Usage Caps: Why They Serve no Purpose.

Technology companies, well many companies, but technology companies in particular like to hide behind complicated sounding tech words and concepts.  Technology and what powers it can be very overwhelming to people so, in the name of sanity, they don’t bother to really understand it.  Being someone who does, in fact, understand technology, how our big 3 telco friends do things really, really bothers me.

First I want to provide a bit of nomenclature context.  Telcos define the amount of speed you have one your internet connection as “bandwidth”.  The technical term is actually throughput.  But that’s neither here nor there.  What bother’s me is the caps we get on our monthly usage.  Telcos claim these caps are in place to preserve network capability and help them mitigate the growth or usage of a network.  While reducing the amount of data you’re allowed to use does, in essence, lower your network usage, they’re misleading us.  One thing a network is capable of doing is maintaining a sustained throughput.  Basically, a network infrastructure can keep data flowing at a certain speed so long as the equipment is active.  Switches and routers have no mechanical moving parts – except for fans – and aren’t subject to the failures of overuse mechanical items are prone to.  There is no fluid to change or moving parts to wear.  In fact, most enterprise grade switches and routers can work happily at 80% of capacity for their entire 3-5 year life cycle.  To claim that usage adds wear and tear to a switch is just deception.

Which raises the second deception: if wear is your concern then limit maximum throughput, not usage.  As I’ve already mentioned, network equipment can happily work at around 80% for extended periods of time.  Even in the busiest parts of the network an ISP won’t be working at that capacity – except perhaps at its core.  If Telcos were truly worried about preserving usage of their switches they would reduce maximum throughput, not cap your usage.  It doesn’t matter how much you use of that switch, if you never use more than 30% of it’s capability it’s basically idling.  Secondly they’d scale their hardware to reflect usage needs.  If your network is growing – which our internet is – you would continue to upgrade and update your infrastructure to grow with it.  In fact, any reasonable and competent senior manager in IT would tell you that planning hardware replacement projects should be done with 3-5 years of growth in mind.  Plan for where you’re going, not where you are.  Or where, as is the case with most Telcos.

There is no technological or network related explanation for placing usage caps on customers.  Here’s a good example of how ridiculous charging for usage caps is: I am the network administrator for a multi-site organization.  That means there are more than one buildings that connect to our network centrally.  Say I note that we will be adding another site to our company, but their network requirements will overburden the core network in our home location.  If I decided to do what Telcos do, I would email the local site administrators and advise them of newly imposed usage caps.  Their business units would be charged (read: punished) for going over.  Yes, my core network MAY no longer be overburdened, short busts of overuse could still happen during simultaneous use, I now have a bunch of angry and paranoid staffers with lost productivity.  It would be far more effective, easier and cheaper to simply place throughput maximums on each of the offices.  In fact, this is what EVERY multi-site organizaiton does.  So why do Telcos break industry best practice for their customers?

Money.

Today’s world relies on an internet connection.  More and more our lives are connected online.  Streaming services and the low cost access to media they offer are causing a burden on our Telco’s network.  They are also causing a business loss as people “cut the cable” and discard expensive TV subscriptions.  Placing usage caps allows them to capitalize on their customers lack of understanding on how network works.  It allows them to maintain their current networks, instead of growing and innovating, and charge customers for their ignorance.  There is an added benefit that they get kickbacks from overage charges when you watch too much streaming content; revenue otherwise lost.  Usage caps are a cop out from Telcos to keep profits up without fulfilling the obligations they have to their customers as service providers.

Seriously, it’s about recouping lost costs from “cable cutting” and making more money.  That, as a paying customer, should make you mad.

But since we live in an environment where choice is limited and, ultimately, just goes back to the big three anyways, what can we do?  Not much.  Even writing to the regulator body who oversees Telcos, the CRTC, will likely have them respond that it’s a customer relations issue.  You could pester them on twitter or email their relations line verbatim, but I suspect your voice will fall on deaf ears.

What should Telcos like Rogers, Bell and Telus do?  How could they keep network usage down while preserving profit margins?  They can’t, really.  Canada’s networks are in shambles and in dire need of an upgrade.  Network infrastructure costs will only balloon for the Telcos, particularly if they take modernization and innovation seriously.  Short term costs have massive long term profitability, however.  Poor networks are a byproduct of their aversion to spending money.  I do, however, dream for the day a Telco realizes something; realizes they could double their market share in 18 months if they broke the mold in Canada.  My proposal is simply throughput based pricing: charge per megabit.  Current prices are all over the map per megabit.  Right now I pay nearly $1.20 per megabit.  It’s weird how the price per megabit rises to over $2 per when under 30Mbit but is actually less than $0.70 per at the highest (most expensive) tier.  A smart ISP would have a flat rate.  Charge $1.25 per megabit.  Then customers can chose their speeds and have much greater control over their monthly costs.  If I can’t afford the $50 this year for my internet, I could scale down to a $40 just by asking to reduce my maximum throughput.  Have 3,6 or 12 month terms to reduce customer call in’s for limit changes.  Do away with usage caps.  Putting a usage cap on any line over 60Mbits is just stealing, plain and simple.

All that to say this: Telcos, if your lines can’t handle customers all ordering and using 60+Mbit throughput connections, a) don’t offer them, b) spend the upfront cash to upgrade your infrastructure so you can.  Our internet demands are growing, you need to as well.

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