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With the latest craze about Time Warner and AT&T introducing download caps for their subscribers, it doesn’t seem like companies care for anything but the short term profit, if that. Price-conscious consumers won’t buy into this game again, like we did with cell phones and limited minutes. Anyone who ever overused their cell phone plan knows how hard it was to pay off skyrocketed bill. Personally I had that experience only once – I was consulting some really large project over the phone and my phone bill went from regular $120/month to $653. Of course, it was a justified business expense, but still – it would have been just $240 if I had two separate plans. If you ask me today – I would go to any lengths available to keep my costs down these days. But I digress.

What beats me in the whole capped broadband picture is that ISPs are trying to implement a restaurant pricing. While at the same time forgetting that they are anything but. My cable provider claims that he provides speeds up to 15Mbps. My dedicated servers are on 10Mbps lines burstable to 100Mbps and I am yet to see speeds above 1 megabit. Between themselves servers swap stuff at very least at full 10Mbps which makes it painfully obvious that my cable provider lies is something like McDonalds – at best.

What is obvious to me is that download cap pricing structure is a loose-loose situation for everyone. Once consumers will get a feeling of what their limit will give them, most of those who, supposedly, would be a cash cow for ISP will leave for something else. Or keep their usage under strict control. Either way, ISPs will loose money. Or, rather, will earn less than they do now – just because they have caps. Wouldn’t you talk on your phone more if it was unlimited calls? Sure. Are you postponing calls to your friends until it’s “unlimited nights and weekends”? Most likely – yes. See the pattern?

If provider companies are so inclined to slice their services in tiers – why not turn the situation into a win-win? How could they do it? TIER THE SPEEDS, NOT THE DOWNLOADS. Some “old parents” setting wouldn’t need more than occasional e-mail checking, downloading pictures of their grandchildren and maybe a video or two. That would be a slowest and cheapest tier. A mom-pop-kids shop would probably need some more advanced tier – videos, music, iTunes for kids, heavy MySpace/Facebook and YouTube. And geeks, gamers and internet business owners would appreciate the fastest speeds and the lowest pings out there at the premium. Basically, companies would milk the same bunch of people, only do it so much different that it would make everyone happy.

Last week I got two letters – one from GE Bank (that provides credit services for Lord & Taylor) and one from Chase. Both were somewhat apologetic and notified me of the credit line cut. In fact, they cut it so much that the credit limit is barely above the balance on the card.

Now, I don’t claim to have a credit score of 900, but it was a decent enough score, especially for a current economy. With lines cut like these, my credit score will undoubtedly plunge – because the integral part of it is an available credit to total credit ratio. As you can see, with a simple move two credit providers have just destroyed about 75 to 100 points of my credit score.

What does it mean in a long run? Well, I expect some more credit cards to do the same (although I don’t have that many anyway). That should bring my credit score down even more. Inevitably, some of the credit lines will get so close to the balance that cards get accidentally overdrawn. That pushes the score even further down. In a two to three months I expect my credit score to nosedive by no less then 150 points, with even more diving in the following months. There’s almost nothing I can do  to prevent that. Obviously, if I was capable of paying off all the balances – I would have done that a long time ago, but I would still need some credit for operations anyway.

So what these credit companies are looking at is in approximately 3 to 4 months driving my credit score down so much that I would stop caring about it. Then, an interesting thing happens – once you stop caring about your credit score, you realize that you can just stop paying credit cards, free up a lot of cash, stop answering calls from credit card companies for about half a year (imagine all the cash you can save by then), wait until your debt is sold to a collection agency, wait out a little longer and then make a deal on paying off just a fraction of the initial debt.

Once you’re done settling (even before you’ve paid off your balance) – your credit score will start to raise, in about a year you’re back to the previous numbers without the debt and with whole lot of cash. Credit company looses, you win.

Now tell me – what’s the rationale behind the initial action of the credit company to cut the credit line of an individual (or a business) that makes all the payments on time and always pays significantly more then a minimum payment? Does it all make sense? From my point of view – it doesn’t.