56% of Americans have Internet data caps; FCC asked to investigate
arstechnica.com
arstechnica.com
That seems like a more reasonable option than hard traffic caps. It's no surprise more wired ISPs aren't using that strategy, though... hard caps generate revenue, while rate limiting heavy users doesn't. That wouldn't be such a problem if there were healthy competition in most metro markets, but there isn't.
Verizon FIOS is one of the few good [fast] U.S. wireline ISP options left that doesn't cap traffic. It's too bad many markets are still de-facto duopolies (from the days when there was a meaningful distinction between "telephone" and "cable" companies aside from layers 1-2). FIOS isn't available here, and if it were I'd switch in a heartbeat because of AT&T's incompetence [2].
[1] http://www.tekgoblin.com/2011/02/03/verizon-to-throttle-high...
[2] http://leaf.dragonflybsd.org/mailarchive/users/2011-02/msg00...
We should all rise up as one and really ask, if we are now paying $X for $Y GB of data, why doesn't it roll over like Minutes or a persistent commodity.
I'd also like to point out Charter Communications doesn't throttle nor cap their bandwidth and yet the service is great!
Because user bandwidth is not, by definition, a persistent commodity. ISPs do not accrue bandwidth every month they are under capacity, so why should users?
http://acompa.net/blog/2011/05/why-isps-will-not-offer-rollo...
How do you know Charter doesn't throttle bandwidth at peak times? Do you track packet loss, and would you notice if it went up by a percent or two?
Even if an ISP doesn't voluntarily throttle traffic, border routers automatically will with WRED or some other more modern queue management strategy if there's too much traffic buffered for the link it's trying to send on. It's more a question of whether packet loss is managed on a per-flow or per-ip basis, on egress, or whether it's managed on a per-port basis on ingress from the customers to their ISP.
Since they've finished the DOCSIS 3 rollout here last week I've considered upgrading to 60/5 from my 25/3 plan but it's pretty over priced and would be much more worth it at 60/10 or 60/15. During the period of trouble (not enough bandwidth for their inter city link where they actually do their peering) I was down as low as 1Mbit/s during peak hours on a 25Mbit plan.
This will usher in a 'pay what you use' scheme, not unlike long-distance phone bills back in the days of yore. (you transferred $Y GB this month, so you owe us $X dollars.)
You're paying for a service and if the company you're paying considers your use in violation of the terms agreed to they should indicate to you that you are in violation not some sneaky restriction you never know about. In fact I bet people have called their ISP and played the "it's not me it's you" game when it's actually the ISP throttling their customers.
http://www.myaccount.charter.com/CUSTOMERS/SUPPORT.ASPX?SUPP...
Be careful what you wish for. Once they start, they will not stop.
Rate limiting heavy users at peak times has exactly the effect on the customer base that an ISP should want. Exactly the subpopulation of users they don't want gets an incentive to leave, and everyone else stays and talks about the smooth, uninterrupted service and "unlimited" bandwidth.
I'm not against metered billing, in principle, but the rates would have to be reflective of what it costs to provision the marginal bandwidth.
The bandwidth cap issue highlights two crises that the industry faces: (i) the nature of fiber optic networks is such that it's several orders of magnitude cheaper to move data between hubs in major cities than it is to move it over the "last mile" to the consumer and (ii) video streaming from Youtube, Netflix and other providers is starting to provide real competition for cable television.
(i) leads to pricing schemes that don't reflect the cost of provisioning services; installing the "last mile" might cost a few thousand dollars up front, but this gets amortized over bills that a customer pays over a long time. Upgrading a customer to a higher speed tier is the only way that the ISP can offer "better service for more money" to a customer but the increase almost certainly won't be reflective of the difference in costs. As we've seen in the airline industry, crazy pricing leads to pathology in the long time.
As for (ii), ISP's can't be seen as good actors when they are in the competitive cable television business. As customers turn on to streaming video, utilization is outpacing the rate at which ISPs want to invest in infrastructure -- and in the long term, the many ISPs which are cable providers realize that customers who've got access to Netflix and other streaming video services might decide they don't need to blow $80 a month for 500 channels full of crap.
as a result, you pay for Fox News when you pay for basic cable in many places, but you can't get Al Jazeera English. The consumer's got no way to say "I don't care for Spongebob Squarepants" or "I don't want my kids watching those stupid live action shows about rich kids that are on the Disney Channel" short of withdrawing from the system alltogether.
With no market discipline on the individual channels, they can keep sucking worse and worse until people eventually give up on the whole package.
The article is arguing that the caps are out of sync with the actual scarcity of the resource. Prices are rising and caps are dropping, even though bandwidth is becoming cheaper and more available. That suggests the caps aren't being used to make people pay for resources they use, but rather to trick people into spending money they didn't realize they'd be on the hook for. That's sneaky and skeezy.
It's like the banks that charge a $50 overdraft fee on each of six trivial transactions. No one is saying there shouldn't be a fee, but if it's turning into a significant profit stream, something's not right.
Prices are rising for services and commodities in almost every industry. For instance, cotton has hit record highs this year, food is more expensive, gas is higher, etc. We're in an inflationary economy right now, so I don't think ISPs should be singled out for raising prices as their costs increase (e.g. they have to pay rising utility costs, salaries/benefits/health coverage, property taxes, etc). Perhaps what should be examined is change in net profit margins for ISPs that cap usage, but even if that rises, it is hard to know with certainty if the "sneaky and skeezy" "tricks" were the factor. One could argue if their tactics are indeed so "sneaky and skeezy" that they would loose business in the long run and negatively impact their profit margin.
I don't have any problem with usage based pricing. ISPs don't really want that either though. They want to push users to a high priced tier and then hope the users don't use the entire bucket each month.
Look at AT&T cell phone data plans for example. They used to have a $30 plan that was 'unlimited'. This plan really had a soft cap of 5GB, so $6/GB. I find that a very fair price. Then they changed to 2 plans, one for $15/250MB or $25/2GB. I bet they did some analysis and found out that most users use 300-500MB/month so they made the plans to push people into the higher plan with the hopes they would not use the data. If they were really concerned about high usage they would have just moved to a flat $6/GB (or something similar), but then most people would ended up paying $6-$12/month.
The reason it can be distasteful when an ISP raises its rates or limits its services is that ISPs often have a monopoly over many of their customers. At best most people get to choose from a duopoly, so the ISPs don't really have to compete in a free market.
Isn't this a site revolving around entrepreneurs in IT? Doesn't everyone want to make more money then they spend?
The fact that bitching about the caps is people's only option should tip you off to the fact that the market is not, in fact, open.
I have a throttle cap on my mobile internet though, I can use as much internet as I like on my iPhone for a flat fee, but if I go over 5GB in a month, they may throttle my speed for the next month. That's pretty fair, I guess, but they're building out 4G now with even faster mobile internet, so those caps are probably going to disappear slowly as people move over to newer technology with more bandwidth than the current 3G/EDGE systems.
Stop being an apologist.
How do you define competition between ISPs?
Where you are, are their lies that affect providers in that area? Or is it all pure competition?
Did those 9 ADSL providers all lay their own line, or is their laws in effect that make those providers lease their lines out to other providers?
Basically, is it pure competition?
There's no competition and choice for cable though, you have the cable company you have, and that's it.
For GSM networks, there's three separate, and two or three 3G networks, so there's competition there as well.
In a few months my house is gonna be hooked up to the city fiber network, at which point I can choose from another bunch of ISPs.
Those grandmas are not paying $65/mo for the top service tier. They are paying $35/mo for 3Mbit/s lowest-tier uverse service, and they still get a transfer cap of 250GB.
Streaming netflix users, who are pretty much all going to be in the top tier or two of service (24Mbit/s or 18Mbit/s) get pinched by the same cap. 250GB is 3.2% utilization of an 24Mbit/s download link, over a month, btw.
Even in some alternate universe where caps make sense, the least AT&T could do is grade the caps by line speed. It seems to me like I'm subsidizing grannie's transfer allowance, even if she doesn't fully use it.
Since the primary issue is traffic congestion at peak usage times, the obvious solution is to rate limit heavy users, rather than punishing them with hard caps which indiscriminately targets users who transfer lots of data in off hours.
Given all that, why does AT&T cap all uverse tiers the same? The first explanation that comes to mind is that they know if they drop the caps too much for lower tiers, because despite what they claim 250GB really isn't that much, they'll start cutting into too many grannies' modest internet usage. They want to keep their low-end customers from being hurt by lower caps, but they want to gouge their higher-end customers for going over the same caps.
And why do they cap instead of rate limiting heavy users? Rate limiting doesn't make them money. Caps might (though they will lose some customers over this outrage, and others will cut back usage or service tiers, so AT&T might even lose money overall).
Kind regards, Sweden
On the kind of fast connections you have over there, you could easily run up hundreds or even thousands of dollars worth of bandwidth charges for your ISP. Will they just operate at a loss, or will the government step in and pay the bandwidth costs, or will they throttle your speed down?
Then again, most of our ISPs are tier1 or tier2 networks, so I assume they don't worry too much about peering costs.
Ideas like government forcing service competition over the physical lines along easements granted by the a government should be explored.
These companies don't want to be relegated to simple utilities with low profit margins, and so they are doing everything in their power to keep the cost of data rising even while their cost of the bandwidth drops by half each year. With bandwidth caps and usage-based billing at 5000% profit margin they are simply begging the government to crack down on what ends up being highway robbery.
I've seen business plans for rural wireless internet projects and typically the economics work out if you can sign up all of the customers in an area but if you've got to split them with the phone company and a cable company you can't pay for the tower and charge an affordable rate.
Now, I know a guy who owns the patent for "virtual geosynchronous" satellites that would have about 1/3 the latency of today's satellite internet connections and drastically increase the availability of satellite bandwidth. Despite having a patent portfolio that covers many aspects of the system, he can't get to first base when it comes to finding a few $1B to build the system.
Incumbents in this space, however, are happy to keep selling satellite "fraudband" internet and hundreds of crappy TV channels.
I went over it by about 100GB last month and I got my service turned off. I wasn't even downloading torrents.
Oops that's slightly outdated, here's a new one http://i.imgur.com/p1ku3.png
Every supermarket chain in Germany has their own branded mobile network reseller with prepaid SIM cards, and prices keep going down.
250 GB cap seems huge to me though, unless maybe you have a multi-user household. I have a 50 GB cap but it doesn't seem to be enforced (yet).
*(depends upon bitrate, sd vs hd, etc, so YMMV).