AT&T Embraces BitTorrent, Considers Usage-Based Pricing

Wired is running a story about AT&T's chief technical officer, John Donovan. He contrasts his view of BitTorrent and P2P in general against the controversial policies adopted by other ISPs. Donovan also explains why AT&T is considering usage-based pricing, citing the cost of network upgrades which only affect a small number of users. AT&T is expected to test the new pricing scheme later this year, which should give them plenty of time to see how Time Warner's customers respond to the idea. "'I don't view any of our customers, under any circumstances, as pirates -- I view them as users,' Donovan said. 'A heavy user is not a bad customer.' What he wants to do is gently encourage more efficient usage of his network, and usage-based pricing may be one of the ways that happens. Such measures may not even be necessary, as Donovan admits that users self-adjust their habits to take advantage of off-peak times. For instance, he said, BitTorrent on the company's network peaks around 4 a.m., when other traffic is at an ebb. Overall P2P traffic accounts for about 20 percent of the network's usage, Donovan said."

Why?

If users are self restricting themselves to off-peak why the need for usage based pricing at all? AT&T received federal funding to get a fiber network in as well, so far they have failed to do so.

We are going backwards .

Instead of trying to make internet more expansive the United States telecoms want to make it cost more. I mean jesus christ we are one of the worst developed nations when it comes to internet connectivity. In Europe you can get double our speeds for the price of dial-up. Obviously their is very little costs on simply maintaining a network yet they continue to charge and rake in profits. These telecoms have no excuse. We fork over our money so you can maintain and grow your network...use it. Upgrade the Seconds Mile and start putting more efficient internet pipes. Obviously it has gotten to a point where it is becomes almost as bad as the oil companies. Just raking in profits and not using it for anything.

Re:We are going backwards .

I'm switching providers next month, my new connection will be 20M/20M, truly unlimited (already tested, thanks to my neighbor), for [4500 HUF = 28.8765 USD] a month.

And I'm not even in the developed part of Europe, either.

My current connection is 5M/1M, for [6900 HUF = 44.2773 USD].

Re:We are going backwards .

Actually I think they're targeting P2Pers because P2P uses as much or more UPSTREAM bandwidth as downstream, which none of the major ISPs have designed their networks around. Cable networks are the worst about this due to how cable internet works, but all the ISPs built their networks around the idea that most users upload less than 2% of what they download. Now P2P is forcing them to realize the intended functionality of the internet, and it's becoming clear to them that their "download only" systems aren't going to cut it. So naturally they're going to do everything they can to curb upstream bandwidth. Otherwise, they might actually have to spend money upgrading their network, at which point they'll be replaced by their shareholders for failing to maximize profits.

Re:We are going backwards .

Well than upgrade the networks. Whether they like it or not the internet is becoming a more two way experience. There is nothing that anyone is going to do about it. Fighting it is obviously not going to help. People are uploading movies to youtube, uploading photos to myspace and facebook, and using webcams.

It is not only P2P that uses upstream...its everything web 2.0

Maybe we need *ISP 2.0*

Bittorrent and Usage

Traditionally the best bittorrent users also seed the files they have grabbed for a long time. So under the usage model, being a good torrent person means being penalized for extra bandwidth that I'm using to seed.

Sheldon

Not *totally* awfull

To a point, I don't think that's a terrible idea. What I do have a problem with is the technical difficulties behind actually doing it fairly. For example, suppose I'm sharing files with my next-door neighbor, and our packets are never going farther than the first switch we have in common. Should I be billed the same as someone streaming gigs to Tokyo? Of course not, but that's probably not technically possible to accurately track without massive hardware upgrades, and even then it sets a bad precedent of charging extra depending on destination.

I'm not sure what to think on this one. I mean, they're acknowledging that they can't offer unlimited access, which we all knew anyway but is nice to hear them actually say. And yes, P2P probably is costing them lost of money. I don't think variable pricing is the answer, though, and I don't think their customers will either.

Here's the real problem

It's not just about fat pipes, either: AT&T also wants to bring you content and applications.

I don't think that the corporation that owns/maintains the connection should be the same one that provides the content. It allows them to compete unfairly by pulling dirty, underhanded stunts. In Ontario, when Bell was forced to open up its network to other telcos, those other telcos were put on the noisy lines, while the pristine lines were kept for Bell customers. The same thing is happening to DSL providers. We saw a similar thing happen with Microsoft. They provided the OS, and the applications. By crippling the published APIs and using non-crippled private APIs, they made their apps look better than their competition's.

Give me one fat pipe, and let me choose which VOIP, IPTV, and ISP companies I wish to deal with.

Enough with the excuses AT&T, build FTTH !

I am sick and tired of the excuses and outright lies from AT&T for their kludgy FTTN U-verse network when Verizon has already proven that you can profitably build a FTTH network in America. But no, AT&T would rather milk their balky copper plant and put off the one-time expense of running fiber like they'll eventually have to do anyhow.

Every time I ask an AT&T droid about that they make wild claims of Verizon having so much trouble building their network, charging $hundreds to rewire your home, etc, etc. All I know is that my grandmother, in the middle of nowhere, can get FiOS and I, in a major university town, am stuck with U-verse.

Yes, Verizon's stock took a hit when they announced FiOS. I used the opportunity to buy shares for my IRA on the cheap. That's worked out well so far.

"A heavy user is not a bad customer"

BS. This is like saying its 'for the children' while the government takes your rights by the bucketful.

This is just a "public friendly" way for the *AA to get their way without the average Joe having a clue it happened. Make it so expensive to download that its cheaper to buy their crap at the store ( and if you actually do buy it online, you get to pay more ).

They cant stop things via technology, so they will kill it ( and most everything else online in the process ) via monetary.

And you get to pay for incoming spam to boot. Grrr

Why change plans?

Why? If you're on AT&T then you're already using bittorrent and have an unlimited package, why would you want to transfer to something usage-based? Why would this attract people from other ISPs? Why should bittorrent even be singled out, it's just another packet on the wire. If people start downloading a ton of videos due to subscription service, will they have "plans" that spring up to help charge you more for that too?

Ease of Network upgrades vs. PC upgrades

Just out of curiousity, just how easy do people think it is to 'upgrade the network'? I see that brought up a lot in the comments (i.e. "AT&T should just upgrade their network" "Given Moore's Law, the network should be cheaper" etc. etc.) It certainly gives the impression that people think that a nation-wide IP network is as easy to upgrade as their personal computer as as proportionally cheap.

When I was working in telecom, network upgrades (and maintenance) could be ferociously hard. If you wanted to upgrade the link between two co-location facilities, besides the problems of running the lines, you could run into issues if you needed to upgrade your networking equipment at either end -- suddenly, you had to stock new on-site spares, make sure the technicians were prepared, deal with power, space, and cooling issues. (If you needed to replace your current router with a newer router that was physically bigger, there had to be rack space available for it. If it needed more power/cooling, that had to be available. If space/power/cooling wasn't there, *someone* had to pay for the upgrades, or you had to move to a new facility and re-home all the network connections there. Not trivial and just the man-hour costs could be huge. (And in some places, the co-locations were subject to union rules, which placed additional restrictions on work.))

(Actually, for some network facilities, the fields would refuse to go without a security escort, because they weren't going to be responsible for driving trucks full of valuable equipment into some areas and leaving them outside while they worked inside. That increased the cost noticeably.)

Most of the business plans (at the time) assumed that equipment would be paid off over a period of years, not months. People would be expensive new telecom gear and plan to pay it off over the course of three or four years so they could set their monthly rate to customers at X, rather than try to pay it off in one year by charging customers more -- the lower prices/competition may have appeared great to the customers, but once the rush of entrants into the ISP business died out and people stopped pumping money in, the equipment upgrades got stalled because business realities demanded that the providers pay off the old equipment first.

So providers had gone in with models saying they would buy equipment for their networks, charge customers X amount, and, say just for kicks, maybe 5% of that amount went to paying off equipment. Of course, every time there was an unexpected cost, or they had to lower their rates to stay competitive, less money could be used to recoup their capital expense in hardware, which meant they couldn't afford to upgrade. (Of course, at a certain point, some couldn't afford to not upgrade, either, and self-destructed.) So the 'life span' of old equipment kept going because no one could raise rates due to the competition, who also couldn't for the same reasons, and new entrants coming in with fresh capital/investments that kept the rates of the moment low. The 'rapid advances' in technology were in part due to the money being poured into the marketplace (investment of one sort or another), *not* the success of the business models. Once the party was over and the reality of the bills hit, a lot of the upgrades stalled pretty hard.

It's not that Moore's Law hasn't affected the cost of providing bandwidth, it's that people are still struggling with buried (sic) infrastructure costs from previous technology. If you feel you are paying 2004 prices for 2004 technology, network-bandwidth-wise, rather than the equivalent 2008 price/performance, it's because you probably are, because the 2004 technology is still getting paid off.

(Let's say that, oh, I could get a 48 port DSLAM for $2400, or $500 a port. So just to recoup my capex on buying that sucker, I need to make $500 per port. If I can throw $10/port a month at the hardware cost, that's 50 months, or over four years until I can justify upgrading it. It can be surprisingly hard to squeeze out that $10 a port, though -- that's just to do the capex recovery, once you figure in the opex (operational expenditures) you have to go through per month to just run that port and keep it going, and have customer service, and office space, and taxes, and accounting, and etc.) the time to the next upgrade can be pushed out a lot. It also assume that your current business/rate plan when you started will survive for those 50 months and nothing happens to bone your revenue models.)

So, anyways -- how many people think that, you know, AT&T should "just upgrade their network" (whatever that means -- upgrade the backbone, but not the last mile? Replace DSL with FTTH? WiMax? People seem to have different ideas about what 'upgrade the network' means) and that it could be done in ... what? A business day, like flipping a switch? A week? A month? Six months?

(Oh, just as an aside, for some reason some carriers like to spend maybe as much as a year testing stuff in labs before deploying it all through out their network because they don't actually enjoy rushing bleeding-edge technology out into their network and having it blow up (even though it sometimes does anyways). That testing cycle/costs tends to have a big impact on how often they upgrade, and is not cheap in terms of equipment and man-hours, which has to be counted against the upgrade costs.)

Re:Been Done

No, this is rather like those night usage electricity tariffs for washing machines, dishwashers, etc...

For home packages the ISP just needs to set a low peak cap during the evening and a high off-peak cap during the rest of the day (e.g. ADSL24 in the UK [adsl24.co.uk]).

Whatever protocol you use (BT, eMule, or HTTP download) doesn't interest the ISP, all they want to do is move non-interactive usage to off-peak times so that interactive usage during the evening works for everyone.

Most users will understand if things are set things out clearly at the start instead of suddenly receiving a fair usage warning e-mails when some mysterious unknown limit is hit. Indeed many P2P users may choose an ISP with this kind of peak/off-peak tariff as they know exactly what they signed up for.

Re:Pleasantly surprised

I'm surprised at this, honestly.

Here we have a guy in charge of the biggest telecom company in the US, and he actually seems to know what he's doing. More than that, he actually wants to give his customers what they want for a fair price as opposed to being influenced by some lobbying group or external forces.

It seems so obvious but it's been so rare with companies this large recently. I don't expect it to last long (the CFO will probably figure that claiming unlimited access when it's not is still more profitable and override him) but if AT&T does this, they've seriously made me look at them in a whole new light.

Re:Been Done

In the UK currently with demon, £17.99 for 50GB peak hours, Unlimited off peak, off peak is set as 11PM to 9AM. Downside is 12 month contract when you first sign up and customer services is based in the part of india were people take it as a challenge to speak with an accent so thick you could drown in it.

Re:Welcome America

People here go, "well, upgrade the network" - explain to me why they should keep upgrading the network at a frantic pace and never making enough money to recoup the infrastructure costs. Telecoms are businesses, they invest, they make their money back (with profit) then upgrade the network again. The abuse of the network which flat rate plans do simply result in unsustainable traffic growth.

Apparently your telecoms are horribly run if they can't manage to make a profit off of Internet access. In America, many (most?) ISPs are small private companies who receive no federal subsidies at all, but still turn enough profit to keep growing and offering new services.

The fact that your local companies are incapable of doing so says that 1) they're all dumb, every single one, or 2) there are market forces there that we don't have, so your whole premise is inapplicable here.

Re:Welcome America

You must be confusing New Zealand with the reset of the world. I'm not aware of any non flat-fee adsl/cable providers over here (NL). Even the dutch Chello is (and always has been AFAIK) flat-fee.

Though there used to be some a couple of years ago, mainly for people switching from dialup to dsl thinking they wouldn't use more than 1Gb per month. Which would have been true if their surfing habits didn't adapt to the always on mode.

Re:Welcome America

Cool.

now all you website owners cant bitch when I help set up Ad blocking systems at all my friends, family and associates.

we are not paying for your advertisement to come to my screen. Either make it very tiny in bandwidth used, or get used to the fact that many many more people will be using blocking tools to eliminate your ad's.

AT&T has $150,000/customer ***SURPLUS***

Since the Government Attorneys aren't going to hold AT&T responsible for their unlawful spying on every customer, with statutory penalties of $150,000/each, they have *plenty* of money, so shouldn't be crying poverty, should they?

The alternative is being held accountable, and liquidating AT&T to pay the damages, which would prove the point that *every* entity is held accountable TO THE LAW.

If Martha Stewart can go to prison for fibbing while NOT UNDER OATH, why the hell is AT&T getting a pass for it's crime?

Re:Welcome America

It is most definately not abusing a service if you've paid for it and are within the rules. If someone sells me a 1 megabit always on connection, it is not abuse if I use it fully 24/7.

If you replace 'abuse' with 'use', your post makes a little more sense. Companies always oversell what they can deliver, and if they screw up, it's up to them to fix it.

I'd guess that in a market which is not dominated by flat rate lines, starting up a flat rate service would be a lot tougher, since you're naturally going to attract the heavy users. In a market in which nearly everyone's on flat rate, companies get all different types of customer.

Re:IDIOTS !! was that too hard ?

So you also want to pay per mile of road you use? No, bandwidth should be flat rate. Just like roads and air.

The ONLY reason the internet is what it is today was the switch away from that archaic pricing structure. ( think CompuServe and the old school AOL ).

This is 2008, it doesn't mean something from 5000 years ago still applies. ( i suppose you also propose we trade chickens for bandwidth? And how about offering a cow before you can get married? )

Re:

I'd like more bandwidth as much as the next guy, but I find it odd that comcast has doubled my connection recently while sending RST packets because their network can't handle traffic. Perhaps these companies should advertise and sell what their networks

Re:IDIOTS !! was that too hard ?

So you also want to pay per mile of road you use?

You do pay for roads by the mile, more or less. Road maintenance is funded via gas taxes, so you pay more for driving more. The alternative model is toll roads, which also charge in proportion to distance traveled.

Re:

Even in America, bandwidth isn't free.
ISPs cant go on offering "unlimited" bandwidth anymore, they really have 3 choices: 1.Tell people that they only get a certain amount of bandwidth per month (i.e. the .au model) and charge people based on that number 2

Re:We have this in Australia...

Experience proves that this simply isn't true. ISPs in Finland (where I live), and several other countries that I have no personal experience with, provide ridiculously fast unlimited connections for very reasonable prices already and keep making a profit. I have a 100Mbit connection for 43e a month, and similar connections are getting more and more prevalent. You could also get an unlimited 3G data plan for 10e a month. Finns have a long history of heavy p2p usage as well, yet the ISPs aren't even complaining, stay in business just fine and my connection at least isn't throttled at all, *true* unlimited bandwidth. They do use QOS, but no artificial bandwidth caps or whatever, just prioritization for low-latency use. Just because your anti-competitive "free market" (we have actual competition thanks to some government regulation of the market, tell me again how your system is so much better) can't do it right doesn't mean it can't be done.