My last column on broadband data caps rubbed the wrong way my old friend Brett Glass, an Internet Service Provider in Laramie, Wyoming. “Your most recent article regarding ISPs and bandwidth caps is misleading and inaccurate,” wrote Brett. “I hope you haven’t joined Bob Frankston’s ‘kill all service providers’ camp, because it sure seems like you have… Our bandwidth costs are $100 per megabit per second and are going UP due to increasing charges for middle mile bandwidth from Qwest/Centurylink and the FCC’s failure to act on special access.”
“My situation is absolutely the norm. Bandwidth is expensive, and anyplace you have to use the (monopoly) telephone company to get to it — which is most places — it is getting more so due to lax regulation by the FCC. At the same time, users are cranking up the duty cycle, attempting to leave streaming running as they once left the TV or the radio on even when they weren’t watching or listening. Add that to the fact that unicast streaming is the most inefficient possible way to deliver media (millions of times less efficient than broadcast), and people should expect to pay much more, not less, for media to be delivered that way than for the same content delivered via an efficient mechanism. Don’t demonize the ISP! He’s trying to make technology and protocols work in ways they were never designed to and which they were intentionally made bad at doing”
I feel for Brett and for any ISP in his situation, but does that situation apply for most readers of this column? No. Your ISP is likely a Comcast or Verizon or some other enormous telco or cable company, not Lariat.net. The numbers I referred to in my last column were exactly right for huge ISPs and exactly wrong for tiny ones like Lariat. But that doesn’t make those earlier statements incorrect.
Last year Brett characterized himself to me as a telco, while this year he contrasts his operation with that monopoly. The fact is there’s class warfare taking place between big and small business not just on the Internet but everywhere. Maybe Brett is a little dinosaur. Certainly he has terrific challenges.
In the conflict between big and small I tend to come down on the side of small. We’re recovering from the worst recession in a generation and big companies aren’t doing a damn thing to help. They don’t pay taxes, they don’t create jobs, they don’t spend money, and as a result the economy is under-stimulated. Large U.S. corporations have restructured themselves to avoid taxation, they see their primary function as increasing productivity which means decreasing employment, they have their highest profits ever and are sitting on $2 trillion in cash that they aren’t going to spend.
In contrast to this, small and medium-sized businesses, which are responsible for all new job creation in this country, can’t get banks to loan them any money to fund those new jobs.
The priorities of American big businesses are completely screwed-up while small businesses are, for the most part, ignored.
ISPs like Brett bring the Internet to places where the big guys don’t want to be bothered. We have had over the years various programs to encourage the development of the rural Internet — programs funded to the tune of $200 billion — that have had little impact on service with the big companies just syphoning the money while leaving little guys like Brett to do the actual work.
Which class of ISPs do you think is viewed as “too big to fail?” Not Lariat, even though in many cases there is no alternate provider.
It’s a bad situation, but also a dynamic one. The problems Brett cites today will be exchanged for different problems down the road. He makes the good point of how inefficient unicast is for media delivery, yet unicast costs are continuing to drop (maybe not in Laramie, yet, but in larger markets) and it is easy to predict that even inefficient old unicast will eventually be cheaper per viewer than broadcast with its higher fixed costs.
So the situation is changing. It might not be changing fast enough to save Lariat, but that’s the nature of business. Brett has to ask himself whether Lariat is what he should be doing with his life just now?
No business has an innate right to exist.
In some respects this big-versus-small issue comes down to how you view your operation. Brett wants to be a telco but he doesn’t have the scale. Maybe his business would be better if he changed his point of view.
I’m reminded of an interview I did years ago with Jim Knopf, a pioneer of shareware software. Knopf’s company, Buttonware, published PC-File, a very successful shareware database. Just across town, Bob Wallace published PC-Write, a very successful shareware word processor. Both men were hiring at the time and Knopf told me about the help wanted ads they placed in the local paper. Knopf’s ad read: “software company seeks marketing professional.” Wallace’s ad read: “mail-order company seeks experienced salespeople.”
It was clear to Knopf that Wallace had written the better ad because it was based on reality rather than ambition.
The reality among Internet Service Providers is that their market has matured. Cable companies and telcos today make more profit from providing Internet service than they do from television or telephones. Scale has become everything and Brett Glass is just another customer to squeeze.
Fortunately I think the market is ripe for another transformation and transformations are never led by big companies. It’s time to change the world… again.