The coming Internet video crash

First, it was data caps on cellular, and now caps on wired broadband -- welcome to the end of the rich Internet

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  • Require providers to count their services' bits last, so any overages or cap bumps can't be blamed on competitors. You know the carriers will try to offer "free" or "included" video services that eat up the data cap, while others' services push people over the edge and end up being the first to be cut. When providers charge for access to services that compete with their own, they can't be trusted to be fair.
  • Require progressive rates, so the rates per gigabyte increases with more use. Progressive rates are effective for other utilities and once were effective for income taxes, so they are proven. For example, the first 300GB in a wired broadband service might cost $40, the next 100GB $20, and the next 100GB after that $30. Progressive pricing should definitely be the standard for cellular carriers, which now start with a high base rate, then add more data at increasingly large tranches for the same incremental cost (usually $10) -- penalizing light users and giving a price break to the data hogs. Today, for example, Verizon charges $50 for the first 1GB of cellular data, $10 more for the next 1GB, and $10 more for the next 2GB. It should be $20 for the first 2GB, $10 for the next 1GB, $15 for the next 1GB, and $20 for the next 1GB.
  • Disallow double-charging for network access. This is another practice already in place for cellular carriers and surely to be copied by cable and DSL providers. For example, Verizon (the most egregious example) charges a $40 "network access" fee to use your smartphone, then it starts its data plan at $50 for 1GB. It's essentially charging you twice: one for voice and text and once for data, though they're the same network. That's just wrong. If the network access is built into the first tier's price, it should not be charged for elsewhere. A fair approach would entail a $40 network access fee, then a $10 charge for the first 1GB, or there would be no network access free, but charge $50 for the first 1GB -- not both as it is now.

At the end of the day, businesses will get away with as much as they can -- that's what they're supposed to do to make profits. But certain types of providers are essentially public utilities -- Internet access these days is as essential as water, electricity, telephone, and postal mail -- and need to be more accountable to the public good.

Left to their own devices, they will skew their services in a way that will stunt if not destroy Internet video services, then threaten other bandwidth-using services such as cloud storage, telemedicine, and remote computing. In other words, they won't stop at Internet video.

You can't use the Internet without having available bandwidth, and if that bandwidth costs too much, you price the Internet out of reach. Bandwidth should not be free, but it should not be expensive or channeled, either.

This article, "The coming Internet video crash," was originally published at Read more of Galen Gruman's Smart User blog at For the latest business technology news, follow on Twitter.

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