After nearly a week of using the latest Google Chromebookthat runs on a chip designed for smartphones and tablets, I’ve tried to determine the device’s performance compared to my older Chromebook. Both are built by Samsung but there’s a large price difference. I paid $ 449 back in June for the Series 5 550 device that uses an Intel chip, while the new one costs only $ 249. The latest one uses a ARM-based Samsung Exynos 5250 chip, which I expect will power smartphones and tablets next year.

What I said in my hands-on video of the newest Chromebook was that it felt about a half-step behind the prior model, in terms of performance. That statement doesn’t really quantify the difference though, so I spent some time benchmarking the two devices. I first made sure both had the latest Chrome OS version installed and I then factory restored them to completely clear out all extra files, history and such. Both devices were plugged in to an AC adapter for the tests, and since they both are kept in sync, all of the same extensions I use are installed on both by default.

Here’s a summary of what tests I used and how the two devices scored. Except where noted, a higher score is better.

What these benchmarks do is tell me that my own observations on the performance between both Chromebooks are accurate. And I’ve noticed a little more sluggishness on the ARM-powered Chromebook as I open more tabs. That’s probably attributable to the lower amount of memory in the device; it has 2 GB of memory, while the Series 5 550 machine has 4 GB.

Does that mean you shouldn’t consider the ARM-powered Chromebook? Not at all, as it’s fast enough for everyday web tasks; I’ve been using my review unit full-time without any problems for nearly a week. But I do like the extra performance boost on the Intel-based Chromebook I bought and since I’ve already invested the $ 449, I’ll likely keep using the device I have. If I do that however, I’ll miss the sleeker, lighter look and feel of Google’s current Chromebook for sure.

My family doesn’t notice or see any such slowness in the new Chromebook. Of course, they don’t have much experience with the older model to compare to, so this makes sense. And for their basic web needs, it looks like the $ 249 version will surely work for them, so while I may pass this one up, at least 2 out of 3 family members are considering the purchase of one. It’s a great secondary or casual use computer for them and probably for most others as well.

GigaOM
Kevin C. Tofel

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Time Warner Cable, a cable broadband service provider, has started to charge its customers a $ 2.50 monthly (broadband modem) rental fee, a fee that is going to increase to $ 3.95 a month in the fourth quarter of 2012. The modem rental fee doesn’t impact about a million Signature Home, Price Lock Guarantee and lifeline subscribers.

But that shouldn’t have much of an effect on the money Time Warner Cable is about to make. According to UBS Research estimates, Time Warner Cable will bring in an additional $ 360 million to $ 370 million in annual revenues for next few years, thanks to these new cable modem fees. UBS thinks TWC will make about $ 3-per-subscriber-per-month in incremental data ARPU (average revenue per subscriber). The research group notes:

The new fee drops straight to the EBITDA line, boosting margins by ~50-60 bps from 2013-15E. Our model reflects this, with EBITDA growth of 7.6% in 2013E to $ 8.53B (prev. $ 8.29B) vs. prior expectations for mid-single digits. Given TWC’s 3.25x leverage target, the ~$ 360M in extra EBITDA should enable TWC to boost the buyback by ~$ 1.2B. We model repurchases of ~8.5% of the market cap in ’12/’13 but leverage of ~3x at YE13 and YE14 suggests more room.

With the buyback as a possibility, it is hardly a surprise that Wall Street loves this move. The stock in the company surged past $ 100-a-share since the news first emerged earlier this month. It is currently trading at around $ 99 a share.

And while it is good news for Wall Street, the news can hardly be described as good for the consumers who are footing the bill for the modems. Unfortunately consumers can’t do much: They have two options, either buy the modem outright or switch to another provider.

Your own modem? Not so fast

You can buy a modem for between $ 50 to $ 150 — and perhaps you should, but what follows is a nightmare in itself.  Fox News in a piece noted:

There is a way to beat the fee — but Time Warner is making it as difficult as possible. Customers can purchase an “approved” cable modem….There are only five approved Motorola models listed on the Time Warner site …Time Warner doesn’t make it easy to switch, however. To begin with, the company doesn’t sell modems directly to subscribers, so a trip to your local Best Buy is the first step. Then customers must call in to Time Warner to switch modems — my initial service call without any hitches or having to wait long was roughly 45 minutes.

The first time you call, all the cable company does is enter the request to change the modem. It takes another four to five days to provision (or configure) the line. This kind of manual provisioning is a throwback to the pre-Web era of ISDN lines. So after first installing the new modem to alert the cable company, one then has to uninstall it; reinstall the old modem and wait. (My service rep called back in three and a half days.)

In other words, Time Warner will make it as tough as possible for you to get you modem.

Competition? What Competition.

And switching to another provider is not much of an option — Verizon (sVZ) is one of Time Warner Cable’s main competitors and it has been quietly jettisoning the DSL business, while putting spending on its FiOS broadband network on the back burner. AT&T too has been focusing its attentions away from slower DSL to its higher-priced services, which too are available selectively. Both Comcast and AT&T serve much larger footprints compared to Time Warner Cable and Verizon.

There is not much competition, and that is why Time Warner Cable can charge a modem fee and get away with it. Time Warner Cable isn’t the first one to do so — Comcast too charges outrageous modem fees — about $ 7 a month. If the Comcast and Verizon relationship got any cozier, it would become R-rated.

Charging for modems is yet another example of how the U.S. Federal Communications Commission — whose ultimate task is to work for the citizens of the country — has failed to watch out for the interests of the people. If we had more competition in the marketplace — and we don’t — the broadband providers wouldn’t think about it. But as long as we have an FCC which is blind and deaf to competition, Time Warner Cable and their peers don’t have to worry about anything.

GigaOM
Om Malik

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The internet is a pretty communist institution: when you sent a packet over the web, it may go through a dozen different networks, but in most cases no money changes hands. Somebody at each connection point has simply given their okay to exchange the traffic with your ISP or any one of the other links in the chain. Kind of like when you spot your friends a beer knowing they’ll cover your drink in the next round.

And that’s how 99.5 percent of the interconnections take place between global networks work. According to a study out Monday from the OECD covering peering arrangements between providers of bandwidth around the world, most interconnections take place “on a handshake basis, with no written contract and the exchange of data happening with no money changing hands.”

This may seem pretty hippy dippy, or at least a lost source of revenue, but as several high-profile peering disputes can show us, the relatively open nature of these agreements benefits consumers and startups and helps keep costs down. What many people may not think about when considering the internet is that it’s actually a collection of networks all around the world that are joined together. And since the places where those networks join are mostly free of fees and legal drama, the cost of sending data over the internet has fallen.

In praise of peering

This new OECD report notes that the benefits of this approach to peering have brought prices for data down to 100,000 times less than that of a voice minute. Thanks to a survey of 4,300 networks, representing 140,000 direct exchanges of traffic on the internet, the study offers up evidence that less regulation on the internet is a good thing, even if it doesn’t seem initially to protect the consumer interest.

Analysys Mason chart on IXP growth.

The report also comes out in support of Internet Exchange Points (IXPs) – data centers where the networks of many providers meet and cross connect. But the real value in this report is in its warning about the threat to the current peering models from proposed regulations as well as private networks that are seeking to take these handshake deals and turn them into sources of revenue.

From the report:

“As incumbent networks adopt IP technology, there is a risk of conflict between legacy pricing and regulatory models and the more efficient internet model of traffic exchange. By drawing a “bright line” between the two models, regulatory authorities can ensure that the inefficiencies of traditional voice markets will not take hold on the internet… That these “rules of the game” are so ubiquitous and serviceable indicates a degree of public unanimity that an external regulator would be hard-pressed to create. The parties to these agreements include not only internet backbone, access, and content distribution networks, but also universities, NGOs, branches of government, individuals, businesses and enterprises of all sorts—a universality of the constituents of the internet that extends far beyond the reach of any regulatory body’s influence.”

The fall of Tier 1 networks and the rise of work-arounds

One threat to peering is the possibility of the International Telecommunication Union regulating broadband networks more in line with communications networks, a threat we’ve covered before. Other risks include governments interfering in peering disagreements or creating mandatory peering requirements that would then imply that the government would eventually interfere in a peering dispute.

According to the report, that way leads to the type of complicated settlement agreements that have played havoc in the voice markets for decades, leading to higher prices as well as business decisions that aim to optimize revenue as opposed to delivering a better or more cost-effective network. Other elements worth highlighting from the report include:

• Legacy Tier 1 networks such as AT&T, Sprint, and NTT Communications that were once seen as a threat to this form of free peering have seen their number of connections fall (in some cases costing them more money) while smaller players and CDNs peered around them to take up the slack and demand for a connection.
• The internet is still growing at a decent rate within the United States from 74 IXPs producing 118 gigabits per second of “observable” bandwidth in 2006 to 85 IXPs producing 826 gigabits per second today.
• A significant reason bandwidth prices aren’t falling is because of a lack of standards and interoperability of network gear faster than 10 gigabit per second equipment.
• Those wholesale prices for high-volume transit have remained between about $ 1.40 and $ 3 per megabit per second per month in the U.S.

The OECD report should be required reading by regulators and companies that are seeking their fortunes on the internet. Peering is an esoteric subject, but the practice has worked for decades to the benefit of the overall internet ecosystem and the consumer. It may now be under threat in some places thanks to regulations and perhaps overzealous ISPs.

Red Square image courtesy of Flickr user yeowatzup.

GigaOM
Stacey Higginbotham

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