MEDIA CURRENT: ARE YOU BEING THROTTLED?

Do you watch movies via a wireless connection on your laptop, tablet, smartphone or even TV set? If so, have you received a love letter from your service provider informing you to either go on a digital data diet or plan to pay more to suck down more streaming 1s and 0s? If not, it will arrive shortly.

The leading wireless companies are changing the usage and pricing models they have long used, shifting the industry from one with “unlimited” plans to “limited” deals.

These new limited plans tier data downloads to the ability to pay. AT&T, Verizon, T-Mobile and Virgin Mobile have either introduced or plan to introduce “data cap” or throttling programs on their 3G and 4G wireless users. Sprint remains the only leading provider offering an unlimited data plan that isn’t subject to throttling.

When thinking about your latest wireless toy, its important to remember two key facts. First, According to Europe’s Organization for Economic Co-operation and Development (OCED), the U.S. ranks 1st in total wireless users, with 200.2 million subscribers as of June 2011. However, it ranked 9th in terms of users per 100,000 people of a nation’s population, with 65.5 per 100/k – this compares to #1 Korea (96.3) and #2 Sweden (93.6).

Second, in the U.S., the datarate for wireless laptops and smartphones lags way behind U.S. wireline rates, let alone speeds among the most advanced telecom countries.  In March 2011, PCWorld found for laptop users the download rate ranged from Verizon’s 6.44 Megabytes per second (Mbps) to AT&T’s 2.48 Mbps to Sprint’s 2.15 Mbps; upload rates ranged from Sprints 0.61 Mbps to Verizon’s 5 Mbps.

The performance of smartphones is even more anemic. Downstream T-Mobile topped out at 2.28 Mbps to AT&T’s 1.45 Mbps to Verizon’s 1.01 Mbps; in terms of upstream, don’t ask – Verizon was only 0.67 Mbps, AT&T was 0.97 Mbps and T-Mobile hit 0.95 Mbps. As a point of comparison, as of Q-3 2011, Akamai ranked the U.S. 13th globally in average (downstream) datarate speed of 5.8 Mbps. (Verizon’s high-performing FiOS service hits 1 Gbps.)

In simplest terms: America’s wireless broadband service sucks!

This situation is a result of the telco duopoly, AT&T and Verizon, shifting their respective business models away from heavy investments in wirelines – the optical fiber landline networks that are the backbone of America’s communications network – to the cheaper and (due to deregulation) more profitable wireless businesses. AT&T and Verizon have stopped building out their most advanced wireline networks, Uverse and FiOS, respectively. This shift will only further erode the nation’s communications capabilities.

Wireless providers, led by Verizon, are warning that they are facing capacity crunch or bandwidth congestion, that the proverbial sky is falling. To address this alleged problem, they must acquire more wireless spectrum and introduce throttling to dissuade large-data usage.

The analysis places the burden for the country’s pathetic wireless – and wireline – system on to the customer for wanting too much. This is a false argument, shifiting the inadequacies of wireless networks failure away from the operators.  These service providers have not invested in upgrading the networks but crème-skimming long-term investments to meet demands of short-term profit and providing generous compensation to executive and returns to shareholders.

A rule-of-thumb for streaming data downloads to a smartphone, tablet or other 4G (i.e., 4th Generation) device is: 1 gigabytes (GB) for standard definition (SD, i.e., 480p) video content requires about 1 hour; for HD (i.e., 1280p) content its about 2 GB per hour.

So, lets say you want to watch a Hulu TV show or a Netflix movie on a tablet device like an iPad in HD. According to Janko Roettgers at Gigacom, an episode of Weeds consists of about 800 megabytes (MB) and a movie like Moulin Rouge would eat up about 3.5 GB of data.

So, if you are one of those who has an unlimited plan and are facing a wireless company’s throttling effort, what can you do?  Very little.

In a recent court decision, Matt Spaccarelli, of Simi Valley, CA, lost a challenge to AT&T over throttling. The Supreme Court ruled in 2011, in AT&T Mobility LLC v Concepcion, that AT&T, along with any other company, could block class-action suits arising from disputes with customers and instead force those customers into binding arbitration. All Spaccarelli could do was enter arbitration following his pyrrhic victory in small claims court and receive an $850 payment from AT&T.

So, either plan to pay more or get ready to be throttled.

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David Rosen is a writer and business-development consultant.  He is author of the indie classic, Off-Hollywood: The Making & Marketing of Independent Films (Grove), originally commissioned by the Sundance Institute and the Independent Feature Project.  He can be reached at [email protected].  For more information, check out www.DavidRosenWrites.com and www.DavidRosenConsultants.com.