ISPs "exaggerate the cost of data"(pcpro.co.uk)
pcpro.co.uk
ISPs "exaggerate the cost of data"
http://www.pcpro.co.uk/news/broadband/370393/isps-exaggerate-the-cost-of-data
11 comments
The reason why we often "charge $x per GB after y GB transferred per month." is that this is simple and the customer can understand it. Usually the idea is that metering costs more than the bandwidth, up to a point, so you get a 'don't worry about it' quota, and then a punishing price after that. Me, I limit people after the 'don't worry about it' price, because, well, the sort of people who are my customer don't want to get hit by unexpected bills.
what would that look like if you had the 'don't worry about it' quota with a more reasonable price on overages? I don't know. It used to be that you'd set the 'don't worry about it' quota a little too high, 'cause with the unreasonable cost of overages, most people would error on the side of not using it all.
(metering costs more for both the provider and the customer, but mostly the customer; the provider side can be automated, so it's largely a fixed cost. The customer usually prefers a flat rate over a variable rate, even if the variable rate was slightly cheaper on average, because variable rate billing means that the customer needs to pay attention, which is expensive.)
When dealing with more savvy customers and selling amounts of bandwidth that matter, charging on the 95th percentile is pretty common.
That said, any major ISP who claims it costs them more than a few pennies per gigabyte to move traffic is flat out lying.
what would that look like if you had the 'don't worry about it' quota with a more reasonable price on overages? I don't know. It used to be that you'd set the 'don't worry about it' quota a little too high, 'cause with the unreasonable cost of overages, most people would error on the side of not using it all.
(metering costs more for both the provider and the customer, but mostly the customer; the provider side can be automated, so it's largely a fixed cost. The customer usually prefers a flat rate over a variable rate, even if the variable rate was slightly cheaper on average, because variable rate billing means that the customer needs to pay attention, which is expensive.)
When dealing with more savvy customers and selling amounts of bandwidth that matter, charging on the 95th percentile is pretty common.
That said, any major ISP who claims it costs them more than a few pennies per gigabyte to move traffic is flat out lying.
"That said, any major ISP who claims it costs them more than a few pennies per gigabyte to move traffic is flat out lying"
Not lying, but confused (see my comment below) and measuring at the wrong margin.
Not lying, but confused (see my comment below) and measuring at the wrong margin.
unless their load is /way/ more peaky than average, they are most likely lying. The people running ISPs know this stuff. I mean, unless their margin is so high that bandwidth costs don't matter, getting different customers with different peaks is what ISPs /do/ (well, it's what transit providers do, and any ISP of sufficient size eventually starts acting like a transit provider.)
I'm saying the engineers may know it, but their bosses _do not_.
It's possible? but I'd be very surprised if this was common. First, it's fairly core to the business of being an ISP; second, it's a fairly easy concept to grasp. I could pretty easily explain the concept to someone who is average; I mean, most upper management looks kinda dumb compared to Engineering, but they are usually above average, even if they usually spend more points on social stuff that doesn't correlate with G.
This would be like saying the president of ford motor company doesn't understand the difference between the EPA 'city' and 'highway' mileage numbers, and how to game each. Sure, if it's convenient, he might claim ignorance to the press, but there's no way he doesn't understand something that central to the business.
This would be like saying the president of ford motor company doesn't understand the difference between the EPA 'city' and 'highway' mileage numbers, and how to game each. Sure, if it's convenient, he might claim ignorance to the press, but there's no way he doesn't understand something that central to the business.
How long until we get to peak and off-peak rates for data usage by ISPs, much like some electrical utilities?
That's certainly how it works for most Australian ISPs. And the off-peak times only run from about 02:00 to 07:00. I'm lucky enough to have an unlimited ADSL account with TPG, or my quotes would be a couple hundred GBs for the same cost.
Luckily, I think competition is going to be making things better for the Australian ISP consumer. That, and recent improvements/additions in undersea cables.
Luckily, I think competition is going to be making things better for the Australian ISP consumer. That, and recent improvements/additions in undersea cables.
I can't speak for your experience with TPG, but a lot of users I know on TPG hate the fact that they have "unlimited downloads" but in reality get limited bandwidth due to an oversold service.
I decided I prefer a limited plan where I know what service level (particularly latency and throughput) I can expect. For instance, plans with Adam and Internode are not that much more than a TPG plan for more usage than I'll forseeably use (I get 500gb a month or so at 20mbps + VOIP for $100), but the difference in gaming latency and actual speeds are both considerably more stable and faster than friends on TPG.
I decided I prefer a limited plan where I know what service level (particularly latency and throughput) I can expect. For instance, plans with Adam and Internode are not that much more than a TPG plan for more usage than I'll forseeably use (I get 500gb a month or so at 20mbps + VOIP for $100), but the difference in gaming latency and actual speeds are both considerably more stable and faster than friends on TPG.
My experience with TPG has generally been very good. I connect at 17-18Mb/1Mb and consistently download at 1.0+ MB/sec. Usually 1.4MB/sec, though I've seen it drop to ~800KB/sec.
Given that your plan is 60% more than mine, I'll gladly pocket the difference and live with the minor problems I've had. As another poster mentioned, I chose to vote with my wallet. Generally small quotas + absurd off-peak times (where the majority of the quota is allocated) make my blood boil and I'll support anyone who helps break up the status quo.
Given that your plan is 60% more than mine, I'll gladly pocket the difference and live with the minor problems I've had. As another poster mentioned, I chose to vote with my wallet. Generally small quotas + absurd off-peak times (where the majority of the quota is allocated) make my blood boil and I'll support anyone who helps break up the status quo.
Off-peak times vary betweem ISPs. But you can also vote with your wallet. I'm with Internode, which is a little more expensive, but they don't have peak/off-peak (among other advantages, for me at least)
It doesn't translate to direct costs, but my speed is largely dependent on contention with other users, and drops heavily during 'peak hours'.
Then again, I suppose you could argue cost per GB = integral(download speed * time) / cost per month, so 1GB at slow speeds is costing me more in terms of time-bandwidth product at peak rates than otherwise. Soft data caps and peak-time QoS might also be happening behind the scenes, skewing matters more.
Then again, I suppose you could argue cost per GB = integral(download speed * time) / cost per month, so 1GB at slow speeds is costing me more in terms of time-bandwidth product at peak rates than otherwise. Soft data caps and peak-time QoS might also be happening behind the scenes, skewing matters more.
Cost per GB isn't really even what you want to measure, and doing so is what causes so much confusion.
Let's say you're an ISP and you have a 10Gbps connection to the outside world, and the routers etc. that can keep up with that speed.
To a first approximation, your costs to serve up 10Gbps to all the customers in your area is 0 (you've got to pay for electricity and engineers and etc, but this doesn't vary with user activity).
If your customers in your area all queued up nicely and downloaded stuff at full rate, never overlapping with each other, you could transfer 10Gbps * 1 month for basically nothing.
However, your customers all want to do stuff at the same time, and thus contend with each other for a slice of that 10Gbps. If you want to serve all of their requests, you're going to have to spring to upgrade your total capacity.
If you don't own your own fiber, you have to rent a link from someone else, or if you do and there's no more available you have to physically come up with more (and pay to dig up the road and etc.). Now your routers and etc. might not be able to keep up with your new backhaul speed, and you have to upgrade those...
You really want to measure "Marginal cost of +x Kbps during the busiest typical hour."
Let's say you're an ISP and you have a 10Gbps connection to the outside world, and the routers etc. that can keep up with that speed.
To a first approximation, your costs to serve up 10Gbps to all the customers in your area is 0 (you've got to pay for electricity and engineers and etc, but this doesn't vary with user activity).
If your customers in your area all queued up nicely and downloaded stuff at full rate, never overlapping with each other, you could transfer 10Gbps * 1 month for basically nothing.
However, your customers all want to do stuff at the same time, and thus contend with each other for a slice of that 10Gbps. If you want to serve all of their requests, you're going to have to spring to upgrade your total capacity.
If you don't own your own fiber, you have to rent a link from someone else, or if you do and there's no more available you have to physically come up with more (and pay to dig up the road and etc.). Now your routers and etc. might not be able to keep up with your new backhaul speed, and you have to upgrade those...
You really want to measure "Marginal cost of +x Kbps during the busiest typical hour."
Probably quite a while. Phone companies have done and continue to do this, but are moving more and more away from it.
I'd be thrilled if someone tried it, though. It's more honest and more likely to address bad user experiences than arbitrary "bytes transferred per month caps."
I'd be thrilled if someone tried it, though. It's more honest and more likely to address bad user experiences than arbitrary "bytes transferred per month caps."
I have this now. It seems to work pretty well to encourage heavy use of the connection out of hours.
That's how http://aaisp.net is billing (but they're quite nerdy in general, e.g. you get your own IPv4 with personal RIPE entry and RevDNS + IPv6 ranges)
And some of them don't even understand basic arithmetic: http://verizonmath.blogspot.com/2006/12/verizon-doesnt-know-...
The report was commissioned by content providers so I suspect the truth lies somewhere between.
Still, at least with my phone I have my choice of carriers and will be switching from AT&T to Verizon this month. I don't have that same choice in choosing a "high speed" ISP... I wish some comcast competition would move into town, the consumer might end up with a better quality product.
Still, at least with my phone I have my choice of carriers and will be switching from AT&T to Verizon this month. I don't have that same choice in choosing a "high speed" ISP... I wish some comcast competition would move into town, the consumer might end up with a better quality product.
...the truth lies somewhere between.
This is a dangerous fallacy exploited by entities like giant ISPs and the MPAA to push debate toward their desired outcomes. If everyone believes that "the truth lies somewhere between," then all an extreme actor needs to do is argue for extreme position A against the status quo B, and public opinion (and political discourse) automatically shifts to (A+B)/2 every time the extreme actor raises the issue. In reality, the truth may be exactly B, but because of a well-intentioned but fallacious desire to compromise, opinion and policy are skewed away from the truth.
The classic example of this fallacy is this: "Some say the sun rises in the east. Some say it rises in the west. The truth must lie somewhere between."
https://secure.wikimedia.org/wikipedia/en/wiki/Argument_to_m...
https://secure.wikimedia.org/wikipedia/en/wiki/Overton_Windo...
This is a dangerous fallacy exploited by entities like giant ISPs and the MPAA to push debate toward their desired outcomes. If everyone believes that "the truth lies somewhere between," then all an extreme actor needs to do is argue for extreme position A against the status quo B, and public opinion (and political discourse) automatically shifts to (A+B)/2 every time the extreme actor raises the issue. In reality, the truth may be exactly B, but because of a well-intentioned but fallacious desire to compromise, opinion and policy are skewed away from the truth.
The classic example of this fallacy is this: "Some say the sun rises in the east. Some say it rises in the west. The truth must lie somewhere between."
https://secure.wikimedia.org/wikipedia/en/wiki/Argument_to_m...
https://secure.wikimedia.org/wikipedia/en/wiki/Overton_Windo...
The truth doesn't have to lie somewhere in between. Look at the last paragraph:
Even for ISPs running their own network, such as BT, [ISP CTO] Davies claims the figures of €0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.
This is coming from a guy claiming that the "existing smartphone data tariffs of around €10 per GB" are too low. They're profit-seeking, and relying on their regulators to be as bad at math as they are.
Even for ISPs running their own network, such as BT, [ISP CTO] Davies claims the figures of €0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.
This is coming from a guy claiming that the "existing smartphone data tariffs of around €10 per GB" are too low. They're profit-seeking, and relying on their regulators to be as bad at math as they are.
The problem, at least in Canada, isn't that the CRTC is bad at math, it's that almost all of the people making decisions used to be executives for the ISP and or Telecoms industry.
Not sure how that'd be possible; wouldn't a competitor have to run cable of some type to the homes? Its hard to compete when your competitor has all their infrastructure down and you have to build yours from scratch.
> Even for ISPs running their own network, such as BT, Davies claims the figures of €0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.
Right. So let's start seeing those prices get in the 0.10~0.30€/GB now shall we?
Right. So let's start seeing those prices get in the 0.10~0.30€/GB now shall we?
I'm sure you're right that prices are pretty low overall, vs the high rates of overage fees, but I wanted to point out that the same people who can't tell bits from bits per second and dollars from cents probably aren't using "an order of magnitude" in the full scientific sense, but rather in the "a whole lot more" sense.
I'd be interested in what an independent investigation would reveal.
I'd be interested in what an independent investigation would reveal.
Considering that almost everyone has a stake (i.e. as either a user or a provider), I'd imagine that an independent investigation could only be done by a government entity forcing disclosure of this information by a private company.
Actually, does anyone know of a government funded ISP that makes this information public?
Actually, does anyone know of a government funded ISP that makes this information public?
«Even for ISPs running their own network, such as BT, Davies claims the figures of €0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.»
awesome, so it only costs about a quarter for a gigabyte. so i use about 20 GB a month. can i just pay 5 bucks a month? yeah, i didn't think so. i'm pure gravy for them, and what does comcast charge me for 4 to 10 Mbps? $70
and don't get me started about the fixed cost versus the variable cost—the variable cost is certainly not more than a few cents per GB but the fixed costs can be enormous.
i wish the internet was just a utility.
awesome, so it only costs about a quarter for a gigabyte. so i use about 20 GB a month. can i just pay 5 bucks a month? yeah, i didn't think so. i'm pure gravy for them, and what does comcast charge me for 4 to 10 Mbps? $70
and don't get me started about the fixed cost versus the variable cost—the variable cost is certainly not more than a few cents per GB but the fixed costs can be enormous.
i wish the internet was just a utility.
This is heartening news because connectivity is becoming a commodity. Will anything come of it?
Recently net neutrality ended and now we have 250 GB/Month bandwidth caps as Comcast customers. I'm not worried about ever hitting that cap, but I am worried about the cap tightening over the next couple of years.
Everyone talks about Google and Facebook's control over their information, but I don't hear enough concern about ISPs' collective control over access to information.
Recently net neutrality ended and now we have 250 GB/Month bandwidth caps as Comcast customers. I'm not worried about ever hitting that cap, but I am worried about the cap tightening over the next couple of years.
Everyone talks about Google and Facebook's control over their information, but I don't hear enough concern about ISPs' collective control over access to information.
Recently net neutrality ended and now we have 250 GB/Month bandwidth caps as Comcast customers.
I don't consider a bandwidth cap applied univerally to be a violation of net neutrality. There may or may not be a legitimate justification for it, but it's still treating all traffic the same. The violation would be if they charged/extorted sites like Netflix or YouTube to collect payments in exchange for traffic to them not counting against the cap.
I don't consider a bandwidth cap applied univerally to be a violation of net neutrality. There may or may not be a legitimate justification for it, but it's still treating all traffic the same. The violation would be if they charged/extorted sites like Netflix or YouTube to collect payments in exchange for traffic to them not counting against the cap.
Bandwidth caps can be seen as discriminating against higher-volume types of traffic, like high definition video (which directly competes with cable TV). If you limit the amount of HD video people can watch online in a given month, they are pushed toward your cable TV product.
For what it's worth, Comcast is already extorting (or at least trying to extort) Netflix for payments.
For what it's worth, Comcast is already extorting (or at least trying to extort) Netflix for payments.
> Recently net neutrality ended and now we have 250 GB/Month bandwidth caps as Comcast customers. I'm not worried about ever hitting that cap
I'm still under a 100GB softcap right now (hardcap is 160GB, but I have to pay more for everything inbetween), I had to reinstall a machine and wipe out my Steam folder due to corruption.
I have about 300 games in steam, I blew through my cap once last month (in two nights, which are 50% off on the bandwidth counter) and this month I'm already at 96.8GB due to leaving Steam unattended for two nights again. And I'm nowhere near done re-downloading my games.
I don't normally come close to exceeding the cap, but once in a while in freak events it's very easy to blow through a few hundred gigs in a month. I miss uncapped connections.
I'm still under a 100GB softcap right now (hardcap is 160GB, but I have to pay more for everything inbetween), I had to reinstall a machine and wipe out my Steam folder due to corruption.
I have about 300 games in steam, I blew through my cap once last month (in two nights, which are 50% off on the bandwidth counter) and this month I'm already at 96.8GB due to leaving Steam unattended for two nights again. And I'm nowhere near done re-downloading my games.
I don't normally come close to exceeding the cap, but once in a while in freak events it's very easy to blow through a few hundred gigs in a month. I miss uncapped connections.
Have you measured your usage over a month's span? With the amount of video content, streaming music, and "cloud" out there these days, it's a heck of a lot easier to use a big percentage of that as a single user than you might first think. But if you just look at text all day, maybe you can rest easy. "Ever" is a long time though.
This is what Rogers did in Canada. It used to be a 200+ GB cap then it slowly lowered to 60GB, 80GB, 120GB depending on your plan. (not sure if those numbers are 100% correct as I've since moved to TekSavvy)
Here in Aus we have always had caps. They've done nothing but increase over the years. My SOHO plan with a quality ISP is $80 for 150GB, for comparison, but you can get cheap no-frills residential for $40 for the same quota. I doubt the caps where you are will come down much, if at all.
Last year my quota was 60GB, 1-2 years before that it was 25, so on and so forth.
Last year my quota was 60GB, 1-2 years before that it was 25, so on and so forth.
That and these days you can get 200, 500, 1000GB caps, which really are about as good as unlimited as you can get. You'd really have to push to download that much data in a calendar month.
past chance to edit: my timeline is out. I think I was on 60GB for 3 years or so, not 1-2. I can't quite recall, but the increase was slower than the above comment suggests
I'm not quite sure what point the consultancy is making on the future mobile-data rates. The article says:
However, it claims forthcoming 4G technologies will significantly reduce those costs. "Forward-looking estimates which take account of the transition to LTE [Long Term Evolution], additional spectrum and traffic subscriber growth... puts the cost to the mobile network operators at under €1 per GB,"
Does that include the cost of the 4G licenses? In the UK these haven't been issued yet. If an operator pays £4bn [1] for the license and has 10m customers it needs to charge an extra £1 to every customer every month for 33 years to cover the cost of that license. That's not an inconsiderable amount before we begin talking about data.
[1] Costs based on UK 2000 licenses: http://news.bbc.co.uk/2/hi/business/727831.stm
However, it claims forthcoming 4G technologies will significantly reduce those costs. "Forward-looking estimates which take account of the transition to LTE [Long Term Evolution], additional spectrum and traffic subscriber growth... puts the cost to the mobile network operators at under €1 per GB,"
Does that include the cost of the 4G licenses? In the UK these haven't been issued yet. If an operator pays £4bn [1] for the license and has 10m customers it needs to charge an extra £1 to every customer every month for 33 years to cover the cost of that license. That's not an inconsiderable amount before we begin talking about data.
[1] Costs based on UK 2000 licenses: http://news.bbc.co.uk/2/hi/business/727831.stm
Within the UK I think that you tend to get what you pay for from the ISP. They just create irrelevant metrics and restrictions to prove to customers why they should upgrade to a better plan. Perhaps they should just make the ISP's publish typical speeds for a particular location, so that you can make an informed comparison. This is exactly what better informed customers already do, instead of just going with BT.
This is the report being talked about for those that are interested [PDF]: http://www.plumconsulting.co.uk/pdfs/Plum_October2011_The_op...
In other news: "water wet", "pope catholic", "bears shit in woods".
For mobile data you can get variable cost plans in Austria that you pay about 4$ per Gb for. So the cost cant be higher than that.
Why are we even having this discussion? It is just a bunch of companies who want a subsidy because.. well because they want a subsidy.
The best way to end it is to slap them with a higher tax until they shut up.
But that would require both balls and common sense.
The best way to end it is to slap them with a higher tax until they shut up.
But that would require both balls and common sense.
I don't understand this logic, what would the higher tax accomplish?
As it is there is no incentive for the companies to not try to get a subsidy and every incentive to try to get it.
If congress makes the habit of slamming those companies which seeks subsidies with a tax, it will mean that companies have an incentive to shut up and compete on the open market.
This will improve the US economy and lower the deficit.
If congress makes the habit of slamming those companies which seeks subsidies with a tax, it will mean that companies have an incentive to shut up and compete on the open market.
This will improve the US economy and lower the deficit.
Heh. We could revoke their right to use publicly funded wires and let them try to become a wireless ISP overnight or go bankrupt, and meanwhile give their cushy near-monopoly position on the developed infrastructure to a more worthwhile company.
I pay my ISP. This is all the funding they will receive. If they start to collect from others, for me, it won't be my service anymore and they won't be responsive to my needs.
I pay my ISP. This is all the funding they will receive. If they start to collect from others, for me, it won't be my service anymore and they won't be responsive to my needs.
These decision-makers would say that "Our costs for providing backhaul / transport / whatever is going up - no matter how much we upgrade, its capacity is exhausted either immediately or very quickly. We have to recover that cost somehow, or we won't be able to continue providing any service."
However, they don't understand that their equipment and transport are constrained at the level of "bits per second at peak" and not "sum of bytes transferred during a billing period." So, they end up making bad decisions about "charging $x per GB after y GB transferred per month."