[iwar] [fc:"Bandwidth.hogs".not.at.home.at.AT&T.Broadband]

From: Fred Cohen (fc@all.net)
Date: 2001-12-06 16:50:53
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From: Fred Cohen <fc@all.net>
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Date: Thu, 6 Dec 2001 16:50:53 -0800 (PST)
Subject: [iwar] [fc:"Bandwidth.hogs".not.at.home.at.AT&T.Broadband]
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"Bandwidth hogs" not at home at AT&amp;T

By Rachel Konrad
Staff Writer, CNET News.com
December 5, 2001, 4:25 p.m. PT

A small but vocal group of former Excite@Home customers is complaining that
connections have gotten slower since AT&amp;T switched them to its own
high-speed cable network.

It's not their imagination.

AT&amp;T's network allows customers to receive up to 1.5 megabits of data per
second from the Internet to their computer (the downstream speed) and to
send up to 128 kilobits of data per second from their computer to the
Internet (the upstream speed).

By contrast, Excite@Home's customers say they were able to receive up to 4
megabits downstream and send 128 kilobits upstream. That means AT&amp;T
customers who have been switched to AT&amp;T's Broadband Internet system since
Excite@Home cut off their high-speed Internet service have less than half
the downstream abilities of their old service.

AT&amp;T executives insist that the vast majority of cable modem
subscribers--the people who use fast connections for online shopping,
gaming, sending and receiving e-mail, and occasional downloading--will never
notice that the AT&amp;T network has less downstream potential. But AT&amp;T admits
that the biggest bandwidth hogs--known euphemistically as "power
users"--might lament slower speeds.

Power users include music fans who upload MP3 files almost every night,
photographers who constantly send and receive large files, and
small-business owners who--in violation of their user contracts--send
bandwidth-intensive commercial files on their residential service. Some are
operating Web servers and taking customer orders for e-commerce operations.

Power users account for only 1 percent of AT&amp;T's broadband subscriber base,
but they suck up about 16 percent of the total bandwidth, said AT&amp;T
Broadband spokesman Andrew Johnson. Because of that disparity, AT&amp;T plans to
implement a "tiered pricing" system. The company won't say when that will
happen, nor will it provide details of the new pricing structure.

"We are going to put in place at some time in the future a tiered service
offering to our customers where we will be able to give them more choice
than the one-size-fits-all system we have now," Johnson said Wednesday.
"We're doing some consumer research and marketing research, and we're still
trying to decide what those tiers might look like."

New pricing to get new customers?
The average Excite@Home customer pays $46 per month for the service, and
rates have been rising steadily--causing a slowdown in growth rates for
broadband subscribers. A survey released Sunday by La Jolla, Calif.-based
market intelligence firm ARS determined that the number of total broadband
subscribers in the United States increased 14.2 percent in the third quarter
of 2001 from the second quarter of 2001.

Although that's a respectable jump, it's the smallest quarterly increase
since ARS began tracking such data. In addition, ARS found that broadband
subscriber growth rates have decreased in every quarter over the past two
years. In 2000, growth rates were at least 30 percent per quarter--more than
double the 2001 quarterly growth rates.

AT&amp;T hopes that lowering the price for some users could boost overall
subscription rates, Johnson said.

"The power users are different than someone who needs even less speed,"
Johnson said. "We'd offer higher and lower price points."

It's unclear when AT&amp;T would increase prices for bandwidth hogs.

AT&amp;T Broadband, which provides cable TV and Internet access for 16 million
households, announced a 5.5 percent increase for 2002 cable TV prices on
Nov. 2. Customers who have both cable TV and Internet access aren't likely
to look kindly on another increase--even as part of a tiered system in which
some light users pay less.

Timing of the tiered system launch is even more sensitive in the wake of the
Excite@Home fiasco. On Saturday morning, the Redwood City, Calif.-based
access provider terminated service with AT&amp;T, and most of the 850,000 shared
subscribers were completely without high-speed connections.

AT&amp;T rushed to migrate those customers to its own network, but in the
process customers had to deal with outages and flaky service, and many had
to revert to dial-up access--a fate they say is almost as bad as having to
write and send letters by hand. Many customers are also upset that they have
to change their e-mail addresses as part of the network migration. They're
also angry about a lack of customer service from AT&amp;T in the first hours and
days of the outages.

AT&amp;T customer service representatives called some customers at their homes
on Saturday and Sunday, but others say they were caught completely
off-guard. Others said they had to try a toll-free information hotline as
many as 40 times before they got through--only to get unhelpful, scripted
comments from service agents.

Given the events of the past several days, many customers say a price
increase could push them to defect from AT&amp;T Broadband Internet.

"I'm very unhappy with the new downstream speed cap of 1.5 megabits," said
Tim Gerchmez of Renton, Wash., who pays $45.95 per month for cable access.
"I'll stick with AT&amp;T as long as they don't raise prices even a single cent.
I will be gone if prices increase."

Mike Baum, a Seattle-area computer programmer who pays $45.95 per month for
cable modem service, is also weighing his broadband options. He doesn't
understand why he should pay the same amount of money for the AT&amp;T service
when it offers half as much downstream capability.

"I was extremely satisfied with the service while using @Home. So far, the
AT&amp;T solution has not been very good," Baum said. "I am waiting a little
while to see what happens...I am looking into DSL again. I will not pay for
what I don't get any longer."

Tiered pricing: The wave of the future
AT&amp;T, which has had the equivalent of tiered pricing for phone customers for
decades, has been considering a tiered system for high-speed cable customers
for at least 18 months, Johnson said.

In fact, AT&amp;T Broadband Senior Vice President Susan Marshall told industry
veterans gathered in March at the CableLabs media briefing in Westminster,
Colo., that the cable company was testing tiered pricing in a trial market
in Boulder, Colo. It was planning to do another trial in Boston later in the
year. 

At the conference, Marshall said AT&amp;T was piloting its "broadband choice"
service in more than 300 Boulder homes. Marshall said she expected most
consumers would pay about $39.95 per month--the same rate AT&amp;T charged
customers for Excite@Home service at the time.

Whenever AT&amp;T moves to tiered pricing, it won't be alone. Virtually all
cable providers are considering similar plans, said Mark Kersey, a broadband
analyst for ARS. 

But Kersey said providers trying to launch the new pricing system will face
extreme resistance from consumers, especially the bandwidth hogs. Many of
them are technophiles who believe that as many people as possible should
have affordable, reliable, fast Internet access.

"The implementation of tiered pricing is going to be a major challenge,"
Kersey said. "Even if you can figure out a good operational way to make that
happen, I'm not sure you want to go to your customers and say, 'You spend
five nights a week uploading MP3 files, so I'm going to charge you $75 per
month.'...You'll see people become more frustrated and quite possibly
migrate to DSL." 

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