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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.

As prices of IP bandwidth sink to new lows, resellers - like Bandcon, AlphaRed, and the rest - are facing pressure. In fact, AlphaRed has apparently closed its doors, which could create problems for other resellers that it buys from and sells to, like BandCon who is the CDN for AlphaRed.  For every reseller that closes, a new one opens up.

(Please note: the other reason that AlphaRed may have closed was that the Washington Attorney General is suing AlphaRed CEO for scareware.)

1 in 12.5 Million responses to spam -- but it is still highly profitable. If the spam was just selling products with $10 profit per sale, it would still be highly profitable. But when you are stealing credit card numbers and identities, it makes spam hugely profitable.

Spammers usually run off of botnets of infected computers. Why people don't update (and run) anti-virus programs regularly is beyond me. Why we haven't defeated spam yet is another issue.

Saw this commercial on TV yesterday for oovoo, which is a Skype replacement.

Why did I like it? Because it demonstrated what it does while doing what Ma Bell used to do in the old days with its Reach Out and Touch Somebody ads.

It makes a connection with the audience. The connection is an emotional bond. No talk of features or benefits. Perfect.

Luca says that there isn't room for any more players. To an extent that is true because the market is full and it will be a zero-sum game of take-away. But with marketing like this, I can see how oovoo could take market share -- but how do they make money?

AT&T is testing broadband caps in Nevada. First, cable now Ma Bell. In both cases, the reason may have to do preserving TV revenue than anything. There is concern. It even popped up as a LinkedIn question.

DSL Prime is outraged over the cap and has a different view of what it means. (See here)

This is just further proof that duopoly competition doesn't work. The TIA is begging Congress for a Broadband Stimulus bill that they say will generate $1B in economic growth. Meanwhile, WISPA lobbied for a license-lite proposal for the "white spaces" spectrum, which was granted. WISPA members (mainly wireless ISPs) wouldn't mind some largesse from the government either to build out more towers and wireless links to actually bring broadband to places without it (you know, crossing the Digital Divide) -- or to offer a third pipe. (The Clearwire-Sprint-Nextel merger was approved today as well, but that company is funded to the tune of billions. Give th

Frontier Communications has added a download cap to its Internet service. It will charge folks for heavy usage.

The company caused confusion and some dismay among customers earlier this year, when it said it would charge for Internet use above 5 gigabytes per month, starting next year. [tbo.com]

What's most interesting is the comments. People are not happy about caps.

Caps are not new. We had time limits in the dial up days. (When you can only access at 33K, time is the limiting factor.) Satellite has always had bandwidth caps on its Internet service. It will become more pervasive as revenues for ISP's decline in this economy.

UPDATE:  AT&T Trials Tiered Broadband in Nevada

According to Alex Muse, DSLReports and GigaOm, Cogent and Sprint de-peered this morning in a tiff of some kind.  Cogent claimed this year that it was settlement free - coupled with its roots in the PSInet backbone network made it a Tier 1 provider. Cogent has had issues with other backbones including Level3 and Telia.

Cogent is incensed at the move,saying it violates a contractual obligation to exchange internet traffic on a settlement-free peering basis, and is taking legal action. It wants Sprint-Nextel to re-establish the link on the same basis.

So Cogent decided to make an offer:

Cogent is taking the moral high ground, and offering every Sprint-Nextel wireline customer that can't connect to Cogent's customers a free 100MBps internet connection until Sprint reconnects, though it says it can't do the same for wireless users. [IT examiner]

It's been all over the blogosphere this morning (GigaOm, Om again, Bear, Alley): Sequoia Capital is worried. They have given advice to all their portfolio companies. Here's some of it:

• The Good Times are Over!
• Cut spending. Cut fat. Preserve capital.
• Focus on quality.
• Reduce risk.
• Make sure you have one year's worth of cash.
• If you have a product, reduce expenses around it and boost sales. If the product is ready, cut the number of engineers.
• Be brutal when it comes to marketing -- anything that isn't working, cut it.
• Don't burn through your cash, for cash is king.
• Cut base salaries on sales people and leverage them with upside.
• Most importantly, be true to yourself.

It means that you have to be lean and focused to get through the next 2 years. Get started now!<

Congress joins the Web 2.0 world thanks to a bill pushed by some grass roots groups like this one and that one. There are Congressmen already using Twitter. They are listed here. You can watch them with this widget:

Now there is an open source microblogging service like Twitter called Identica. CNET has the interview with Identica. A further explanation about Identica and Laconia are here.

With all the buzz about Twitter, businesses have a platform for creating an internal app. I think people puke too much on Twitter. Try following some of these folks using Twitbin (a Firefox plug-in) and the page quickly fills with one person's messages. Ridiculous even if his name is Guy. I wonder how much puking Congress Critters will do -- or if they just tell their aides what to Tweet.

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.