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Comments on news posted 2010-01-06 18:09:45: There's two major reasons ISP executives want to shift from flat-rate to a pricing model where customers face low caps, and high per-gigabyte overages. ..

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bgraham2
join:2001-03-15
Smithtown, NY

bgraham2

Member

Get everyone hooked on the internet then raise prices.

This seems to be the way ISP's are going to get more profit in the future. Costs go down and prices will go up.

keithps
Premium Member
join:2002-06-26
Soddy Daisy, TN

keithps

Premium Member

Save me

Come save me from the ISP overlords, EPB FTTH. At least I'm hoping the smaller, independent, non-shareholder companies can provide decent internet service without trying to screw everyone.
iansltx
join:2007-02-19
Austin, TX

iansltx

Member

If one ISP balks though...

If there exists in a given area an ISP that offers an uncapped connection transfer-wise then that's a MAJOR selling point, and will get them a premium price or allow them to sell lower speeds for the same price, versus a competitor. When TWC talked about metered billing in San Antonio and Austin, Grande Communications immediately took the statement and ran with it, advertising that their plans have no caps. If any provider is willing to stick to uncapped internet to the point that they'll advertise it as a value-added feature, they for the short term get more customers and in the long term prevent a move to low-limit cap-and-tier pricing in that area.

Unless of course you're being throttled by your local loop provider...ahem Bell...

hayabusa3303
Over 200 mph
Premium Member
join:2005-06-29
Florence, SC

1 recommendation

hayabusa3303

Premium Member

people need to

vote with there wallet.

chucky5150
Divers do it Deeper
join:2001-11-03
New Iberia, LA

chucky5150

Member

I already am. I've cut off cable TV service and just use the internet for my tv watching needs.

gee can't wait for Cox to start doing something like this so I can switch over to the slower AT&T DSL.

Ryokucha
join:2000-10-20
Ormond Beach, FL

1 recommendation

Ryokucha to hayabusa3303

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to hayabusa3303
Which is why more competition is needed, so people can do just that. If there was real competition in the market this wouldn't even be a story.
Corydon
Cultivant son jardin
Premium Member
join:2008-02-18
Denver, CO

Corydon

Premium Member

Out of curiosity...

Does anyone have any hard figures (and good, trustworthy sources) on what the cost to a major ISP is per GB?

Perhaps putting some hard numbers out there about the markup that a $5/GB charge represents might shame ISPs into pulling back (given enough bad publicity).

StevenB
Premium Member
join:2000-10-27
New York, NY
·Charter

StevenB to iansltx

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to iansltx

Re: If one ISP balks though...

The only reason this hasn't hit in the USA yet, is due to verizon. Once verizon hops on board to do this type of billing, it will come live. ATT/Time Warner/Comcast/Cox etc.. all have had their dream goals of metered internet, but verizon isn't hoping on board with it.

Cablevision isn't on board either because of the Verizon competition in all of their markets. But they'd love to do it as well

The little ISPs/MSOs i don't know what they'll do, but prob follow suit with the big boys.
iansltx
join:2007-02-19
Austin, TX

iansltx

Member

Again, no cap = competitive advantage. If Verizon does cap their landline broadband it'll be upwards of 500GB in all likelihood. Otherwise they'd be running at ~5% of capacity.

As for CV, they've said straight up that they aren't going to cap-and-tier anyone. They took throttling off their 15/2 service a few years back and the way they run their network (fast and loose) there's no reason to do capping scare tactics.

Right now bandwidth pricing is at an all-time low, which means that "indie" providers can pick up enough to bring their bandwidth cost per gigabyte near zero, provided they can get transport to a major internet city. With the pipe open on that end, they can push whatever they want down the line to consumers, and will have a lot of excess capacity if they're running DOCSIS 3, DSL or FTTH. The most logical way to use this capacity in a competitive marketplace is to ratchet up speeds and increase or eliminate transfer caps, because if you're better than your competitor, people switch to you.

karlmarx
join:2006-09-18
Moscow, ID

1 recommendation

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Re: Out of curiosity...

Amazon charges $0.10 (10 cents) per GB. And that's with a markup, so the real cost per GB is probably closer to $0.05. Given that, Comcrap gives you I think 250GB/month, so their 'cost', would be in the range of $25.00.

The real question is thus. What is the BASE cost. If it costs $30.00 to run the 'circuit', and they give you 250GB, then I would expect to see a $60.00 bill, which is what you see. Having said that, why doesn't granny, who uses 2GB a month, see a $30.10 bill a month?

What's that you say, the cost of the circuit is $50.00 per month? That means the per GB cost is about $0.01. That means granny still pays $60.00, and warez dude, who uses 1000GB per month, will end up paying $70.00.

Either there is a very high 'base cost', or there is a very high 'byte charge'. If it's a high base cost, then warez dude won't pay very much more, cause the bytes are cheap. If it's a low base cost, then why doesn't granny get a $20.00 bill. The ISP's are greedy, pure and simple. They want to charge a high base cost AND a high byte charge. Which is it?

MxxCon
join:1999-11-19
Brooklyn, NY

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Re: people need to

if i only have 1 choice, there's not much i can vote with :\

SoSad
@rr.com

SoSad

Anon

Hope someone will fight this

Holy crap! Hope our northern brothers and sisters fight this oppression!
gorehound
join:2009-06-19
Portland, ME

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to bgraham2

Re: Get everyone hooked on the internet then raise prices.

Bullshit !!!
They better not even try doing this krap in the USA.
patcat88
join:2002-04-05
Jamaica, NY

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patcat88 to iansltx

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Re: If one ISP balks though...

said by iansltx:

Right now bandwidth pricing is at an all-time low, which means that "indie" providers can pick up enough to bring their bandwidth cost per gigabyte near zero, provided they can get transport to a major internet city.
Well getting your fiber just to the basement at the colo/meet me room can be a $1000 a month, then you might find out the only duct owner in the city is the ILEC and 1 or 2 CLECs that price 5% less than the ILEC in a duopoly. Or the ILEC rented all unused ducts to the peering center to force everyone to rent from them. To pay for urban construction to add ducts to the colo building you don't even own, you must be as rich as a silicon valley dot com start up in 1999. All the other CLECs in the building rent bandwidth or lambas from the ILEC or the CLEC in order to serve that building. Some cities have NIMBY "embargos" on street construction which mean no new ducts can ever be built again except by existing telecom providers under a maintenance or emergency exception. Some cities give exclusive telecom ROW rights to the ILEC to keep the ducts organized and mapped well in the city, even the CABLE COMPANY MUST RENT FROM THE ILEC to run its coax to serve the city. See »en.wikipedia.org/wiki/Em ··· y_Subway

TuxRaiderPen
A Warm Embrace
join:2009-06-02
Outer Rim

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Re: Out of curiosity...

We've been demanding this for years. ISP's hide data to prove (or to reveal) poor network design, "congestion", bandwidth hogs etc...

SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

1 edit

1 recommendation

SpaethCo to karlmarx

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to karlmarx
said by karlmarx:

Amazon charges $0.10 (10 cents) per GB.
Amazon also has their bandwidth concentrated on a couple hundred switches spread across a few dozen datacenters with interconnects in carrier neutral meet-me facilities.

That's not exactly the same thing as maintaining a network for millions of endpoints each at different physical addresses and the widely disbursed infrastructure required to support that.

You don't see too many Amazon bucket trucks driving around.
SpaethCo

SpaethCo

MVM

Increasing prices creates a market for competition

The key limiting factor that prevents upstarts from entering a market and providing ISP services is money. The existing LECs and Cable Cos already have infrastructure deployed under self supporting business models with Cable TV and Telephone service; internet access is just an add-on service. Any new player to the market has to start from scratch and deploy the access infrastructure and provide the service.

If the incumbent providers want to keep raising prices, eventually it becomes cost effective for others to build out their own network access to compete.

Chuckles0
Premium Member
join:2006-03-04
Saint Paul, MN

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Re: people need to

said by MxxCon:

if i only have 1 choice, there's not much i can vote with :\
That's not what these guys say...

»www.youtube.com/watch?v= ··· GMxGq9rM

nothing00
join:2001-06-10
Centereach, NY

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Re: Out of curiosity...

Hmm. That's interesting. Of course, according to the Roger's billing model, that infrastructure is already paid for in the price of your service. So you really are just paying for more bandwidth. Regardless, ignoring Amazon completely, within Roger's own billing model, a GB doesn't cost more to provide to a low-tier customer than a high one. Your whole premise is flawed.

It's maximizing profit, plain and simple. The cell phone provider "guess how much you need" and we'll bill the crap out of you for guessing wrong model.

Z80A
Premium Member
join:2009-11-23

1 recommendation

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Re: Get everyone hooked on the internet then raise prices.

Or what? You go back to dial up?

DSLInstaller
@covad.net

DSLInstaller to SpaethCo

Anon

to SpaethCo

Re: Increasing prices creates a market for competition

Not so...In cases like this what the ILEC's will do is reduce the prices in the area where the "competitor is trying to launch his service at dirt cheap prices until they drive this new market player out of business and then raise the price again.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

1 recommendation

FFH5 to SpaethCo

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Service Industry costs are people costs

What Karl neglects to mention in his claim that hardware costs are decreasing and bandwidth costs are decreasing is that other costs are rising. Content costs are rising and customer service & install & repair people(and their healthcare) costs are rising and as service industry companies(cable and telco), that is their major costs.

So, rising costs have to be paid for SOMEHOW. And how they do it will make or break them. But, THAT IS THEIR DECISION. And the gov't shouldn't step in just because some people want everything to cost less.
Thislilfishy
join:2008-10-28
Dundalk, ON

Thislilfishy

Member

said by FFH5:

What Karl neglects to mention in his claim that hardware costs are decreasing and bandwidth costs are decreasing is that other costs are rising. Content costs are rising and customer service & install & repair people(and their healthcare) costs are rising and as service industry companies(cable and telco), that is their major costs.

So, rising costs have to be paid for SOMEHOW. And how they do it will make or break them. But, THAT IS THEIR DECISION. And the gov't shouldn't step in just because some people want everything to cost less.
Somewhat true, except an ISP should NEVER be allowed to be a content provider, secondly, content should be self supporting and not rely on profits from an outside source.

Customer support is getting less expensive as they ship that source out of country to the third world. Actual techs are mostly outsourced to sub-contractors that bid on the right to be sub-contractors, and Rogers for one sets the price that those contractors can charge. So I'd say at best that cost has stayed level....perhaps a slight increase over the last few years...but that would be a very slight increase. Many of those 'techs' are taking home close to minimum wage once you calculate the number of hours they work (I was one, so I know this to be fact). There are in fact very few in house ROGERS employees, and they are very well compensated for the most part. However I think the number of actual employees has dwindled over the years...this is just guess work, but I believe if we look at a subscriber to employee comparison we'd see a dramatic increase in that ratio over the last 15 years.

I am not a hater of Rogers, but I feel their fee's of late have been criminal and mirroring Bell in disdain for customers, as what choice do those customers have? Buy bell tv/internet or buy Rogers tv/internet. Pretty much that's your choice. Being smart business men, they've raked in millions in profits weekly....becuase without competition you set your price and the customers like it or lump it.

I don't pay for tv anymore, as close to $100/month for the few channels I actually wanted was not justifiable. Also, I use an independant ISP, but at the end of the day most of my money ends in Bell's pocket. I've not had a raise in 4 years, but still my cel phone, internet and tv rates have increased almost exponentially every year.

Ian
jjeffeory
jjeffeory
join:2002-12-04
Bloomington, IN

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Where are the customer service and install/repair people's raises? Healthcare costs look like they're being offloaded onto the employee. Content costs are rising, but then again, ISPs should be dumb pipes, so that shouldn't really have an effect on them. I know that ISPs are changing that ( Comcast/NBC Universal merger), but my opinion is that they shouldn't be permitted to do so... Too much vertical integration opens the door to even more monopolistic behavior.

erniewitt
@cia.com

erniewitt

Anon

Monopolies and ARPUs

What do you expect when you have a monopoly. All the CEO's have to look at now is the prized ARPU. When shareholders look at the quarterly report, they look at ARPUs, not customer satisfaction (as there is no competition to switch to). I hope minister Clement would give incentives to spur on new competition in broadband, or at least give some help to 3rd party ISPs to wean themselves off Bell.

HappyAnarchy
@iauq.com

HappyAnarchy to FFH5

Anon

to FFH5

Re: Service Industry costs are people costs

I would believe this if they weren't posting record profits. Profits are the amount you are making after taking out expenses. This means that they are making more money than ever before, which would imply that either costs are going down, or at the very least they are raising the rates faster than the costs are going up.

This is not something I disagree with in principle.

In practice, the way they are doing this is by cutting on investing for expanding their service, trying to offer less service for more price and in general cutting costs and raising rates.

In a healthy capitalist economy, this is prevented by competition. A company that raises costs and provides less value is quickly shown the error of its way. Unfortunately, across the board that hasn't happened in this industry, due to duoopolies and cooperation in raising rates and providing less service.

This is not healthy competition, and this is not good for the country, or the industry. It is great if you are a day trader however.

SpaethCo
Digital Plumber
MVM
join:2001-04-21
Minneapolis, MN

SpaethCo to nothing00

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Re: Out of curiosity...

said by nothing00:

Hmm. That's interesting. Of course, according to the Roger's billing model, that infrastructure is already paid for in the price of your service. So you really are just paying for more bandwidth. Regardless, ignoring Amazon completely, within Roger's own billing model, a GB doesn't cost more to provide to a low-tier customer than a high one.
Infrastructure isn't entirely accounted for; increased utilization drives network expansion, and expansion costs money. As to the cost differential, volume discounts are common in pretty much any industry.
said by nothing00:

The cell phone provider "guess how much you need" and we'll bill the crap out of you for guessing wrong model.
In response to that companies came out with prepaid plans. Eventually this stuff works itself out.

mbaha
join:2009-03-01

mbaha

Member

no deal!

that sucks!

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK
Netgear WNDR3700v2
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Re: Service Industry costs are people costs

Content costs are decreasing for all but TV and music rights, and they already sell those in their new TV plans. The costs of maintenance and employees and overhead naturally figures into pricing; However this kind of draconian new pricing model is way out of line with costs. It's driven by the same unrealistic expectations that stock value and profits must keep increasing by double digits year in, year out.

Because the market simply isn't competitive enough, we have to either pay the increases or do without.... but it's starting to break the back of the American consumer. Government regulations may end up being the ONLY options available to curb the abuse.

Dominokat
"Hi"
Premium Member
join:2002-08-06
Boothbay, ME

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Dominokat

Premium Member

Way to kill innovation

This comes to the states I'll go back to dial up.
It will be cheaper.....
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