Broadband for the rest of us?

In its ongoing struggles to offer broadband Internet access, cable company Comcast recently had its hand slapped by the FCC for selectively shutting down access to certain Web services. Now, Comcast has decided in lieu of shutting down legitimate file sharing programs, it will simply limit users' Web access. If a Comcast customer creates more than 250 GB of traffic in a month, the company may terminate their service agreement.

While this is a throwback to the days when folks were charged by the kilobyte for access (remember MCI Mail and CompuServe?), it underscores some deeper problems at Comcast (and perhaps augurs similar problems at other cable Internet providers). Investors and Internet users (okay, all of us) should wonder: The profit margins are ostensibly quite healthy in the online access business, so why would a company go to such extremes—flaunt FCC rules, infuriate customers, hack clients' computers—to restrict Internet access?

Two reasons:

1. It has serious infrastructure problems, very serious infrastructure problems. Clearly Comcast cannot adequately handle the data load of its current subscribers, which means possible failures or tremendous capital expense in the future to keep up. So investors should be leery.

2. Its premium services, such as video on demand, are struggling. So Comcast wants to restrict movie studios and companies like Tivo from competing with Comcast's own video-on-demand business. The best way to do this is by limiting Internet access and thus preventing people from using those competing services in the future.

The first issue should certainly cause investors to worry. It indicates that the company has not anticipated the demand for Internet services and since it cannot keep up with that demand, the future looks bleak indeed for Comcast. It will either have to extensively upgrade the nodes on its network (the hubs in each neighborhood) or-–worse—add more lines. The latter is so expensive a proposition as to be prohibitive.

The second problem is ineluctable. As more video services become available, it's only a matter of months before more and more customers bump up against the 250 GB limit. Comcast tries to make 250 GB sound like a lot of data; the equivalent of 125 standard definition movies (at 2 GB a movie), the company says. However, people are watching movies in high definition now (what year is it, anyway). Those movies are more in the range of 25 to 33 GB each. Order 10 movies online from the growing number of legit movie sites, and you'll exceed Comcast's limit and your connection could be terminated, according to Comcast.

This way leads Comcast directly into antitrust lawsuits and extensive court battles. That means corporate distraction and declining profits.

Furthermore, while some may claim that 250 GB of data traffic a month is plenty for anyone, they would be wrong.

Increasingly popular Internet services promise to only raise the demand for data. Consider online backup and storage (just backing up a typical PC online would exceed Comcasts limits), and look at applications like Microsoft's Photosynth, and video calling services. These are data intensive, mainstream services. Photo and video sharing on sites like Youtube are commonplace. And online software purchases (want the next version of Photoshop?) can easily account for gigabytes of downloads. And never mind adding a few family members on the home Wi-Fi network who are addicted to World of Warcraft and iTunes. It won't take the average suburban family long to crash the 250 GB limit.

Now will Comcast actually call those families when they exceed the limits? That remains to be seen. However, it does indicate how deep the company's problems run.

On the upside, investors might look more closely at the likes of Sprint. Comcast's problems could be a boon to Sprint and its forthcoming WiMax wireless broadband service. All Sprint has to do is drop WiMax cell towers wherever Comcast has service, and voila, thousands of new subscribers.

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After rumors of its demise and resurrection, it looks like WiMax will finally get the push it needs in the U.S. to become a viable contender in the wireless communications space.

Broadband for the rest of us?

Sprint and Clearwire finally rekindled a deal to launch a nationwide service--thanks to a multi-billion-dollar push from investors Comcast, Intel, Time Warner Cable, and Google. The new service will be marketed under the Clearwire brand, and it could offer true wireless broadband Internet access a year or two ahead of Verizon and AT&T's planned offerings.

For those not familiar with WiMax or some of its potential uses (ranging from cars to rural broadband service to virtually free mobile calling), see "WiMax Network's Rollout Abroad" in Popular Mechanics, "Web Surfers Can Take the Internet Along for the Ride" in The New York Times, and "Beyond WiMax" in PC Magazine.

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Net Neutrality

While Comcast began backtracking (well, sort of) on its policy of shutting down certain Internet traffic, those north of the 49th parallel look like they're about to become second-class Netizens. The culprit? Bell Canada. And to think that all these years they were worried about the ugly Americans controlling the media.

First off: Comcast and BitTorrent (one of only dozens of technologies that legitimately use peer-to-peer software on the Web) have announced that they are talking about how Comcast handles spikes in traffic on its network. To date, Comcast has shut down or tricked peer-to-peer software to interrupt downloads, but it now promises that in future it will adopt a protocol agnostic network management technique to keep data flowing on its overwhelmed lines. (You can read the release for yourself here.)

However, it still means that popular applications, such as digital phone service like Skype could be thwarted for Comcast customers. It also means that Comcast still wants to make the Internet its own and could shut out (or "manage") competitors looking to deliver video entertainment online or digital phone service competing with Comcast's offerings. Indeed, Comcast wants to introduce new standards to control Internet traffic--without going to the official Internet and Web standards bodies (well, it said it would submit its ideas to the Internet Engineering Task Force). Not exactly what people had in mind, we think. And you can imagine the uproar if another company, say, Microsoft had proposed such a thing. There'd be H E double L hockey sticks to pay. (By the way, there's already such an internationally accepted standard for addressing these "management" issues: IPv6.) Of course, what Comcast is really doing is desperately trying to avoid potential government legislation that would protect the Internet as it stands (see Net Neutrality).

Meanwhile, back in Canada (no, we haven't forgotten about you) several companies that sell high-speed Internet service to folks have learned the hard way that there's some fine print in their contracts with Bell Canada. It seems that Bell, which delivers the main Internet hookup to those companies, can reduce service whenever the mood strikes it. And the mood has struck.

Bell Canada has already begun slowing down certain traffic on Canadian Internet connections. In the process, subscribers to so-called high-speed services are experiencing serious slow downs (can you say, "dial-up") and even the venerated CBC got caught up in the controversy when its program,“Canada’s Next Great Prime Minister,” (notice how I'm restraining myself from making a joke about this) was made unavailable online due to Bell Canada's slow down. So much for those Canadian content rules.

The question is: Would Alanis Morissette call this ironic?

For more on the inequities of living in the Great White North, see an article from one of my former employers, The Globe and Mail. By the way, Bell Canada, polite as can be, is planning to slow down all Internet traffic it finds objectionable by April. Well, at least most of the snow should have melted by then and Canucks can play outside...

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Technology is like Taoism: It reveals the interconnectedness of things.

Okay, maybe not. But it's a good excuse for a rambling discussion of technological trends, issues, and advice. Such was the case on Ron Morris' show, The American Entrepreneur, on Saturday, January 26th, 2008. From Comcast and the future of digital phone service to maglev technology, we covered the gamut on Ron's radio program, which airs on AM Newstalk 1360 in Philadelphia.

Radio

Of course, it's also available as a free podcast from iTunes. Just search on "Ron Morris" under podcasts and download the January 26th show. 

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Net Neutrality

The issue of who controls the Internet--whether it remains as it is with open access or can be controlled by private telecommunications companies--moved to the fore again this week when a San Francisco subscriber to Comcast launched a suit against the company. The suit alleges that the largest cable company in the U.S. misleads customers and uses unfair business practices by interfering with file sharing programs.

Naturally, lawyers for the plaintiff are looking to form a class action suit (now that's one way to recoup those inflated broadband access charges). So get in early and often by contacting the representing law firm.

Already, a collection of consumer and legal organizations have asked the FCC to prevent Comcast from interfering with legitimate file sharing. One proposal is that the FCC should fine Comcast $195,000 for every subscriber whose Internet access has been restricted.

For its part, Comcast says it does not block programs on the Internet---it just delays some traffic. Right.

To read more on this issue see "Comcast Hijacks the Internet" and "Verizon and AT&T: Web 2.0 Killers."

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For those who wonder what all the fuss about so-called net neutrality is about, witness what Comcast has done to subscribers of its "Internet" service.

Essentially, Comcast is secretly blocking certain Internet requests and Internet traffic in the same manner that hackers hijack computer systems with false messages. Comcast does not inform customers that it is blocking Internet traffic; indeed, it intentionally hides its hacking activity from users.

Comcast's behavior raises several issues: Is the company guilty of deceptive advertising by claiming it offers high-speed Internet access when in fact it only offers access to some parts of the Internet? Can it now be sued by users--including the possibility of a class action suit--for such practices? Is it trying to censor Internet traffic in the same way that government officials in China and Burma censor Internet access? Will the company begin censoring sites that differ from its corporate political views? (In fact, several analysts point out that there appears to be no specific law to prevent Comcast  from blocking or hiding, say, republican or democratic sites from its customers.)

Now that Comcast has been caught deceiving its customers and ducking questions about its behavior--questions that were raised as long ago as last August--it may represent a turning point in the battle over net neutrality. Until now, companies such as Verizon and AT&T claimed that there was no reason to enact laws protecting Internet access as it exists because no one was blocking access to customers or planning to do so.

But now the telecom oligopoly has in fact started to hijack the Internet, which may finally spur people and the politicians that represent them into action.

For more on net neutrality, see: Verizon and AT&T: Web 2.0 Killers

For more on Comcast's actions, see: Comcast Blocks Some Internet Traffic

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