ISP explains data caps to FCC: Using the Internet is like eating Oreos
arstechnica.com
arstechnica.com
That's not the only reason people think ISPs are greedy pigs and evil villains. Their customer satisfaction rankings speak volumes about what people think of the major telcos and cable companies. When they have an effective monopoly, charge vastly more than what companies in a dozen other developed nations charge while providing the same or worse services (often much more and much worse), and treat customers as if they owe the company their business, it shouldn't be surprising that people are deeply unsympathetic to their desire to provide even worse service at even higher prices.
They're regulated because it is a market with very little competition at the last mile. And they're regulated because it is an industry that has shown itself to be horrible at self-regulation or moderating the abuse they inflict on consumers (from its very earliest days). I'm all for market solutions, but I'm all out of sympathy for telcos and cable companies when it comes to their crocodile tears.
"Let's say you have a bad Oreo habit. Like a box a day. With such Oreo consumption, you have negotiated a deal wherein you get a full month's supply for $100. 30 boxes or so for $100. Now a few days before the month is up, you run out of Oreos. You see, you have visitors , and they like Oreos too. You would thing you could just to to 7-Eleven and buy a box for $5. But you can only buy Oreos from your current supplier, as the local municipal government has legally mandated that there are only two OSPs (Oreo Service Providers) allowed to sell Oreos in your city. You have to pick one (which you have) and you can't switch mid-month without paying for the next month you'll never receive. So you get the extra box from your OSP, and pay the overage fee of $25 a box.
Yeah, the internet is exactly like Oreos."
source: http://arstechnica.com/information-technology/2016/09/intern...
So we get these wonky billing schemes that the ISP can't really defend because they're not about to come out and say that their customers aren't rational enough to handle a more sensible scheme.
To be fair, I'm sure the fact that it kneecaps Netflix doesn't hurt their enthusiasm for usage caps, and residential ISPs are overpriced in general, but there is an element of customer behavior which pushes ISPs in this direction.
I don't want to think about what time it is when I go on Facebook or whatever, because I have more important things to think about. There is nothing irrational about that (though the premise that increased rationality is something to be desired in this context is deeply questionable to begin with and maybe slightly creepy.)
When an ISP can offer a plan that requires me to think as little about it as possible, that simplicity is a valuable service.
I take it this person has never seen an all-you-can-eat buffet in one's whole life?
While there are fixed costs for a connection (i.e. a subscriber with a physical connection via DSL or cable) the total required Internet bandwidth is highly dependent on the aggregate behavior of all the subscribers.
Outliers in a statistical multiplexing situation can push total traffic into an over-subscribed realm. It is certainly possible to simply raise the rate for all subscribers to cover the network build-out required to satisfy the outliers, but it isn't far fetched to think that the outliers should bear most the cost via an alternate rate plan, overage charges, etc.
The bigger problems is that we don't have effective competition for Internet service at the last-mile level. If you are a business in an office building serviced by multiple fiber providers, your Internet costs are going to be quite competitive. Otherwise you are basically beholden to the local telco and/or cable company and the regulatory infrastructure in your state.
Should electric rates be increased so that some novel use of electricity can become affordable due to the subsidy of other rate payers? What if the use of electricity was 10 times a normal residential use? 100 times? 1000 times?
But if you insist, there are many things sold slightly above cost for most but slightly below cost for a few, because the averages still work out and it serves to benefit the society as a whole. Insurance is one example. Maybe, again if you insist, bandwidth could be sold slightly below cost to a few, to facilitate investment in the future.
The numbers matter here but when I say below cost, I mean that the average price paid by the outlier is less than if they were paying their weighted share.
Example: Let's assume I'm selling something such that by selling one unit at $1 I make a reasonable profit. If I have 100 subscribers and 95% of those subscribers use an average of 5 units per/month but 5% use an average of 50 units per month, I have to provision for 725 units/month (955 + 550).
If I charge everyone the same monthly rate, I would charge $7.25/month per person to get my $725 of revenue.
But 95% of the people are only using 5 units. They are paying almost 50% more than actual usage would justify. This is because they are subsidizing the 5% who are each getting 42.75 units subsidized for 'free'. Their monthly rate is 'below cost'.
I doubt the real-world data is bimodal in exactly this way but I think this illustrates what I was trying to communicate.
I did find this interesting quote from http://www.techhive.com/article/2055502/why-your-internet-se...
> According to Comcast, the current median monthly data usage for its customers is roughly 16GB. AT&T claims that the top 2 percent of its users (in terms of data consumption) eat up 20 percent of its network’s total available bandwidth. Telecom analyst Teresa Mastrangelo, principal at Broadbandtrends, suggests that the 80/20 rule applies, in that 80 percent of the data is going to 20 percent of users. “It may even be closer to 90/10,” Mastrangelo says.