Netflix: ISPs who charge by the gigabyte are ridiculous
arstechnica.com
arstechnica.com
For example, in the UK the last mile is usually supplied by the incumbent (BT), who also (virtually) route that traffic over a private IP-based backbone to ISPs to provide the backhaul. They charge ISPs by capacity. So these ISPs effectively have marginal costs that vary throughout the day according to demand, since they have to pay directly for an appropriate (fixed) amount of capacity to be available.
We also have LLU (local loop unbundled) ISPs who still use BT's last mile but provide their own equipment directly at the exchanges, thus effectively providing backhaul straight from the exchanges. They may only have a fixed cost for bandwidth depending on how they provision those links. But if they are buying capacity from anyone else, they will be charged by how much they are buying, and suddenly they have a marginal cost again.
The article says that Netflix are complaining about the situation where Netflix have brought the traffic to the last mile. In this specific situation it makes sense. But in the general case, ISPs still have marginal costs in providing bandwidth.
An ISP's customers, all added together, are downloading a certain amount per month. That is, a certain amount of data per time period -- which is bandwidth.
Everybody knows the cost to the carrier is only a fraction of what they charge, but there's no competitor willing to charge less. Education, unfortunately, seems to only go so far.
But surely you can see where people who don't have full family plans have a completely different view of the issue?
OP's point was about consumer education. Have you considered that maybe you should feel like you're getting ripped off?
Part of my other point was that the comparisons in the link to why SMS is ridiculously overpriced, in which the cost of downloading songs via SMS is calculated to be in the millions of dollars, is that that's a bogus argument. If you're sending that many SMS's, get an unlimited plan. If your carrier doesn't have an unlimited plan, switch to one that does. Consumer education is fine, but there's also something to be said about consumer responsibility.
It also double-counts SMS costs (for sending and for receiving), but doesn't double-count the ISP bandwidth costs.
Still, I agree with its conclusion: there's no good reason for texts to cost so much.
Wireless (cellular) users can look to satellite ISPs to see just how crazy things can be. On a lot of satellite systems, users are sold "unlimited" bandwidth, but then aggressive fair access policy, unpublished caps, etc. apply, so your unlimited 2Mbps x 256Kbps connection might actually only let you transfer 500 MB/month.
True hilarity happens on the L-band services like Inmarsat BGAN when either someone leaves Windows Update or other autoupdate turned on, or isn't aware of the per-MB charging. $3 to $25 per megabyte adds up quickly; I've personally seen a $160k/mo bill due to users downloading movies and music over a BGAN system (with the bill paid by a third party, obviously, and no mechanism in place to communicate costs to the users).
In any case, they're absolutely right. These plans are clear cash grabs, and they wouldn't exist if we had proper competition.
There's no doubt in my mind that the U.S. can have excellent broadband at a reasonable price. Unfortunately, in most areas we only have the choice between pricy, midgrade cable internet and cheap, slow DSL.
The Cable/Telco-FIOS spar is likely to evolve into a wink-and-nod conspiracy where companies all settle on similar high prices and compete only in the marketing arena (see SMS as one easy example).
[1] And of course, Netflix' catalog in Canada is very limited due to similar politics.
And it definitely is good enough for Netflix.
Just wanted to throw that out there... you never know, they may eventually creep westward and bring some real competition :)
The problem is since all of the major ISPs also provide television they are effectively attempting to get rid of netflix as competition by placing such restrictions on our access.
http://openmedia.ca/ has been campaigning to get rid of the caps in Canada. Quite a fair bit of interesting reading and it's nice to see it gaining momentum lately.
EDIT for the typo.
It boiled down to the wording. Uncapped means that they can shape your line to s*, and still sell it as a 4meg ADSL service.
Most plans are advertised by GB/month though.
250GB, which they consider pretty high, would actually take a while:
http://www.wolframalpha.com/input/?i=250GB+%2F+56Kbps
But smaller values are less impressive. 10GB is only half a modem month.
Looking at the $1/GB thing gets more interesting. How much would it cost me to run a 54Kbps modem 24/7 for a month at $1/GB:
http://www.wolframalpha.com/input/?i=%2856Kbps+*+1+month%29+...
Things sure have changed. I remember praying to the modem gods that the connection wouldn't simply drop when downloading something as small as 200kb. The good ol' days -- you made every moment on the net count.
http://www.wolframalpha.com/input/?i=10GB+/+3Kbps 10 months.
Edit: What I just linked to above was incorrect. I should have used kilobytes per second, not kilobits per second.
If you only got 3 KBit/s over a 56K modem, your download-rate would have been 375 bytes/s - a third of a Kilobyte per second. That's a bit more than what you could have reached with a 2400 baud modem from the eighties.
You get to your 10 months result by dividing the 10 Gigs by 3Kbit/s, while you would probably have ment to divide by Kbyte/s
http://www.wolframalpha.com/input/?i=10GB+%2F+3KBps
38 days.
http://www.wolframalpha.com/input/?i=56+Kbps+in+KB%2Fs
With 8 bits per byte plus protocol overhead, a good rule of thumb is take the Kbps value and divide by 10 to get a realistic KB/s figure. It's been too long since the BBS/dialup days and I don't recall if some of the later modems implemented on-the-fly compression which would squeeze out even more bandwidth.
However, the foundation of this argument is baseless. All that discussion of how much it costs to provide the bandwidth really is irrelevant.
I've said it before and I guess I have to keep repeating: the price of a product is unrelated to its cost!
The price of a product is the point at which a producer is willing to make another unit of it, and at which a consumer is willing to buy that unit. Costs don't come into the discussion at all. Everything based on the perceived value of the product from each party's perspective.
In an open and free market the cost generally works out to around 1.1x the cost of producing the quantity of product that customers want to buy. Which is why most large companies hate free markets and do everything they can to create monopolies either natural or legislative. Cable companies would love to charge 1$ for something it costs them 1c to make and they are trying everything in their power to make that happen.
Pay-as-you-go, Unlimited, Monthly caps -- all are potentially reasonable ways to charge for network access. Provided there's competition.
And without competition, there's really no advantage to any of them. You're just picking a poison at that point. The monopolist(s) will get their profit out of you.
Several years ago the ACCC (Australian Competition and Consumer Commission) banned the use of the word unlimited on Internet plans unless they were truly unlimited meaning no overage fees and no traffic shaping after hitting a soft cap.
Compare that to the UK where they've de died that unlimited means what 90% of users use, which is as little as 5GB/month!
In the US you typically still have caps (hidden behind terms like "fair use"). So the only difference in Australia is the ISPs are upfront about it.
So in Australia the net effect has been:
1. You buy the plan most suited to your usage. In other words you pay for what you use.
2. You get what you pay for. If you pay for 1TB/month you get 1TB/month.
Both of these situations are much better than say Comcasf or Time Warner really only giving you 250GB/month or UK providers declaring you're a downloaded and moving you to a network that in the evenings is utterly unusable.
The fact is that bandwidth still has a marginal cost so it's not unreasonable to expect users to pay for that. Nor is tiered pricing based on usage a bad thing.
In New York I have one choice for high speed Internet: Time Warner (some areas have Verizon FiOS; not mine). There are two plans for $65 and $99 (iirc).
In Australia I have typically a dozen choices or more ranging from $20 to ¢150+ pe month based on the features I want. How can that possibly be a bad thing?
I live in the US and pay 45$ a month for a 35mbps up/5mbps down on a fiber connection with no cap. The actual cost of me downloading 1TB works out to around 10$, but like most customers I don't break 200GB/month which is a small fraction of my bill, and the company is wise enough to realize overcharging for bandwidth is just going to piss me off.
PS: I am not saying that people living in the middle of the country need to have high speed internet just that you could wire up the major city's at reasonable cost because that's where most people live. http://www.environment.gov.au/soe/2001/publications/theme-re...
No, the REAL problem is that they preferentially exclude their own services from these charges/caps.
For example: If you get Bell's IPTV offering (in Canada), do you really think they're going to cap your consumption? What about Rogers on Demand? Is that subject to the same caps?
The answer is no, making their services more attractive than competitors like Netflix.
Ergo, the only solution is separation of concerns. Providers of pipe should not be providers of content. Ever.
Oh and we've already prioritised traffic too..If i was to buy tivo, then all my on demand data would be "free". I don't think Net Neutrality is even a remote consideration here - though there are many of us who passionately believe in it.
30 euro a month for unlimited and unshaped 20/20 FTTH. :)
From what I understand it's like this in a lot of Europe actually, especially those scandinavian countries.