high-speed data usage could present MSOs with a steady
stream of operational and technical hazards
Although high-speed data has grown to become an immensely popular cable service, operators are still trying to figure out how to get more return on their investment and how to police bandwidth hogs who cost more to maintain than the monthly nut they pay.
But cable operators, for a melange of reasons, are treading into these areas as carefully as they might toe a tightrope without a net.
So far, the most common push in this direction with HSD has been in the deployment of simple speed-cap tiers, typically with a high-end version for power users, a middle-tier for the flagship service, and, in rarer instances, a lower, entry-level tier that targets Internet newbies and current dial-up customers.
Operators such as Cox Communications, Charter Communications, Comcast Corp. and overbuilder RCN Corp. have already tested or deployed some form of tiered data services.
That conversation, he notes, is gradually moving into the area of consumption caps that can help operators target customers who are ripest for an upgrade to a higher service tier or perhaps charge for the bandwidth consumed above and beyond any set limits. MSOs might also find the practice useful in thwarting users who illegally uncap the speeds of their cable modems.
If consumption-based HSD is indeed the wave of the future for broadband, capturing (and possibly tracking) that data will be mandatory–and that requirement could involve a sticky mess of consumer privacy issues (covered in more detail later in this story).
Despite that looming bugaboo, cable operators "are definitely thinking about [consumption caps for HSD]," says Michelle Nowak, vice president of product management for billing vendor DST Innovis. "They're exploring it as a long-term goal, but most of them do not have it in their plans in the next 12 to 18 months."
CSG Systems Inc., like other billing vendors, has modified its platform to handle consumption-level monitoring of bandwidth. "We're just waiting for the customers to take advantage of it," says Dwayne Ruffin, executive director of product management for CSG's broadband division. He adds that one CSG customer might need it by this July, but that most are targeting 2004.
Some MSOs, including one in the top five, are already doing it.CABLE GETS INTO THE ACT
In Alaska, GCI has offered a speed/consumption hybrid since April 1999. In addition to offering different rate limits, the operator is also keeping a close eye on the amount of bandwidth its high-speed customers consume each month.
GCI, arguably the furthest ahead in this area of all North American MSOs, offers five different tiers of service, ranging from an entry-level "silver" package to a high-end "diamond" tier (see chart, p. 22, for a detailed view).
Terry Nidiffer, GCI's vice president and general manager of Internet services, notes that between 1.5 percent and 2 percent of GCI's high-speed cable customers exceed the cap in any month. Those who do exceed the limit must pay $20 for every extra gigabyte they gobble up.
GCI was early to the consumption and tiering game because it initially rolled out HSD based on proprietary (and QoS-sensitive) Com21 cable modems and cable modem termination systems. GCI is also deploying DOCSIS 1.1-qualified Arris C4 CMTSs and 1.1-certified Toshiba cable modems in new HSD markets.
GCI was compelled to offer so many different tiers and services because of its telephony roots: voice customers are accustomed to a guaranteed level of service. Plus, customers who eat up lots of bandwidth should also help to foot the bill when the meal is over, Nidiffer says.
"The people who use the networks the most should pay the most," he adds, noting that a consumption cap "allows us to address those users who over-utilize the network, even though they were using a lower level plan."
More recently, Cox Communications started to track customer bandwidth consumption in some markets last November. The new policy, which eventually will be rolled out to all Cox properties, is designed to maintain the integrity of the MSO's high-speed service, says Dave Pugliese, Cox's vice president of product marketing management.
That policy sets Cox's monthly downstream consumption cap at 30 Gigabytes per month and a maximum of 2 GB downstream per day. Cox limits the upstream at 7.5 GB per month or 1 GB per day. To put 2 GB into terms a customer might better understand, Cox has explained in a letter to customers that the amount equates to about 60,000 photos, 2,000 minutes of MP3 music, or three to four full-length movies.
|Tier||Rate cap (down/up)||Consumption cap*||Price**|
|Silver||384 kbps/64 kbps||5 Gigabytes/month||$29.99|
|Silver Plus||1 Mbps/128 kbps||10 GB/month||$54.99 (cable modem service only) $39.99 (with long distance voice service bundle)|
|Gold||1.5 Mbps/128 kbps||20 GB/month||$84.99 (with LD)|
|Platinum||1.5 Mbps/256 kbps||25 GB/month||$99 (with LD)|
|Diamond||2.4 Mbps/256 kbps||30 GB/month||$149.99 (with LD)|
|* Operator charges $20 per GB consumed per month above the cap.|
** Prices vary based on plan and location.
By entering the MAC address of their cable modems, GCI customers can tap a Web-based tool to track how much bandwidth they’ve consumed in a given month.
Still, even a small percentage of customers can have a noticeable impact on an MSO that had about 1.4 million HSD subs at year-end 2002. A mere two percent of that figure–28,000 customers–could impact the integrity of the overall service.
Comcast has yet to incorporate a consumption cap, but "we're now understanding how broadband content will shape future use, and taking that into consideration," says MSO spokeswoman Sarah Eder.
Metered HSD isn't limited to cable operators. BroadBand Solutions, a Utah-based wireless Internet service provider (WISP), offers a residential service with download rate limits ranging from 256 kbps to 1.1 Mbps and a consumption cap of 10 GB (aggregate downstream and upstream).
BroadBand Solutions charges $5 per GB above the cap, but uses a software program that notifies customers when they're 1 GB below the limit. Between two to four percent of the company's customers exceed the cap in a typical month, says BroadBand Solutions CEO Kevin Santiago.CHALLENGES AFOOT
The challenges for consumption-based HSD touch operational and technical sides of the business, including being sensitive to privacy issues, addressing consumer expectations and accounting for rogue Internet elements like spam and Web pop-ups.
The most potentially troubling issue involves how an operator can track a consumer's bandwidth consumption while also protecting his or her privacy.
Privacy protection in this aspect first came under the heatlamp last year in a case involving a Verizon Communications high-speed data customer suspected of downloading more than 600 songs per day via the Internet. The Recording Industry Association of America, still reeling from the scare the Napster of yore first injected into the music industry, requested that Verizon turn over the customer's name.
Despite a judge's order for Verizon to turn over that information, the RBOC asked a federal appeals court in January to stay the ruling, arguing that the RIAA's request breaches privacy laws. Further, Verizon claimed that the recording industry is using it as a "test case" for "aggressive legal theories."
How this case turns out will certainly have a far-reaching effect on the U.S. cable industry, which, according to Kinetic Strategies Inc., had 11.2 million residential cable modem subs at the end of 2002.
AT&T Broadband, for one, received a similar subpoena from the recording industry, but complied with the RIAA's request, Comcast spokeswoman Eder confirmed. Comcast's policy on whether to comply is determined after the MSO figures out whether or not it's oppressive or required by law, Eder says.
Another consumption cap challenge comes from the fact that most HSD customers aren't accustomed to a model that's largely been tied to cellular phone services. "We in the domestic U.S. are used to paying one price for an all-you-can-eat model," Nowak notes. "I think it will be tough to sell into the marketplace."
Bob Hritsko, director of product management at DST Innovis, agrees that operators will have to be very creative with their marketing to pull off consumption-based billing. "But I think you'll see [operators] take incremental steps and experiment in different markets to gauge consumer reaction to it."
Notifying a customer of his bandwidth usage presents yet another problem. While consumers have a rough idea of how many minutes they use on their cell phones, ascertaining how many bits and bytes have passed up and down their broadband connection is more difficult.
GCI is meeting that challenge via a Web-based tool that gauges how much bandwidth a customer has devoured for the month. All a customer has to do is input his MAC address, and the site displays the cable modem's statistics.
GCI is also looking to become more proactive in this area. "We have it on our list of things to do this year," Nidiffer says, noting that GCI could eventually install a notification component that alerts customers when they approach 80 percent to 90 percent of their monthly bandwidth limit.
Enforcing consumption policies without drawing the ire of the customer presents another set of bugbears.
The first time a Cox HSD sub breaches the cap, the customer receives an e-mail that reminds them of the policy and reinforces what those limits are. At that point, "it's not even referenced that they've exceeded the limit," Pugliese says.
If a customer continues to exceed the cap, Cox will remind the user of the specific policies. If it happens again within a set period, the customer gets yet another e-mail notification. If the behavior continues, Cox will send notification via postal mail.
Beyond that, customers who exceed the cap will be directed to upgrade to a business-class level of service that better suits their usage patterns, or, in extreme cases, they could have their service suspended.
Though most bandwidth usage is within a customer's control, spam and pop-up windows probably are not. The question is whether operators that impose consumption caps count that bandwidth toward the total or cut it out of the equation.
GCI counts spam toward a customer's overall consumption total, but sells a filtering product that quarantines unsolicited e-mails and files that might contain damaging viruses.
To help operators deal with this broadband conundrum, Convergys has integrated a rating module with its ICOMS platform to bill for a spate of different services or combination of services. That element, which Convergys purchased from Geneva Technologies in March 2001, "can evaluate the different records coming in and determine if they should be included in the cap calculations," Champion says.TOOLS OF THE TRADE
Convergys is just one of a spate of companies that offer products designed to set rate limits, meter bandwidth and track Internet usage.
In addition to serving as a WISP, BroadBand Solutions also markets a product that it uses to set consumption levels and ratchet up data rates. BroadBand Solutions' Customer Management System (CMS) can also monitor specific ports, and peer down to the application level. This would allow ISPs to know if customers are merely surfing the Web or running peer-to-peer applications.
"But we only count bytes," Santiago says. "We don't look at what Web sites they're going to, and we don't look at any e-mails."
Though BroadBand Solutions doesn't yet have any cable customers for its CMS to speak of, it is in discussions with an operator that has deployed a DOCSIS-based system.
BroadBand Solutions isn't alone in this area. A veritable crop of bandwidth management vendors has emerged to help MSOs ply this component of their broadband trade. Companies in this area include Allot Communications, Ellacoya Networks, P-Cube and Narus Inc., to name but a few.
P-Cube, for example, offers a programmable "service control" platform that drills down to the subscriber and application level (please see the October 2002 issue of CED for more on these vendors).
While such tools are readily available, that doesn't necessarily mean cable operators want or need to implement them. In fact, cost issues aside, some would rather altogether avoid the potential privacy implications they might represent.
Cox, for one, does not collect data that specifically describes where a customer is going on the Web or tracks usage at the applications level. "We're not Big Brother saying, 'You've gone to Napster and then Morpheus,'" Pugliese explains. "It's strictly [the tracking of] quantities of bytes passing through our network to an individual subscriber."
Still, that doesn't mean there aren't other tools an MSO like Cox might be in search of. "We do want to have the ability to bill customers beyond their byte cap," Pugliese says. "I'd also like to add the ability [for customers] to check how much they use in a given month. We're scoping that out."VOIP IMPLICATIONS
The usefulness of consumption-based billing might also apply to IP telephony, which sends out packets and, therefore, can gorge on valuable bandwidth.
While the cost for calls sent over traditional circuit-switched technologies are typically set by the time of day, the amount of packets flowing up and down the broadband pipe in a VoIP environment could cause cable operators to eventually reassess their pricing and rating models for IP telephony.
But changing that model, at least initially, isn't such a great idea, because it flies in the face of traditional telephony service buying habits, Champion warns.
Cable operators that offer IP telephony "will use the existing model and really compete on price," he says. "But they may use that collected data...to see trending and use it to analyze their capacity and call volume."