The Chilling Effect of Bandwidth Caps On Entrepreneurial Culture

Internet Access

If your cable company, who now has essentially a lock on anything faster than your current speed, announces a new policy:  They are going to cap usage and make users pay not only by the speed of their connection but by their consumption of bandwidth.  Various “tiers” are offered which are not enough or suitable for your demands. But here – a monopoly on the high speed Internet prevents penetration by other vendors.  They justify this tiered usage plan by blaming users for their consumption and claiming that their pricing wouldn’t support necessary costs of providing the bandwidth. In this condition you may want to prepare for a fight.  They are planning to roll this out everywhere that they don’t currently have competition that would cannibalize their user base.

So What is The Effect That This Has on Entrepreneurs Specifically, and The Region in General?

  • Most entrepreneurs these days are “heavy users” of the Internet.  Between developing their software, creating distributed development teams, uploading and downloading information to servers, twitter, website updates, video presentations, and all the other myriad ways that entrepreneurs market themselves – they almost all will fall into the high bandwidth usage scenario.  Many do this sort of work from home, either during work hours, or just during off hours.  This means that they will typically be paying between 3 and 4 times what they are now for Internet access – times as many employees or collaborators as they currently have. This additional cost will not only discourage the average money-conscious entrepreneur, but also discourage their collaborators, their users (for after all if they develop a high-bandwidth application like HULU, or NETFLIX , or even medium bandwidth services like BLIP.FM, or they will be trying to get users in this city as well, and their financiers (what venture capitalist will take seriously an investment developed in a city where they know that everyone is watching their “internet gas meter” to see if they go over).  They’ll simply move on to invest in other areas that are more tech-friendly.
  • Students and new, young minds are the core to successful entrepreneurial ventures.  New ideas come from youth, and the more we can encourage our youth to come to Rochester to learn their trade, and stay here once they have learned it, the more competitive our city can be in attracting and retaining young hard-working bright men and women to our area.  But if their first impression when they arrive in Rochester is to get a bill for a 10mb/s connection for $150/month(because believe me – college students are probably the definition of high-bandwidth users) which they get at home in a combo bundle form Verizon FiOS for $60/month which includes phone, TV, and Internet at a blazing 20mb/s down and 10mb/s up – are they going to stick around here after they graduate, or move to a more progressive area with more reasonable Internet access.  I’ve already gotten tremendous feedback from the RIT campus here in town that students eon masses’ (and especially the deaf and hard of hearing students at NTID who use video streaming) are up in arms about this latest proposition form Time Warner.  So, as a region, we have to decide – do we tolerate this monopolistic pricing scheme, or do we legislate it away?
  • Collaboration depends on a highly connected community.  According to this study made by the state of South Carolina, a highly connected, inexpensive to access broadband infrastructure is one thing that can make a region more competitive and connected to the future.  Having this strength available makes the collaborative process easier to manage, results in more ideas, creates those ideas faster and brings them to market.  Adding high price or being unable to access high speed broadband on the other hand puts a community at a definite disadvantage, because the oppressiveness of monitoring and paying for the bandwidth cap drives collaboration down and highly skilled employees and technical people away from the community to areas where they can get these features.
  • Driving prices up in an already suffering economy hurts our residents, whether employed or unemployed, ability to recover quickly, and adds to inflation.  A full package of internet, phone, and cable television services could easily run into the $300-400/month range depending on features selected.  A marginal price increase would be painful, but doubling or tripling the rates for many users renders them impossible to bear.
  • Price caps selectively punish your most tech savvy and powerful users – the ones who help all other users, the ones that drive change and innovation on the internet.  It selects against young people, active business people, and the businesses that they drive. 
  • It selects against tech-savvy small businesses who use the web to their advantage to market their products and services.  Ah you say, businesses themselves won’t be bandwidth limited, while this is true (for now – I wouldn’t bet on it being true forever if we let price caps enter the market), its not the business use of bandwidth that is at issue, it’s their end users. But hey are wrong.
  • The very fact of bandwidth caps subtly changes our Internet usage – and reduces the power of the internet to entertain, increase productivity and provide better services to our clients and end users.  People have become dependent on “instant access” – it’s now EXPECTED in the business world.  If we have to watch every gb of usage though, we’re more likely to “Skim the surface” of the Internet, rather than dive in head first.  That is doing a disservice to our high school students, college students and others across the region.
  • What about companies that have moved to a more distributed “work from home” environment. Many companies have moved to work from home scenario especially after Covid-19. Do they pass that cost up to their employer, who then passes it to the customer – yet again we run into an inflationary situation.

So what will you do in face of all these changes. You will be obliged to take steps on war footing to keep your business afloat. We have seen scenario in areas where any internet provider maintains monopoly. You should also think of personalized internet route. Or the best option is to giddy up and fight back. This situation can be reversed if a competitor arrives in your areas. This is a serious problem which many entrepreneurs may have to face but his can be solved with specific tools.

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