Friday, June 9, 2006

Bit caps - What to expect from Telecom companies if Net Neutrality fails

Happy with the last nights rejection of Net Neutrality in the House of Representatives, Telecom companies will soon be giving a generous gift to its consumers, called 'Bit caps'. They have promised themselves to give this gift to their consumers now or little later but definitely. This time, they mean it. People, that rejected the Net Neutrality, do you know what is in the making and what can be expected from these greedy Telcos? Here you go.One tiny step. Bit caps.

If you have a internet connection from one of these greate Telecom companies, they setup a bit cap, a limit on the amount of data you can download or upload. That is not bad at all. But here is the problem. If you download video from the Telecom company, then that data will not count to the cap. You can download almost unlimited video from your company. But if you download a video from Google or youtube for example, then that video would count to the cap. Once you reach the cap you must pay for each bit you download. In plain words what Telecom companies are saying is that, "Use our service or Pay for each bit!". This is one of the benefits what telcos call 'competition brings so many benefits to customers' if net neutrality is not enforced. This is how they define competition. Dictionaries and common sense calls it 'exploitation' of their size and network to reach. FTC calls it 'Anti-competitive'. But these guys know how to play it to their advantage, just like they got Net neutrality rejected in HR. 

If you are following Net Neutrality debate, you must have heard that Telcom companies said there is no discrimination at this point. And so we don't need a law to prevent something that does not happen. Read the report "MULTIPLE PLAY: PRICING AND POLICY TRENDS"  published by OECD (Organisation for Economic Co-operation and Development). There is some thing called 'Bit caps' mentioned in the document that is already in force in many countries.
Bit caps : One potential bottleneck in multiple-play markets is the anti-competitive potential of bit caps in a few OECD markets. Bit caps are  limits on the amount of data traffic that subscribers can use in a given month. Once a subscriber reaches a bit cap they either pay an additional fee per Megabyte transferred or have their connection reduced to dial-up speed. The potential problems arise because providers typically do not include video streams from their own servers in the calculation of bit caps but the caps would apply on content such as videos from other sources. For example, TV quality video streaming would require roughly 2 Mbit/s for standard definition television. That equates to 256 KB per second of video or roughly
15.4 MB per minute of television viewing. A subscriber with a 2 GB bit cap would run over their monthly allotment in only 129 minutes of television viewing from a competitive provider.

Folks, who rejected the Net Neutrality bill, do you understand what is in the making?

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