT&T is launching it’s own cloud computing initiative, again reinforcing the theme of moving applications and data to the web.  While the initiative is for the enterprise while presumably any bandwidth caps would only apply to residential accounts, it seems very hypocritical to push for cloud computing on the one hand, while punishing customers for using the Internet with the other.  Translation: They just want more money from everybody.
2. A researcher at the University at Minnesota has shown that Internet traffic growth rates are stagnant or possibly falling, while transmission rates are declining.  He suggests stimulating traffic growth, in essence increasing demand for Internet usage to meet the supply.  As the article mentions, though, that might not be such a good thing for ISPs who have struggled to provide adequate bandwidth to the last mile:

Any day now, when everyone has fiber to the premises (*cough*), bandwidth caps and throttling issues should hopefully become relics of the distant past. The core has plenty of bandwidth and is growing along with traffic, so once that last-mile gets expanded into an eight-lane superhighway, everything should be copacetic. Until then, we’ll continue to see enlightened policies like 5GB monthly caps.

Previously:
Metered broadband: An experiment
Bandwidth experiment, day 2: Throttled?

What pushed me over the limit? Well, on Friday I remotely connected to my computer for maybe about 30 minutes. I also downloaded audio podcasts using Juice, video podcasts using Miro, and did some general browsing. Today I downloaded some YouTube videos, downloaded a few trial programs, and uploaded the YouTube FLV videos to Media-Convert.com to convert them to a different format.

Combined, those activities over two days amounted to a total of 8 GB of total usage. And keep in mind that’s only activity from my computer, not including Christy’s or the girls’ computers or any other Internet-connected device we may have (such as the Wii).

Here are the reports so far (click to enlarge):

The totals really surprised me, but my biggest surprise came around 8:30 this morning. Overnight I had downloaded a rather large (1.76 GB) documentary via the “Yes, We’re Open” channel on Miro. The documentary (completely free) was downloaded using the bittorrent protocol (an example of a perfectly legal use of bittorrent). Everything was fine and dandy until about 8:30am, when our Internet connection suddenly slowed to a crawl. A speed test on Bandwidth.com showed our download speed to be almost exactly 512 kbps while our upload speed was still the normal 800 kbps or so. (Normal upload speed is around 5 Mbps, 10 times the speed of what I was seeing.) After about an hour our Internet speed returned to normal.

Had AT&T throttled our Internet connection as punishment for downloading over bittorrent? I have no idea. I’m sure if asked, they would deny it.

By the way, the documentary, ironically, was The Corporation, a Canadian film about the rise of big business and corporate America. Coincidence?

Previously:
Metered broadband: An experiment

He states:

While 5 GB [the limit imposed by New York ISP Frontier] looks pretty sizable – Comcast claims that their average broadband subscriber only uses 2 GB per month – in reality, it’s nothing. It’s essentially two movies in HD. Once you go over the limit, the meter ticks over faster than a San Francisco taxicab. That would limit the amount of Internet a consumer can use on a daily basis, thereby limiting the amount of time people spend on Facebook, MySpace, Microsoft, Google, Yahoo or any one of numerous services.

The situation would be no different than the early days of dial-up, when the pain of dialing up prevented us from being always on the network. When broadband came along, things changed, for usage of services like Google skyrocketed, Skype came along and YouTube became part of our lives.

One of the problems with metered Internet access, as Malik touches on, is that most consumers have no idea how many bytes they push and pull across the Internet tubes in any given month. Is 5 GB a lot? Doesn’t sound like it. Heck, I don’t even know what I use.

So I’ve decided to run a little experiment.

For the month of August, I’m going to run DU Meter on my home computer to measure how much bandwidth I consume.

I don’t download torrents or movies and don’t download all that much music, but I do use streaming audio and video fairly frequently. I also remotely connect to my computer on a regular occasion. So on a 1 to 10 scale, with 10 being a very high usage (downloading torrents, HD movies, etc.), I would probably rate myself around a 6.5 or 7; high but not excessive.

Of course, there are other computers on my home network, so this won’t give me a grand total for my account. But it should be a good barometer for overall usage.

I’ll report the results at the end of the month.