Technology

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U.S. Internet service providers to consider charging customers per-gigabyte

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I remember watching Saved By the Bell as a kid thinking Zach Morris' mobile phone was totally awesome. I couldn't wait until I could have a phone I could carry around wherever I wanted. The brick-sized phone from the early '90s has since become an icon of the dawning of an era of increased connectivity to the rest of the world, and comes with a certain degree of hilarity when we consider our colour-screened, text-message-sending, movie-capturing, Internet-browsing, chocolate-bar-shaped cellular phones we have today.

Every time I look at my cell phone bill and I think I'm probably getting overcharged, I flash back to images of Zach Morris and his brick phone and consider how much he would have been charged for something I now take for granted. Then try to convince myself that as the market becomes more competitive prices will go down. But prices aren't really going down. Sure, I'm paying significantly less per minute of talk time, but new features are constantly becoming seemingly essential to the everyday use. If you asked me five years ago when I got my first cell phone if I'd be willing to pay 10 bucks a month for text messaging, I'd probably wonder why anyone would send a text message when it's just as easy to call them. With the popularity of the BlackBerry on the rise, text messaging is being taken one step further, with people now wanting to send e-mail from their phones rather than be bothered to make a phone call or get to a computer to e-mail out their message.

With advances in technology, we've also come to accept a certain level of instability. We accept that there are places we're going to go in which our cell phones aren't going to work, or times of the day our Internet is going to be down for maintenance to work. Cell phone service providers boast the fewest dropped calls in efforts of attracting customers, when the technology seems to have been around long enough that there should be no good reason for there to be any dropped calls. Whether it's your cell phone or Internet access, new advances in technology are making it more important for people to keep up with the direction technology is going in order to remain competitive or be able to have the same level of access as other providers of the service.

Unsurprisingly, telcos (telephone companies) didn't go into business for the purpose of providing people with services that will enrich their lives or make them any better. I mean, sure, that's part of what they'll tell you, but they'll also tell you they're in business to make money. It shouldn't come as a surprise, then, that they're going to come out with more "essential" services so they can continue to make money. I don't have a problem with this per se, but there still seems to be some cause for alarm following the announcement south of the border that Time-Warner will be testing a new method of Internet service based on charging customers on a per-gigabyte basis for usage.

Consumers can look at this in a variety of ways. People who don't use much bandwidth can rejoice over the potential of their Internet fees dropping. There's no reason my grandmother should be paying as much for Internet as I am. She uses it to read her e-mail and check out the weather, while I can often be found browsing bandwidth-intensive websites, uploading and downloading around 60 gigabytes worth of stuff in a single month, in addition to reading my e-mail and checking the weather. I'd be rather surprised if that's not exactly how they were going to market the change of service, claiming that users of the Internet such as myself should be willing to pay more because I use more. The shortsighted consumer would probably agree and take this as good news.

Say however, that it turns out the average Internet user consumes 10 gigabytes of bandwidth per month. It might be argued if that's the case, why not cap bandwidth at 10 gigs a month and people who go beyond 10 will see surplus charges on their monthly Internet bill? From this business model, telcos could drop prices for their service, which should satisfy most of their users, and charge more for people who go over. This is roughly how telcos run cell phones and charge people on a tiered basis. If you want a higher number of monthly minutes, you pay more fees for those minutes, rather than having a flat monthly fee like a home telephone.

On the surface, this may seem like a brilliant idea that makes a bunch of people happy. It'll keep the market competitive, which will lead to lower prices for the consumer. But where this model goes wrong is it fails to-or succeeds all too well, depending on how you look at it-acknowledge the growing use of the Internet. Apple recently announced AppleTV, a service that allows consumers to download high definition versions of TV shows on demand, and only pay for what they watch. This serves as an excellent example as to how bandwidth usage is going to continue to go up in the coming years. The whole reason dial-up modems existed in the first place is because for the purposes of the Internet at the time, phone lines were sufficient to carry the information that would be exchanged, and the infrastructure was already in place. As demand has grown for faster access to the Internet, it has made sense for it to migrate to a mode of delivery that allows for faster exchange of information that has almost as much infrastructure already laid down-the cable used for watching television. Once again, cable is used as a matter of convenience rather than being the best mode of delivery. Fibre optics, for example, is ridiculously faster but the infrastructure simply isn't in place to make it worthwhile at this point.

Famously, Bill Gates once said of computer hard drive space, "640[kilobytes] ought to be enough for anybody." Presently, computer hard drives are commonly well over 100 gigabytes and when you consider a gigabyte is roughly a million times the size of a kilobyte, you might find it rather amusing to consider how tiny 640K truly is. Today, what this quote really illustrates is how far the computer industry has advanced in terms of what it can do and what it requires simply to operate in the modern world. The switch from dial-up to broadband clearly indicates a growing need for access to the Internet and with that comes greater bandwidth usage. It should be clear, then, that while capping Internet usage at say 10 gigs a month may be reasonable to the average user now, after the major service providers have migrated to the more competitive delivery system, consumers will be screwed into bending to the will of the mighty hand of the industry, rather than actually saving on Internet costs.

Some Internet service providers are doing something similar already. When I signed up for my Shaw Internet access when I moved into a new house, I was astonished to discover how much things had changed since the last time I went through the process several years earlier. Seven or eight years ago, your options at Shaw were either their Lite-Speed, semi-broadband option, or their full-on, High-Speed broadband. Today, they have four different options to choose from, ranging from Lite-Speed to Nitro, which supposedly gives you up to 25 megabytes per second of download speed. This all sounds well and good, but something tells me when I first got broadband back in 2000, I could have reached those same speeds. The only thing to stop me would have been the web's unfulfilled potential. My modem at the time probably wouldn't have been able to handle it at the time, anyway.

As technology becomes more advanced, there is a general expectation that prices will come down. But it is foolish to think telcos do what they do in an effort to benefit consumers rather than lining their pockets. At the end of the day, improving the lives of customers just doesn't seem to pad their bottom line quite as nicely.

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you have to take into account the "canadian factor". whereas the market for consumers in the USA involves innovation, creativity, and a drive to get and retain customers, canadians seem pretty complacent taking whatever is fed to them. there's no other reason why telcos like telus mobility are able to get customers and why even more people willingly purchase cellphones in canada, unaware that the exact same make and model is 65% cheaper 500 miles south.