The Black Horse of the Blog World

Recently, the FCC decided to allow ISPs to charge content providers for the services ISPs provide in conducting content to customers.  This is principally a fight over bandwidth consumption from sources like Netflix and YouTube. Critics of this move have said that this will break the notion of Network Neutrality by allowing network providers to favor some providers over others, based on how it benefits the network provider.

Brett Glass, an ISP operator in Laramie, Wyoming, accurately described this as what is economically referred to as a two-sided market, with the advantage that ISPs can continue to offer customers a fixed bill (unlike, say, your electric bill which varies based on usage), while still being able to charge to account for fluctuating usage, by billing the content provider.  He uses the newspaper model as an example of a long standing, and successful two-sided market.

In the case of the newspaper, customers pay a fixed subscription cost regardless of whether or not the size of the paper varies from day to day, week to week, or whether the customer reads some or all of the paper, et cetera.  On the other side, advertisers pay a cost which covers the overhead of making the paper bigger to include the ads, such as extra printing and delivery costs.

But while this is a good example of a two-sided market, this is a terrible model for ISPs to ape.  An ISP is not a newspaper.  Take away all the ads from a newspaper and you still have a product that customers want to buy.  In fact, customers almost never want the advertising they receive anyhow, but accept it as the shared price of keeping their newspaper subscription costs low.  But take away all the Netflixs and YouTubes of the world from what your ISP brings you and the service distinctly loses value.  It comes down to the fact that a newspaper -is- a content provider, and is the primary content provider.  ISPs are a service provider.  They provide little to no content of their own.

Advertisers pay a newspaper for access to the subscribers because advertising is fundamentally an undesired product to most people. Netflix shouldn’t pay an ISP under a similar model because Netflix is providing a product that people want and pay to access.

The real problem comes with trying to apply a two-sided market model to a utility service model.  Currently, ISPs sell a fixed amount of bandwidth to customers at a fixed monthly cost, and offer tiers of service with different bandwidth speeds to try to differentiate their customers. And they charge very large amounts of money, while simultaneously underprovisioning.  They sell the speeds they offer to a large number of people, knowing that many people aren’t going to use nearly that much.  And now that popular offerings like Netflix and twitch.tv are around, more people are in fact using more of what they’ve bought.  And rather than improving their infrastructure to accommodate, or altering their tiered offerings or pricing structure, ISPs are taking this as an opportunity to get paid twice for the same traffic, once from the customer requesting it, and once from the content provider providing it. And they can do this because customers don’t really understand the concept of bandwidth.  Ever since the days of dialup access they’ve paid a fixed monthly cost without really understanding what that entails beyond unmodified access to the internet. So when streaming video gets choppy, customers are just as likely to blame the service provider as they are anyone else, even if it is a result of network congestion on the part of the ISP.  To return to the utility analogy, that would be like blaming the reservoir because the water pressure in your house is too low.  It’s -possible- the reservoir is out of water, but unlikely.

So a two-sided economic market model makes little sense when applied to ISPs which function more like a utility. And ISPs don’t want to switch to metered usage models (like your electricity or gas) because they lose the ability to oversubscribe and underprovision. And customers like the idea of a fixed bill with ‘unlimited’ usage.  So what’s the way out? How do we get to a model where people pay for what they use, and ‘fairness’ is restored?

Some people think the way out is for the FCC to actually regulate ISPs the way they do another utility service: the phone companies. This is called ‘common carrier status’ and proponents see it as a way to encourage competition and to allow for new entrants into the market that can experiment with different pricing models and service offerings.  Recent legal outcomes have made it clear that the FCC can choose to take this route, but so far they have been very reluctant to do so.  Time will tell.

Amanda has posted about the third in a series of N things we are struggling with right now.  Hopefully N stays == 3.

Again life is sieging us about our mental walls and trying to reduce us to useless blobs of jelly.

Short version: our older cat (who we can’t be certain of the age, but isn’t -that- old) has an aggressive and intractable cancer.  Prognosis is months if we are lucky, weeks if we aren’t.  Cats, and this cat in particular, are a big deal to us and our history. And we have no idea how Jägermonster will take it, either.

 

Did you know that childcare is really expensive? Some of you don’t have kids, and some of you plan to never have kids, in which case, you’ll never know this personally. And this post may not be for you.

Still here? Yeah, so child care is really expensive. As of a 2008 study [1] it was the largest expense on average for middle class families, eclipsing both food and housing. As of a 2013 study [2], it often exceeds the cost of tuition at a state school. As you’ll read later, I had reason to gather facts and figures on this.

In Massachusetts, the average cost of childcare is $16,000 a year. That makes us if not the most expensive state, the second most expensive. Depends on the source and timing of the data. That’s the average cost. Quality care at an accredited center, will, of course, cost more. And centers in the more affluent and higher cost of living eastern part of the state will skew above average as well.

But we are lucky. I work at a college that has a very high quality, fully accredited program that has been established for 30 years and gives about a 33% staff discount. Meaning we have been able to enroll our toddler in a top tier program for a little less than it would have cost at the not-nationally-accredited KinderCare facility that he was in when he was too young to be enrolled at Regis. (Both are still above that average figure cited above but not by much. Those geographical factors.) And obviously it is convenient, because what could be more convenient than driving where you are going anyhow? And there is a safe and spacious campus around it, so the children can go on long(er) walks to the athletic fields or the gym, or to the science department to do exploratory and educational play, etc. His previous KinderCare we referred to as day care, and the Regis center we refer to as school. That kind of difference.

That whole paragraph will soon need to be rewritten to be past tense. At the end of April we received a letter informing us that because the center has had declining enrollments and has been running at increasing deficits, the program is being terminated at the end of June and will not reopen. This was a complete shock to us and the other parents. Many of us had already signed contracts for next year. And many of the almost comparable nearby facilities have already filled up for the next year. And it was a bombshell to the teachers at the center, who will also have a hard time getting new jobs because the nearby centers have already planned out their staffing for the next year.

We’re ‘lucky’. His previous facility has openings, so we have someplace for the Jägermonster. And as good as the people there are, and as clean and pleasant as the facility is, it is very hard to return to average when you’ve had excellent and were expecting excellent as an option. But the other excellent options either don’t have full day options, are way out of our price range, don’t have openings, or some combination of the three.

The parents of the children did rally and have a meeting with the President and CFO, but I don’t know as anything will come of it.

So this is one more thing that has been adding to our mental and financial stress.

[1] http://www.pewstates.org/uploadedFiles/PCS_Assets/2008/PEW_PkN_pre-kpinch_Nov2008_report.pdf

[2] http://usa.childcareaware.org/sites/default/files/Cost%20of%20Care%202013%20110613.pdf

Some of you will have already seen this. Amanda posted on Monday night a very important piece about the state of the Amanda. In short, it hasn’t been good, but it is getting better. But to get better, we have to walk through fire. It’s an f-locked post, so if you can’t see it, ask one of us and we’ll share the details and/or add you to the f-list.

And as the bottom of her post says, “Thank you all for reading and caring. We really need it right now. Another post will be coming soon, for as they say, it does not rain but it pours and there is more, but it needs it’s own write up.”