A Layman's Guide To Bandwidth Pricing 203
narramissic links to IT World's A Layman's Guide to Bandwidth Pricing, writing "Time Warner Cable has, for now, abandoned the tiered pricing trials that raised the ire of Congressman Eric Massa, among others. And, as some nice data points in a New York Times article reveal, it's good for us that they did. For instance, Comcast says it costs them $6.85 per home to double the internet capacity of a neighborhood. But the bit of the Times article that we should commit to memory is this: 'If all Time Warner customers decided one day not to check their e-mail or download a single movie, the company's costs would be no different than on a day when every customer was glued to the screen watching one YouTube video after another.'"
This is modern business (Score:2, Insightful)
They don't want to do anything new, but they want more money, because business these days is about finding new ways to charge more while doing the same or less. I believe this is another cause of our current economic woes that is not getting enough attention, because we aren't creating any new value but the economy somehow continues to grow.
Not the way it works... (Score:4, Insightful)
Disappointed in the "research" that went into the original article. Most definitely if everyone didn't use any bandwidth for a day or two, then a cable company would likely pay less that month for the their transit bandwidth. In Time Warner Cable's case, they get their transit bandwidth from Level 3.
I'd guess Time Warner Cable is paying about $10/mbps (or less) on the 95th percentile. So if the top 5% five-minute averages of traffic to Level is thrown out, then the top average left is what they pay for. I would bet there are a few samples each night that are in that top 5% of samples, if everyone did NOT use the Internet one night during peak, the sample that is left at the 95th percentile would likely be less and they'd pay less that month for transit charges.
Re:NYT quote is a bit unfair ... (Score:5, Insightful)
Well, upload is a niche market (though I admit, I'd love to be able to get at least a megabit...Even half a megabit would be nice).
I think the whole lesson to be learned from TFA can be summed up with the following quote: "Why (is the 160mbit commection offered) so cheap? JCom faces more competition from other Internet providers than companies in the United States do."
We talk a good line about capitalism, but we don't walk the walk. Competition would change the whole game.
Private Sector (Score:1, Insightful)
A business should be free to price it's products as it chooses.
The market will naturally determine the price the public is willing to pay for such products. The only time a problem arises is with a monopoly (or price fixing - but anti-trust law should take care of that).
The only issue with cable providers is the lack of alternatives. Technically there is DSL, FIOS, and some slower alternatives, but the customer is locked into only one cable provider. In certain geographical area's (and high density buildings) these alternative choices are not be available, this creates a pseudo-monopoly.
I hope this problem can be solved with private sector alternatives and not with legislation. Government intervention in the free market tends to have negative consequences.
Bad Logic (Score:5, Insightful)
If all Time Warner customers decided one day not to check their e-mail or download a single movie, the company's costs would be no different than on a day when every customer was glued to the screen watching one YouTube video after another.
And if no tweenies show up to tonight's Miley Cyrus concert, the cost of putting it on will be pretty much the same. Does that mean that Miley should go to a flat rate, come-as-often-as-like model?
All retail businesses are based on assumptions about normal behavior. Hypotheticals that posit unlikely behavior aren't arguments. If they were, then we could suppose that every TW customer might decide to visit YouTube at precisely the same moment, and that TW should build out its network to support that and charge accordingly. Are you ready for $1,000 a month for DSL?
Let me anticipate the same lame point that gets made every time we have this discussion: Even if TW ripped off the government by pocketing the money they were supposed to use for expanding their infrastructure, we still have a "no free lunch" scenario. Even thieves need a sustainable business model.
Re:NYT quote is a bit unfair ... (Score:5, Insightful)
While it is true that the equipment doesn't cost more to use than not use, that doesn't mean bandwidth is cost free. There are plenty of costs involved in maintaining high bandwidth lines.
Now as it applies to consumer connections the problem is one of oversubscription. The reason they can offer you bandwidth for less is that they oversubscribe their lines. That is to say if they have a 10mbps uplink, maybe they sell 100mbps of bandwidth downstream. This works well, so long as everyone isn't trying to use their connection full blast all the time.
It is the same theory you see in a LAN. For example at work here we have gigabit switches to our desktop machines. However, those gig switches are only connected with a gig back to the distribution switches. There are about 20 ports in the room I'm in (we are computer support so lots of computers) but only 1 gig connection out. Likewise, the distribution switches are oversubscribed. Most of them are 48 port Ciscos, nearly full, and they only have 1 gig back to the core. That then in turn only has 1 gig to the firewall, and 2 gigs to the NetApp. However, despite all this oversubscription it is very fast. It is rare for a person to use their whole connection period, and then not for long. We can all share those links without a big problem.
However, that would break down if someone wanted to use their whole connection all the time. If someone was doing a solid gig to the NetApp without letting up, well I'd be going up and having a chat with them real fast. It would screw over everyone else.
Same deal with ISPs. They can afford to cheaply sell you a cable line with 10-15mbps. However they don't have dedicated bandwidth for that upstream. It is oversubscribed at a number of levels, just as with our LAN. So if you use it periodically, and leave it low/idle the rest of the time, it works out fine. However if you try to torrent on it 24/7 to 100% capacity, it is a problem.
Re:NYT quote is a bit unfair ... (Score:5, Insightful)
2) Get a Gb switching hub, 2 computers, and an amp-meter. Plug the computers into the wall, plug the switch into the amp meter. Note the power usage of the switch with no load. Then set up a load where you are using 1 Mbps of traffic between the two computers, and note the Amp load. Then try 10 Mbsp, 100 Mbps, and 1000 Mbps. You'll notice that the amperage (for most switching hubs) climbs very little as you do so, and that the total power consumption is insignificant.
That's great, you've created an intranet and demonstrated it's pricing. Now, of course, try to get a peering agreement with a tier-1 ISP so that your bits can travel to and from the internet at large. Try one month at 10 Mbps and another at 1000 Mbps and see if your bill changes.
Re:get a clue... PLEASE! (Score:1, Insightful)
Bandwidth cost money... real money. Unless your upstream provider is stupid and or sucks, you pay a fixed rate per megabit every month for a fixed amount and a per megabit for bursting over.
So apparently my Crown Corporation (look it up) ISP that has no caps, and a flat-use fee for metered access with no charge for usage is "stupid and or sucks".
Silly me, thinking that because their corporate charter dictated their obligation is to provide service rather than generate profit for private money they were doing me any good.
So I should switch to cable that caps and charges me per GB then so I won't be "stupid and or suck"?
How the hell did that post get modded up?
Re:Why limit ourselves? (Score:5, Insightful)
You are mostly right, but it is actually worse than that.
The natural monopoly is on the LINES, not the SERVICE. But the US government grants a monopoly for BOTH. I am okay with only having two companies providing lines to my house: cable and telephone. The problem is that there are only two companies offering service over those lines: the local cable company, and the local telephone company.
Re:NYT quote is a bit unfair ... (Score:5, Insightful)
Re:Why limit ourselves? (Score:2, Insightful)
Not necessarily it wouldn't.
First, even if a government owns the basic infrastructure they could still contract out maintenance work. So for those who believe any governement activity is inheirently incompentent, competition between private companies is still possible.
Second, I know it's popular on Slashdot to mock anyone who works in the public sector as being lazy and stupid, but some people have other motivations than maximizing their income. I'm not talking about pure alturism, but some people actually like to help others or have more time to spend with their friends and family. These people will take decent compensation for a job that allows to staisfy those desires over one that pays significantly more but doesn't allow them to fulfill their non-monetarily based motives.
Re:Disingenuous (Score:3, Insightful)
Comcast says it costs them $6.85 per home to double the internet capacity of a neighborhood.
Comcast also says that their users like their service and don't leave it the instant Verizon installs FiOS in the neighborhood. You shouldn't put much faith in what Comcast says.
The actual line in the article is "Comcast, the nation's largest cable provider, has told investors that doubling the Internet capacity of a neighborhood costs an average of $6.85 a home.". We should believe them in this case, since AIUI they can get in actual real trouble with the SEC if they lie to their investors.
Re:NYT quote is a bit unfair ... (Score:3, Insightful)
why not, all the cable lines from all the neighborhoods go to one colocation center that provisions the lines, just like the TV signal comes from one place. The "distribution" cost is part of the "cable" part of my bill. The internet part should be just for the equipment to connect to the internet! So yeah, serving 10,000 houses should be the same cost as a data center.