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.'"
Why limit ourselves? (Score:5, Interesting)
no transit/upstream? (Score:3, Interesting)
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.
Does this just mean that Time Warner is big enough to only have settlement-free peering instead of paying anyone else for connectivity, or does it mean that their connectivity is priced by pipe size rather than data transfer?
Re:NYT quote is a bit unfair ... (Score:5, Interesting)
While it is true that most costs are fixed and therefore the costs are no different if every customers takes an Internet break one day, one has to plan to for peak capacity ... or something like a 95% threshold. No different than other utilities such as electricity, plumbing, etc.
Exactly. This is what's so brain-dead about the argument that bandwidth is free - it's only free once you've built out infrastructure to handle capacity, but something has to pay for that. This is common, as you point out, to any industry in which one-time costs dominate per-unit costs.
I compare it to the pharmaceutical industry - pills cost, say, $0.05 to make. Why do they cost a great deal more on the market? Because you have to price in the cost of research and development.
I think the fairest thing is to do what many cell phone plans do; namely, metered or capped usage during peak hours, and free access off-peak. If a user is savvy enough to schedule iso downloads or watch video off-peak, it shouldn't cost him much since that traffic truly is nearly free.
Re:NYT quote is a bit unfair ... (Score:5, Interesting)
I.e. if I use 10,000 gallons of water (ballpark numbers), I get charged a base rate per thousand gallons. However, for each thousand gallons above that, I'm charged 2x that base rate. And then for each thousand gallons above 50,000 gallons, I'm charged 5x the base rate.
And yes, this is a "monthly load" rather than an instantaneous load
The Kilowatt, minute, cubic foot, Gigabyte (Score:4, Interesting)
At the consumer level power is generally sold by the Kilowatt. Phone converstaions used to be by the minute, still are for cell. Water is sold in cubic feet.
I think we have finally reached a point where bandwith should be sold by the Gigabyte.
Ultimately I think cable companies and straight ISPs should sell the fastest cable connection possible. Maybe charge a flat fee at first if the new
speed requires a new modem and that sort of thing. We are fast approaching speeds of 50mpbs which if we actually could obtain from
servers out there would be pretty close. Once we hit 100mbps we are good with speeds above only needed for special circumastance. Most content
won't be streamed live, but rather pre-cached almost as DVRs do it now.
Just like the other type of resources we can give breaks for per unit the more you purchase. So 1-20 gig is 50 cents a gig. 20-40 is 30 cents and so on.
Users who want to stream HD movies can instead of buying the HD channel package on their cable bill.
I wish it was possible to distinguish between the guy downloading a linux .iso and someone downloading a pirated movie, but we can't.
Either way both are using more than the grandma checking her email, but somehow pay the same amount.
This might not be popular, but I think deep down most of us know it's the compromise we need. If you want to drop you cable bill and
go with Hulu...fine. Just realize you have to pay. This idea that we can get everything we always had for 20-40 dollars a month just
because the magic internet came along is bs.
What really irks me about cable companies is they want to put caps, but provide absolutlely no way to contest it. My bill
does not have a usage number on it, but if I go over it they'll let me know. You can go look at your power meter, call your phone company, or look at
your water meter. Put in usage monitoring first then we can talk. You could even put out a bill with IP, number of packets, and amount of data.
Re:Why limit ourselves? (Score:5, Interesting)
Yes, if we were really a capitalist society, government would maintain ownership of natural monopolies (roads, utilities) and set up competitive systems whereby businesses compete for operating (not owning) them.
Today, we let the businesses own these natural monopolies outright. That's the opposite of capitalism; there's no competition.
Re:NYT quote is a bit unfair ... (Score:5, Interesting)
Re:The Kilowatt, minute, cubic foot, Gigabyte (Score:3, Interesting)
Just like the other type of resources we can give breaks for per unit the more you purchase. So 1-20 gig is 50 cents a gig. 20-40 is 30 cents and so on.
This would be fantastic if that were the actual price, but TW wanted to charge 75 bucks a pop and then a buck a gig after the initial cap. When it becomes more expensive to download something than it does to have it burned to a CD and sent via snail mail, the internet ceases to have credibility as a medium. (Case in point, a game I just bought online, 3 bucks to ship it, its 4 gigs in size on a DVD, why should it cost me more to download it, than to have someone pack it, carry it 750 miles, transfer it by hand onto 3 different trucks and walk it to my doorstep?)
Left to their own devices, TW/Comcast/Cox, etc would certainly price internet right out of the range of most normal beings. Witness the current price of messaging costing more on a per bit basis than controlling a satellite..
Re:NYT quote is a bit unfair ... (Score:3, Interesting)
all these analogies are flawed which can be seen if you think for a while what you purchase and how it is delivered. In some countries in EU it is much easier because to deregulate the utilities market authorities require the producers and the grid owners to be different entities and the price at the end consist in principle of two parts: grid usage fee and pay per unit of delievered utility.
There is of course another aspect of this - utilities are common goods i.e. things that we all need. If there is no difference whether you use little or a lot people have no motivation for being reasonable and some are not. If the bandwith limitation that is caused by extreme usage by some causes then deterioration of service for everybody else then it is only reasonable to introduce progressive fees. They do not have to be drastic but I think they can have few thresholds. When the users are informed and the limits are set properly this should not be such a big deal me thinks.
Re:NYT quote is a bit unfair ... (Score:3, Interesting)
"Competition would change the whole game."
Provided the ISPs are not in collusion in an attempt to manipulate market value.
http://www.comscore.com/press/release.asp?press=385 [comscore.com]
From the article:
"By contrast, only 4 percent of those with the fastest connections, over 1 Mbps, report they plan to switch providers."
The ISPs know this, and ALL bank on this fact when considering price hikes.
We (those with fast cable connections) are the least likely, and least ABLE, to upgrade out of higher pricing schemes.
Re:NYT quote is a bit unfair ... (Score:4, Interesting)
Not really. Water is a fixed commodity. Though there is a lot of it, there is not an infinite supply, and it is therefore subtractive. If you use 10,000 gallons of water, it inherently prevents anyone else from using that 10,000 gallons of water, and it is irrelevant when you use them.
In the case of computers, it is entirely possible to use an amount of data in excess of what everyone else is using, and yet still not deprive anyone of their bandwidth, by using it when no one else is using it.
They need to stop dicking around and use the sort of pricing structure that has worked excellently in the cellphone industry, where you pay by the minute during peak times (whenever that may be) and you do not pay a dime during non-peak times. I'd be happy to pay by the gigabyte during peak hours, and have an unlimited reserve otherwise.
Re:NYT quote is a bit unfair ... (Score:5, Interesting)
That's where monopoly busting laws come in. That's what they were designed for...To keep capitalism from eating itself.
Anyway, most people can't switch providers right now, since they're locked in with local monopolies, or they don't want to buy new equipment to switch between DSL and Cable...Give them more than one option where they don't have to switch their hardware, and that number will go WAY up.
Personally I am a proud member of the 4%. I am the anti-customer: I switch every 3 months without fail. When the other company calls and offers me a sweet introductory deal I take it, and then 3 months later, I take the next one.
It's to the point where I leave all the hardware plugged in, and just switch "live" interfaces on my firewall...AT&T fucks with me, goodbye eth1, hello eth2. Cox fucks with me, goodbye eth2, hello eth1. What's wrong with that picture? I'm like a woman with two abusive husbands! I hate this shit!
Re:NYT quote is a bit unfair ... (Score:3, Interesting)
Try one month at 10 Mbps and another at 1000 Mbps and see if your bill changes.
So, you're saying that Comcast (or other ISPs) change their connection speed to the rest of the Internet on a monthly basis?
No, of course they don't. They know they need ###Mbps at times, so they pay for that much all the time, and they don't get any price reduction for not using all the available bandwidth.
This is why it shouldn't matter how much bandwidth end users use...the cost for the ISP is the same regardless. What ISPs should be encouraging is the reduction of peak usage, not total usage. This will allow the ISP to pay for less bandwidth on a long-term basis. And, if done correctly, it won't limit any of their customers in any way that reduces the usefulness of their connection.
Disingenuous (Score:4, Interesting)
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.'"
Of course, those customers would be glued to blank screens since TWC lacks the capacity to have every customer watching youtube at once. Their network would grind to a halt. And the network expansion necessary to handle all of them watching youtube all day would have a considerable additional cost.
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.
Re:NYT quote is a bit unfair ... (Score:3, Interesting)
It really does depend on how big a consumer of electricity you are, domestic supplies are rather small and insignificant. Industrial Electricity demands can be huge and quite often there are agreements about how much can be used and agreed low use times. it's a trade off better pricing by agreeing to cooperate with the electricity companies.
Electric companies do offer some incentives for domestic customers e.g Economy 7 in the UK offers cheap electricity in the night and a slightly higher than standard rate for during the day and evening. If you can adjust your usage to take advantage of this scheme you can make quite significant savings.
Virgin a cable provider seems to get this idea, and limits bandwidth over a certain amount (based on package) during peak times, knowing you can get faster rates after midnight, users can modify their downloading habits to suit.
$1mb != $1mb at any location (Score:3, Interesting)
Because the physical plant your webhost has to provide is 1 hardened structure with a buncha equipment.. expensive.. yes.. but now imagine you have to run a few of those buildings, and of course all the physical plant that connects them together and the COs to the houses?
Once you have plant that large, you also have to deal with repairing it, since you'll have a higher failure rate (downed utility pole if you're overhead, or some guy with a backhoe if it's underground).
Everyone seems to think that 1mb==1mb regardless of where and how it gets there.. sorry.. that's just not the case.
If you -want- $0.10GB for b/w, rent out a full cage in a colo and live in it.
As for the $ now vs the $ spent for 6mb.. keep in mind that the $ the spent to get 6mb was -alot- back then.. It'd be like trying to buy a 1gb switch 10 years ago.. you can do it, but it's ALOT more cost.. you can get the same 1gb switch now for -alot- cheaper.
Also when comparing Japan/Europe to the US, remember the biggest benefit to the US is also it's biggest hardship.. we're a f-n big country. A (in my mind typical) Euro town is alot smaller in area compared to a US town of the equivalent population (at least outside the NE corridor) That distance means extra physical plant needs to be installed, operated, and maintained. [citation needed]
That said, I personally dislike my cable company, and the Bell's have fallen by the wayside unless it's your only option, and I wish everyone would just run Ethernet to the home already.