Is Unlimited Online Backup a Scam?

Is Unlimited Online Backup a Scam?

by Rob Cosgrove

It must have seemed like jumping off a cliff in the dark without a safety line for the first online backup company who offered unlimited storage for a set low price. I think it was Mozy in the Summer of 2005 (I’m going to ramble a little and then come back to my point).

Since then a few others have followed Mozy off the same cliff (Carbonite, Zoogmo, BackBlaze, HP Upline). Several have hit bottom and died in the rubble of their customers’ valuable data (Zoogmo and HP Upline). So far, Mozy and Carbonite are still in free-fall. Carbonite is burning through gazillion$ in venture capital, and Mozy… well, nobody outside of EMC really knows about Mozy.

<ramble>
Mozy was consumed by EMC in September of 2007 in a deal that some skeptics (like me) found unlikely, chewed on a little, and then spit out with a new name – Decho. Josh Coats raised $1.9M in capital to start the company, and was bought out for a very high profile $76M a little more than two years later. So, either EMC thought they could get rich at $4.95/month or Josh owed EMC a whole lot of money for equipment he decided his business model couldn’t pay for. Nobody in on the deal has ever spoken candidly about it, which keeps us skeptics beating this dead horse in cheap, rumor-mongering, self-aggrandizing, run-on paragraphs like this one.
</ramble>

How can any online backup company afford to offer “unlimited” backups? Doesn’t “unlimited” mean unlimited? Can’t I store as many files as a want, use up as much bandwidth as I like, and eat terabytes of storage space for just $4.95/month?

Well, it turns out that those companies had a safety line when they went over that cliff. It’s called a “Fair Use Policy.” It’s a clause in their Terms of Use (or Software License Agreement) which acts like a sort-of safety net, allowing the companies to take action to prevent users from sending too much data. Most Fair Use Policies (also called Acceptable Use Policies) allow companies to take action against individual customers who use more storage space or bandwidth than “average” users.

None of the many boring Terms of Use that I read through actually spelled out just how far you would have to go to have your hand spanked. One would think the web would be full of customer complaints. Interestingly, though, I found very few complaints from customers who had run afoul of Fair Use Policies.

I DID find complaints about upload speeds, though, and a few bloggers who posited that the more data they uploaded, the slower the speed. So, I conclude that the companies are enforcing their Fair Use Policies by individually throttling bandwidth. That’s what I’d do. It makes fewer waves than slapping hands. But I also found rebuttals by Online Backup companies denying throttling bandwidth. I guess I’d do that, too, or have my PR people do it.

Topping my “Bending Unlimited” chart today are ElephantDrive and Carbonite. ElephantDrive won’t let you back up a file over 1GB (Home Edition) and 2GB (Home Plus Edition) even though they advertise an unqualified “Unlimited Storage.” Carbonite, whose Dave Friend is the undisputed and freakishly likable king of “unlimited,” won’t back up external hard drives. Among many other limits it spells out, their loquacious Terms and Conditions of Use (Oct 15 2009 revision) says they “backup only certain types of files.”

I think “Unlimited” was an unfortunate choice of word by some marketing geek who isn’t bothered by partial disclosure. It’s one of those “absolute” words that shouldn’t be followed by the phrase, “oh, except for…”

To be fair, customers should want their online backup provider to stay in business, so they shouldn’t complain about the Fair Use Policy. Such policies are necessary, IMHO, to prevent one user, or a raft of malicious users, from ruining it for the rest of us.

The dubious use of the word “unlimited” aside, Online Backup companies need a way to protect the vast majority of their users from the possibility of abuse by a few.

Fair Use is just fair; and “unlimited,” it turns out, is not.
 

The company and product names used in this article are Service Marks or Registered Trademarks of their respective owners.

Rob Cosgrove is the President of Remote Backup Systems and founder of the Online Backup Industry.