Broadband Capacity Is The Alternative Minimum Tax Of The Web

Think video is the future of online media? Broadband revolution, right? Apple perfecting the digital video experience?

Well, not if everyone decides to embrace that future all at once. Time Warner Cable is experimenting with caps on broadband usage, which means too much movie downloading and suddenly you’re paying $30 per movie.

From Gizmodo:

Everybody is using more bandwidth than ever, and that is going to continue ramping up with services like Netflix and iTunes that keep pushing these “large downloads” into the mainstream. So, it might only hit a small percentage of users really hard right now, but soon enough it’ll be hitting everybody, which is the real point.

My first thought when I read this — it’s the Alternative Minimum Tax of the web.

The AMT was introduced by the Tax Reform Act of 1969, and became operative in 1970. It was intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the tax code of the time.

In recent years, the AMT has been under increased attention. Because the AMT is not indexed to inflation and recent tax cuts, an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax.

Well, I guess you could say that broadband capacity hasn’t been indexed to the inflation of video downloads and streaming on the web. At first, it’s only going to hit people who download lots of movies via BitTorrent, but soon high-capacity video downloading will include just about everyone.
Here’s another metaphor: If you’re in Washington, DC, and you want to head due west on a highway, I66 is your ONLY choice — all TWO lanes. During rush hour, the ENTIRE highway goes HOV, but it still doesn’t help.

Robert Cringley had another apt metaphor in a prescient column from a year ago:

The Internet as we know it is a shell game, with ISPs building their profits primarily on how many users they can have practically share the same Internet connection. Based on the idea that most users aren’t on the net at the same time and even when they are online they are mainly between keystrokes and doing little or nothing when viewed on a per-millisecond basis, ISPs typically leverage the Internet bandwidth they have purchased by a factor of at least 20X and sometimes as much as 100X, which means that DSL line or cable modem that you think is delivering multi-megabits per second is really only guaranteeing you as much bandwidth as you could get with most dial-up accounts.

This bandwidth leveraging hasn’t been a problem to date, but it is about to become a huge problem as we all embrace Internet video. When we are all grabbing one to two hours of high-quality video per day off the net, there is no way the current network infrastructure will support that level of use. At that point we can accept that the Internet can’t do what we are asking it to do OR we can find a way to make the Internet do what we are asking it to do.

Cringley argues that fixing the web’s AMT would effectively bankrupt the ISPs. So who’s going to fix this mess?

Google is building a LOT of data centers. The company appears to be as attracted to cheap and reliable electric power as it is to population proximity. In Goose Creek they bought those 520 acres from the local state-owned electric utility, which probably answers the land question posed above. By buying out all the remaining building sites in an industrial park owned by an electric utility, Google guarantees itself a vast and uninterruptible supply of power, much as it has done in Oregon by building a data center next to a hydroelectric dam or back here again in Columbia by building near a nuclear power station.

What is Google going to do with all of these data centers? Cringley’s theory:

Google intends to take over most of the functions of existing fixed networks in our lives, notably telephone and cable television.

The more people use the web, the more Google makes money. That’s why Google is so keen on the mobile web and supporting projects that blanked localities with WiFi internet access.

I don’t know if Cringley’s right, but the broadband capacity drama is definitely in its first act.

Here’s one last thought about the “wired” world we no live in. I was on a call today doing an online demo. Outside it was snowing, hard. Suddenly, the power failed. Cordless phone base — dead. Apple Airport — dead. Lights out. Fortunately, I had a charged cellphone, charged laptop batter, and a wireless broadband card — and it wasn’t dark outside. (When does that ever happen?)

The web is undoubtedly the future, but there’s a real risk that in the near-term we may have to weather some blackouts.