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Bandwidth caps have more to do with preserving TV revenues than network management business. Yes, there are issues of last mile and node congestion for both telco and cableco networks. It is also a function of the band-aid approach that these companies take. instead of one huge upgrade (like say Verizon with FiOS), there have been baby step fixes.

It's also about preserving revenue. If you switch from watching Broadcast TV to just downloading Netflix and Amazon, how do the TV Providers make money from VOD (video-on-demand)? If you are watching shows via Joost and Hulu (and the coming network to replace Showtime), how does the big upgrade get paid for? The duopoly is preserving its content revenue - plain and simple.

Personally, the FTC should be investigating false advertising by the carriers - both on cellular data and broadband. In many cases, it is sold as Unlimited, but isn't. That's false advertising.

This will present an interesting challenge as people will switch. The duopoly is doing everything it can to compete on price and not value. Neither company is trying to court customer loyalty.

The ripple effect on this may be to stymie Internet business growth. Software and Application companies (SAAS, ASP), Web 2.0, and entertainment companies will find it hard to maintain customers and grow revenyue under a bandwidth cap.

I wonder how AT&T's partner, Apple, who makes the Apple TV and owns iTunes, feels about a cap, which will eventually flatten its revenues.

Not for nothing but these companies can't bill correctly anyway. There are certain to be many folks billed for overages where there are none. An even bigger erosion of customer satisfaction is coming.I guess we forget about Customer Acquisition costs and the lifetime value of a customer.

The news this week in online music is that Best Buy is buying Napster and now has anti-trust approval from the FTC to do so, according Yahoo news.

Also, Yahoo News  reports that "After approval by the U.S. House and now a nod from the Senate, the Webcaster Settlement Bill is headed to President George W. Bush's desk for his signature. The bipartisan bill will allow copyright owners and artists, on behalf of SoundExchange, to negotiate with Internet radio services. The bill is expected to benefit all Webcasters, including National Public Radio, small Webcasters, and college Webcasters, who put their stations on the Internet."  And my favorite, Pandora, who pushed a grass-roots effort to get the bill through Congress.

In other online entertainment news, Netflix adds Starz. 

As businesses increasingly rely on technology to store and maintain data, including customer records, the risk of identity theft also is increasing. The Federal Trade Commission ("FTC"), together with federal banking regulatory agencies and the National Credit Union Administration, has adopted new regulations intended to combat identity theft. Known as the Red Flag Rules, these new regulations require financial institutions and creditors to develop and implement a written identity theft prevention program to identify and combat identity theft in connection with new and existing customer accounts.

If you are an operator that provides service in advance of payment, then your company is a "creditor" because your company regularly extends, renews or continues credit or defers payment for goods or services. The Red Flag Rules apply to each "covered account," which is a customer account involving multiple payments or transactions for which there is a foreseeable risk of identity theft. By contrast, a single, non-continuing transaction, where no ongoing relationship exists, is not a covered account. The Red Flag Rules may also apply to some of your business customers.

All companies subject to the Red Flag Rules are required to implement a written customer protection program by November 1, 2008. This program must be designed to detect a "red flag", which is a pattern, practice or specific activity that indicates the possible existence of identity theft. The FTC has identified five categories of Red Flags and provided a list of examples of the types of red flags that fall under each category. If you are providing interconnected voice or VoIP services, the Red Flag compliance program can be combined with your CPNI program required by the Federal Communications Commission's rules.

The customer protection program must include policies and procedures for: (i) detecting warning signs or "Red Flags" of identify theft, (ii) responding to any such Red Flags in a manner that will prevent or mitigate the identify theft, and (iii) updating the Program. The customer protection program must be managed by the Board of Directors or senior employees of the company if there is no Board of Directors. Also, the customer protection program must provide for staff training and oversight of your company's service providers.

Thank to Attorney Stephen E. Coran of Rini Coran, PC for providing this info.