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4 edits

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Broken Funding around High Bandwidth Applications

said by funchords:

I have examples of caps and metering crushing businesses, but nobody with a 250 GB-ish soft cap, Comcast is a bit unique in this area.
There are probably just as many, or more, examples of successful broadband businesses that grew under "invisible caps" and since.
said by funchords:

The specter of the nation's largest residential ISP having a static cap year after year means that anyone who does have a 3-5 year outlook on their high-bandwidth project is not likely to fund the investment. I know that, you know that, but we don't know that it has -- in fact -- already happened.
Part of the problem is funding the Usage. I think most with some basic network knowledge understand that bits cost money. More bits = more costs. Most also understand that in a Consumer flat-fee billing model, the light+medium fund the majority of heavy users and the costs wash out. The ultra-heavy are a bit different (see ad-nauseum previous discussions on this).

What few understand is that the current Internet transit/peering model does not actually fund high-bandwidth Usage properly.

[Below is mostly from a previous post in another thread]

There is a calculate shift by Content and CDNs to move their high-bandwidth growth costs to the ISPs (and in turn the Consumer). The cost of traffic growth around next gen high-bandwidth apps is something Content and CDNs, obviously, want to pay as little as possible for. Most of the time they pay an intermediate provider that doesn't actually carry the traffic any distance. If the source of traffic no longer pays their network share for the growth, or the broadband carrier that has the majority of the costs is not funded by Usage, there is a challenge. (Please read on before you call me Ed Whitacre)

Examples like ESPN360 may be the future and it is unclear if this is good or not. Also the BBC iPlayer over P2P or the BBC PR campaign to force multicast peering. This gives the BBC unlimited free access and all the end to end traffic growth costs are pushed to the broadband ISPs without incremental revenue that was previously obtained (by someone) via Content transit. While Content may not have paid that specific broadband ISP directly, with peering ratio balance requirements, this typically can wash out as a balance of trade.

The major CDNs and major Content distributors have very creative ways to cause ISPs pain and manipulate peering relationships to either gain peering (typically with smaller broadband w/ transit costs) or exploit an intermediary ISPs peering relationship with a broadband ISP. Two examples were above, and the below quoted blocks are what Content providers are stating:

Broadband ISP - Not sure I should peer with you as I have all the network costs"
quote:
We both pay for transit, so why don't we just peer

Because any transit savings for the broadband ISP are for current or existing traffic. Unlimited free (for Content) bandwidth has the potential of large end to end, unexpected, growth costs of infrastructure. These new costs no longer have a growth funding source and the costs have moved to the consumer.

Unbalanced peering traffic growth is not mutually beneficial and is an enabler which brings with it large unfunded costs.

I'm concerned about the traffic growth and while I won't offer free peering, as I have all the network costs, I will offer you the same or lower rate for transit that you pay now
quote:
If you won't peer with me, I will use your most expensive transit provider and they will make money off of you.

or

I will connect to the same router port as you and your peer and pay them small amounts unless you peer with me. (Given the costs of a port vs the full end to end costs are small, the intermediate provider can do this. This is one of the reasons the existing Internet peering environment is a mess. NOTE: Depeering is messy and not a simple solution to this)

IOW:

I will not pay you the same amount I would pay an intermediate provider even though you carry the bits end to end and they just offer 1 router hop.

All of these shifts have the potential to move the cost of high-bandwidth traffic growth from Content, to the Consumer.

You can say "I don't care, I buy bandwidth from my ISP", "Just upgrade your network", but the reality is bandwidth has been a two party payer system and the business plan for high-bandwidth apps does not fit well with the legacy Tier based transit / ISP system.