The Technologist

Steven Levy
Steven Levy
Steven Levy
Wednesday, January 30, 2008; 12:00 PM

Newsweek senior editor Steven Levy, whose column now also appears in The Washington Post, will be online to discuss the latest buzz in the tech industry Wednesday, Jan. 30 at noon ET.

This week's column focuses on a new pricing experiment that could charge you fees for downloading content from the Internet. He also recently reviewed the MacBook Air.

Levy started covering the digital revolution more than 25 years ago while writing a story for Rolling Stone about computer hackers. Since then, he's written books about hackers, Apple, artificial life and the iPod.

A transcript follows.


Steven Levy: Hello, everyone. I'm delighted to be doing this chat for the Post, and even more delighted that my column will be regularly running in the paper. I'm happy to answer questions not only regarding this week's column on broadband issues, but the previous week's review of the Macbook Air (on which I'm working at this very moment) as well as any other tech issues you might want to throw at me.


Alexandria, Va.: Instead of wasting their time making goo-goo eyes at professional athletes during the "steroids" hearings, why aren't our Congresspeople and Senators looking into questionable practices such as this per-gigabyte fee - or more importantly, why the 4 largest cellphone providers are all offering essentially the same calling plans? The cellphone providers appear to be more collusive, than competitive.

Steven Levy: First, I should emphasize there's nothing illegal about Time-Warner's testing out a pricing system based on pricing by volume. That said, it seems to me that there is a national issue in that our system, as you note, does not seem to be delivering the virtues of competition. In terms of broadband, most people have two choices: the cable company with the local monopoly or the telco that has the local voice franchise. (Some have one or no choices.) Even though there is competition in wireless networks, it seems, as you note, that it's rare for a company to break away from the pack and offer consumer-friendly packages. Maybe this is beginning to change, as we see Verizon indicating that it may open up more. Also, if consumers push back on things like restrictive contracts, we may see better service.


Annapolis, Md.: This is an experiment. We have no idea how much the price will be per byte, we should judge this before it's been rolled out. Have you asked them about the pricing?

Time Warner is making an effort to curb bandwidth abuse and this is the method they've chosen. Let's find out the specifics before we judge the program.

Steven Levy: Of course I asked Time Warner about pricing. The answer was that pricing has not been set yet. The indication, though, is that the pricing won't be much different in various tiers. I infer (though I can't take this to the bank) that the standard 4-5 mbps speed I currently pay in New York City (for about $40) might put me in the 20 gig a month speed. Depending on my travel schedule (I buy more TV shows on iTunes to watch on the plane) and a few other variables, I can easily exceed that. So even someone who is not a P2P denizen can wind up paying more.


Washington, D.C.: What about people who download tons of illegal movies who pay the same amount as i do, when i only check my email. Time Warner is trying to make it better for people like me.

Steven Levy: As I just indicated, my conversations with Time Warner do not indicate that the charges for service packages will decrease. If you are using the lowest level of service and paying the lowest level, you probably won't be paying less.


Silver Spring, Md.: Bucks for bytes?

I don't have a problem with the idea of charge different rates by bandwidth usage. IF the overall effect is revenue neutral, this will mean that low bandwidth users will pay less than they do now.

In fact, I would agree with a pricing scheme that is like my electric, water or gas bill. Charge 1 is simply to bring it to my door, even if I don't use it. Charge 2 is how much I used (gigabytes). Of course, this is ONLY acceptable if there is a meter on my PC that shows me where I stand on my usage for the month.

In the end, I don't like the scheme because:

1. Bills for low bandwidth customers will NOT go down; the scheme is not revenue neutral.

2. The overage charges will be punatively high and will be a suprise when they happen - just like those cell phone plans.

Steven Levy: We don't know if this will be revenue neutral but the way it has been explained to me it would not seem so.

My problem with metering in general is that broadband consumers in the US right now pay more for broadband than in many other countries -- and get much slower speeds. The arc of innovation in the Internet is moving towards media-rich applications that eat up more bandwidth and work better at higher speeds. If US users can't generally take advantage of these break through products they will be developed and adopted elsewhere. Do you want our country to miss out on the next 10 YouTubes?


Arlington, Va.: How many people out there are really downloading movies at all let along HD movies over the internet? I would guess it is a small fraction of 1 percent. Won't this actually effect very few people? Unless they find out that they aren't meeting their revenue targets so they adjust the limit downwards to gouge more consumers?

Steven Levy: I don't have the numbers at hand, but I think that Apple has sold maybe 7 million movies, a disappointing figure. HD is only beginning. But clearly this is a starting point. It seems logical to assume that digital distribution will blossom and it could be great for movie studios. (The problems are not the same as with music, since people generally only watch a movie once and don't have a need to store them.) But one reason it hasn't taken off quickly is that our broadband speeds are too lame for fast downloading.


Arlington, Va.: So why don't we have better, cheaper broadband like Asia and much of Europe? Is it government intervention there that requires high speeds? Are the broadband providers there just more willing to innovate and beef up their networks? Population density? Evil companies here too greedy and devoted to making as much money as possible instead of providing their customers with good service? Do people there really have more choices or are the providers just better?

Steven Levy: No simple answer here, and in fact a vigorous debate. The big bandwidth providers do argue that population density is an issue, but I've seen papers that dispute that. I think it's a combination of things, but one cannot avoid the perception that an aggressive, coherent government policy would help sort out the problems and use carrots and sticks to improve the situation. In other countries, it has been a high priority to make this happen, even if it meant taking on big powers (Japan thwarted its most powerful telco)


Follow up about restrictive contracts: If people want the monopolies, anti-consumer practices, non-competitive contracts to continue, they should continue to vote for the republicans who tout competition but actually do all they can to make sure there is none -- like here in Florida. There are virtually no consumer protections or consumer advocacy groups in FL.

Business rules here, unlike states like CA where consumers have many more protections and choices, much better pricing and their is huge competition.

Just a reminder that your vote matters and has actual consequences in real life.

Steven Levy: I'm not sure it's fair to dump all of this on the Republicans (though if the policies of presidential candidates are an indication, the Democrats seem ahead on this issue). But you are absolutely right that if citizens make demands on this issue, there is a much higher likelihood that politicians will act in the public interest instead of the interest of the big communications companies.


Seattle, Wash.: What's the status on the pay-per-channel system that telephone companies were pushing (and cable companies fighting)? That seemed to me to be one way of breaking cable companies' local monopolies somewhat.

Steven Levy: As far as I can see, the video offerings of the Telcos adopt the cable model of bundling rather than an a la carte system. In the long run, it will be pure Internet TV that takes on that model -- when services like Joost and others are able to deliver quality on a level with HD cable. Oh, but that would mean higher broadband speeds. . . hmm, maybe there's another reason why the companies who want to sell us separate video service aren't rushing to increase our broadband speed.


Rockville, Md.: With my cell phone, I can login to my account and see how many minutes I have used so far this month. Then, I could alter my habits if I were approaching the limit.

If my ISP set a limit, how would I know how much I've downloaded so far? Could I ever know that? If I knew I had 50gigs left, I would download the movie/file/etc but if I had 50megs left, I would wait until next month. Basically, could we reasonably know where we were on our limit at any given time?

Steven Levy: Good question. I assume that if Time Warner or some other company did meter use, it would be only fair to let users know when they were getting close to hitting their limit. But, as I point out in the column, this only points to the insidious part of the scheme that might push you to favor Time Warner's cable video on demand instead of an Internet alternative like iTunes. (If I'm close to my limit, I'll avoid iTunes and maybe buy a movie on demand from Time Warner cable, which won't count towards my limit.) By the way, if Time Warner decided to exclude its own properties on the Internet (like HBO online) from the total, that would raise a lot of red flags. But TW hasn't indicated it would do that.


Washington, D.C.: We haven't missed out on any YouTubes so far, and I think the U.S. has been in the driver's seat in terms of creating the innovative applications like iTunes, YouTube and NetFlix online downloads that you're talking about despite our "inadequate" broadband speeds.

That being said, I feel more comfortable seeing broadband providers trying new ways of managing demand for broadband than I do having federal bureaucrats or, worse, Congress dictating how networks ought to function. Shouldn't we be cautiously optimistic about these kinds of experiments?

Steven Levy: Talk to leaders in the technology field like Ed Zander or John Chambers and they will tell you they are VERY concerned about this. And though YouTube started here, there are many great services abroad that most Americans simply haven't heard of.

I don't think many people want Congress to micromanage networks, but the idea of pushing for broadband competitiveness is another matter.


Washington, D.C.: I suggest one policy change is to reduce or limit local control over broadband franchisees. Verizon has been limited in its roll-out of FIOS because it has to get permission from every town first. Of course, they're being forced to jump through the same hoops each cable co. did in the 80s before wiring up.

BTW, any word on when/if FIOS will be coming to the District?

Steven Levy: This is an interesting situation that seems to come about because cable operators are trying to slow down competition from telcos. Of course telcos can take care of themselves, and I think eventually they will be able to offer their video services where their fiber is. Don't know when Verizon is coming to DC, sorry, but I'm sure you'll get flyers in your bill when it arrives.


Betehsda, Md.: Here's how much I hate the cable-telco-wireless companies: I'm a card carrying Libertarian and I want them all nationalized!!!! The service we get from these guys is worse than the post office. They have the laziest, surliest, most pig-headed employees on the planet.

Then the companies pull tricks like charging for something I signed up to have unlimited. I can't imagine how the executives sleep at night. They are profit maximizes without the threat of completion, and they act like I'm they're doing me a favor by letting them sell their service to me.

The thing that has me really ticked off: been a Verizon wireless customer for 7+ years. My office decided to give me a phone on our network, which is on Sprint. Well, if I were a new customer, they'd pro-rate my cancellation fee. But since I'm an old customer, the promises their CEO made in front of congress don't apply, so I am stuck paying 3 more months of my bill because they won't waive my cancellation fee.

When Verizon hears about this usage, I bet they'll install an iris scanner and charge me whenever I look at my phone.

Steven Levy: Not many people would agree that the companies should be nationalized, but it is significant that there are people like you who feel so strongly that you've been abused. Telcos and cable companies have monopoly in their genes, but should be given a chance to develop more competitive approaches. The problem is that there isn't enough competition. In broadband, a duopoly situation doesn't seem to be doing the trick.


Economic Downturn?: Steven,

Any idea how the tech industry is equipped to deal with any economic downturn? It will suffer like all industries, but is it in any way better built to take the hits?

Steven Levy: OK, now moving to some other issues.

If you recall what happened in the early part of this century, when the tech bubble burst, clearly the industry is prone to a big economic hit. However, no matter what is happening with stock prices, the underlying conditions that push tech innovation -- Moore's Law (more powerful computers, cheaper), more pervasive Internet use, and, more recently, the ability to start a company with very little capital outlay -- will still be around. So it's one story for shareholders and another for users.


Baltimore, Md.: There's no portability for e-mail addresses when you switch providers, is there? I'd dump Comcast for Verizon FIOS but I don't want to the lose the email address I've had for years.

Steven Levy: It wouldn't seem right to use Verizon for with a address, would it? You might have to bite the bullet and send out email to everyone you know. But before you switch to a Verizon address, you might think about using an web-based service (that wouldn't be linked to your isp) or registering your own domain and linking it to whatever service you're using.


Newllano, La.: You must have money to throw away to buy a Macbook Air, even the Mac boy's dont like it.

Steven Levy: Actually, in the category of subnotebooks (which is pricey), but Macbook Air is far from the worst offender. For some people the ability to have a good quality Mac computer that weighs so little and looks so good will be worth the price. I only wish that it had the 160 gig drive in the upperlevel iPod classic instead of only an 80-gig drive.


Washington, D.C.: Are HP and Gateway, and maybe even Dell these days, pretty similar in what they can offer in performance and reliability in their processor and specs in a desktop for the at home use?

Steven Levy: A few years ago everyone was competing with Dell's model of low-innovation and low pricing. (To be fair, Dell was very innovative in its distribution and supply chain.) Now that that's not working as well, and because Apple is succeeding in innovation, we're seeing PC makers using more imagination in design and features. But as far as specs are concerned -- processor speed, etc--that's pretty much determined by what chipmakers and storage companies provide.


New York City: What seems to be winning in the technology wars, the Wow Factor or practicality. In the wake of the iPhone I say the later. Thoughts? Oh, and any thoughts on the Fake Steve Jobs Blog? I was just introduced and thought it quite funny.

Steven Levy: The Wow factor means a lot, as Apple has proved, but buyers will resist if a product is not practical. When it was time for me to send back my review unit of the iPhone I thought long and hard about whether to keep my Newsweek blackberry for mail or switch to the iPhone, even though it didn't handle mail as smoothly. I went for the iPhone because it was so much better at web access and everything else -- and because, I guess, of the Wow factor.


Washington, D.C.: Welcome to the Post!

When do you think we'll get our paws on a 3G iPhone? I'm ready to sell my first gen once they offer me a second gen!

Steven Levy: It seems that AT&T CEO Randall Stephenson has already said that we'd see one this year. I think that the crucial factor is how quickly AT&T can make its 3G network pervasive. A more widely available Edge network was supposedly why the iPhone wasn't 3G from the get-go.


Arlington, Va.: With the lack of security in 802.11, and more importantly most people not knowing how to set it up this is a disaster waiting to happen. Some single mom (or poor family) in an apartment is going to get a monsterous bill because they didn't lock down their wi-fi, and the signal is bound to spread beyond their walls.

This is going to be impossible to implement.

Steven Levy: I asked the Time Warner spokesperson about this, and he indicated that this was something the company would try to take into account when it rolled out the plan. Interestingly, TW has a relationship with FON, a system that allows users to share broadband wirelessly.


Steven Levy: I have to say that you are a GREAT chat audience. In my queue are a number of really smart questions I wasn't able to get to. Thanks so much for your attention and I hope I can get to more of you next time.



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