 r81984Fair and BalancedPremium
join:2001-11-14
Katy, TX
 ·AT&T U-Verse
 ·AT&T DSL Service
 ·row44
1 edit | reply to CylonRed
Re: Flate rate is also easier to forcast The problem is the cell phone companies build the network, they do not pay per byte so it makes no sense to charge customers per byte.
Paying per byte does not allow more users since everyone can still flood the network at the same time.
The only benefit for paying per byte is the company makes more money.
There is no benefit to customers who now have to pay more for usage.
Also, do not forget that per byte billing is crazy since you have no control over the size of the websites you go to and then you can't use any streaming services like radio (xm), tv (hulu), or streaming movies (netflix).
If it is up to customers they will never charge per byte.
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Democrats are not Socialists any more than Republicans are. |
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 CylonRedPremium,MVM
join:2000-07-06
Bloom County | quote:
The only benefit for paying per byte is the company makes more money.
There is no benefit to customers who now have to pay more for usage.
Of course the only benefit to per byte is more money for the company - kinda the reason it is in business.
If they price unlimited high enough to make a good amount more while people perceive the value is worth it - then it will be done.
So far - I have yet to see a company have all, or even a majority, of its customers leave when per byte billing has been implemented. As such - it won't be going away soon. Prices are very rarely solely up to the customer.
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Brian
"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain |
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r81984Fair and BalancedPremium
join:2001-11-14
Katy, TX | Customers can't leave because most ISPs are monopolies and they work together with competitors to be able to charge more.
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Democrats are not Socialists any more than Republicans are. |
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 nixenRockin' the BoxenPremium
join:2002-10-04
Alexandria, VA | reply to CylonRed
said by CylonRed:So far - I have yet to see a company have all, or even a majority, of its customers leave when per byte billing has been implemented. As such - it won't be going away soon. Prices are very rarely solely up to the customer. How long you been using the internet?
Back in the mid 90s, most ISPs were charging for connect time (not bytes). Any time one or more ISPs in the area offered an unlimited connect time, people BAILED on the connect time chargers.
Then again, people used to have quite a few choices of providers in many markets. Now? There's mostly, at best, duopolies. People *can't* bail. And, even if they can, it makes no sense to do so because the two "competitors" have pretty much the same rate structures in place.
So, yeah, with the markets the way they are, now, you won't see much migration when a company does something egregious. Doesn't mean customers wouldn't leave if they had other, real options.
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The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell |
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 espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2
·Clear Wireless
| reply to r81984
said by r81984:The problem is the cell phone companies build the network, they do not pay per byte so it makes no sense to charge customers per byte. This is one of the reasons that broadband and wireless data is lagging behind backbone infrastructure. At the carrier level you pay by commit level and 95th percentile utilization, or you pay full circuit unmetered rates. Usage-based pricing at the carrier level created a system by which escalating usage created increasing levels of cash flow which provided the necessary funding to rapidly build to meet demand.
Flat, fixed-rate pricing provides you with consistent income, but your upgrade cycles are fixed -- you don't have a rapid inflow of cash should demand outpace predicted growth, and the opportunity to fall short is ever present.
said by r81984:Also, do not forget that per byte billing is crazy since you have no control over the size of the websites you go to and then you can't use any streaming services like radio (xm), tv (hulu), or streaming movies (netflix). That's a scare tactic that's frequently thrown out, but it's not true at all. People are using these services today and ISPs are paying their upstream network providers based on usage. The cost of electricity didn't stop people from buying more electrical appliances; if a technology has merit it will still be used. |
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espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| reply to nixen
said by nixen:Back in the mid 90s, most ISPs were charging for connect time (not bytes). Any time one or more ISPs in the area offered an unlimited connect time, people BAILED on the connect time chargers. That's because there was more money to be made selling "unlimited" services at $19.95 to the average person rather than billing the average subscriber $9/mo in usage charges. Sure, there are people that spent well above that, but the average subscriber paid much more under flat rate billing than they would otherwise.
Peace of mind is a lucrative business. Just look at all the money companies make selling "extended warranties." For every 1 person that comes out well ahead there are at least 100 people that lose money in the interest of "financial safety." |
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r81984Fair and BalancedPremium
join:2001-11-14
Katy, TX Reviews:
·AT&T U-Verse
·AT&T DSL Service
·row44
| reply to espaeth
said by espaeth:said by r81984:The problem is the cell phone companies build the network, they do not pay per byte so it makes no sense to charge customers per byte. This is one of the reasons that broadband and wireless data is lagging behind backbone infrastructure. At the carrier level you pay by commit level and 95th percentile utilization, or you pay full circuit unmetered rates. Usage-based pricing at the carrier level created a system by which escalating usage created increasing levels of cash flow which provided the necessary funding to rapidly build to meet demand. Flat, fixed-rate pricing provides you with consistent income, but your upgrade cycles are fixed -- you don't have a rapid inflow of cash should demand outpace predicted growth, and the opportunity to fall short is ever present. said by r81984:Also, do not forget that per byte billing is crazy since you have no control over the size of the websites you go to and then you can't use any streaming services like radio (xm), tv (hulu), or streaming movies (netflix). That's a scare tactic that's frequently thrown out, but it's not true at all. People are using these services today and ISPs are paying their upstream network providers based on usage. The cost of electricity didn't stop people from buying more electrical appliances; if a technology has merit it will still be used. That makes no sense. You are getting usage and customers mixed up.
With a flat rate when they get an influx of new customers and they will make more money right away from the flat rate fees.
Also, electricity rates are regulated, the cost of a byte is not. Consumable electricity generation cost is also variable based on how much electricity is generated. The cost of building a network is fixed and electricity usage is basically fixed (since its price is regulated). Regardless if you are only using half the bandwidth of a strand of fiber or all of it, the cost does not change.
Everything with an ISP is a fixed cost. They pay for the internet connection, they pay for equipment, they pay for tech support, etc. It makes no sense to have a variable pricing when all the costs you have is fixed based on the number of customers you have.
They have to pay the full network costs regardless if customers use their full connections or not.
All these companies will do with pay per byte is set a high per byte price that at least give them the same amount of money they get with the fixed pricing so they can still pay all their fixed costs. Then what happens is the customers that actually use their internet connections get gouged with higher fees while very few people who barely use their internet connections actually save some money.
If they actually had a fair realistic pay per byte fee where they divided up the fixed costs by how much bandwidth they have available then we would all be paying less and they would lose money.
Why would you want customers to pay higher fees?
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Democrats are not Socialists any more than Republicans are. |
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Lazlow
join:2006-08-07
Saint Louis, MO | reply to espaeth
espaeth
You know very well that ISPs do NOT pay by the gigabyte. Both their transit costs and hardware cost are solely based upon peak Mbps. So ANY GBs downloaded during off peak hours incur no additional costs (as in zero) for the ISP. |
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espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| said by Lazlow:You know very well that ISPs do NOT pay by the gigabyte. Please point out where I said they did.
said by Lazlow:Both their transit costs and hardware cost are solely based upon peak Mbps. Which is exactly what I stated. |
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espaethDigital PlumberPremium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2 Reviews:
·Clear Wireless
| reply to r81984
said by r81984:With a flat rate when they get an influx of new customers and they will make more money right away from the flat rate fees. That only works until you saturate a market to the point that new subscriber sign-up rates drop off. Of course, the barrier for entry is huge for new providers; the cost of broadband is artificially low because existing cable plant is being leveraged in the majority of installations. Telcos and MSOs were able to leverage a vast copper cable plant already in the ground paid for by the high profit margins of other services deployed on those lines for decades. Nobody can complete to just come in and offer a data-only service offering, which is why you are seeing even in the case of muni deployments that they need to supply the triple play of phone, TV, and Internet to make the cost structure work.
said by r81984:Also, electricity rates are regulated, the cost of a byte is not. Consumable electricity generation cost is also variable based on how much electricity is generated. Electric utility rates are not regulated in every state, and the cost is not per byte -- it's in the percentage of infrastructure consumed by utilization. That's why it's a sliding scale at various points along the network and there isn't a fixed "per byte" cost universally.
said by r81984:The cost of building a network is fixed and electricity usage is basically fixed (since its price is regulated). Regardless if you are only using half the bandwidth of a strand of fiber or all of it, the cost does not change. Once you reach the capacity of your infrastructure it's forklift upgrades to provide expansion. Capacity upgrades are not linear, it's a step function. You want to improve DOCSIS cable rates, you have to replace your CMTS with one that supports DOCSIS 3.0. You want to upgrade to ADSL2+, you need to replace all of your field DSLAMs to units that support the new protocol.
said by r81984:Everything with an ISP is a fixed cost. They pay for the internet connection, they pay for equipment, they pay for tech support, etc. It makes no sense to have a variable pricing when all the costs you have is fixed based on the number of customers you have. They have to pay the full network costs regardless if customers use their full connections or not. You're leaving out one massive variable: oversubscription. The sum total of all of the subscriber access connections is greater than the capacity of the ISP's network. As usage at the edge increases, elements of the network must be upgraded to support the greater capacity demand. If the network were provisioned at 1:1 even throughput you would never be able to afford your broadband connection. (look at the pricing for T1, DS3 services as a start to index on pricing)
said by r81984:Why would you want customers to pay higher fees? I want a model that supports growth. If I want to consume 1500GB/mo at home, I want a system in place that would both allow me to do that and provide a financial incentive for companies to grow their network to be able to sell me more bandwidth. That model has delivered massive gains to the web hosting market space over the last few years, there is no reason that it couldn't deliver the same possibilities for end-user access. |
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r81984Fair and BalancedPremium
join:2001-11-14
Katy, TX Reviews:
·AT&T U-Verse
·AT&T DSL Service
·row44
| Flat rate supports growth. They just have to set a price that is profitable for them and can fund their upgrades.
If you saturate the market and your price is set correctly then you are making so much money you don't have to worry about ripping your customers off with per byte billing.
If they oversubscribe they get more money from the extra customers to pay for upgrades.
Problem solved.
If you actually do a fair implementation of per byte billing (all the fixed costs divided by the available bandwidth) then they will not be charging enough to afford to upgrade anything unless their available bandwidth is always maxed out.
Flat rate is fair and gives them the money to hire employees, upgrade equipment, and to provide bandwidth. Fair per byte billing will put them out of business.
If there are people that do not want to use all of their bandwidth then, oh well. The fee is for a 24/7 connection, just because you do not use it 24/7 does not mean all the fixed costs to provide that connection just disappear.
A flat rate is the fairest way to pay for the network and to keep it funded for upgrades.
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Democrats are not Socialists any more than Republicans are. |
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 JKM
join:2009-06-08
Seymour, MO | reply to r81984
How do you figure an ISP's bandwidth is a fixed cost? And there bandwidth transportation? And their electric costs which rise with usage? And their maintenance which rises with usage? And on and on. Rent, Leases and such are fixed costs. Not most other costs. Truck rolls increase with usage and do support costs. What is your business experience?
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Begin with the end in mind! |
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 jmn1207Premium
join:2000-07-19
Ashburn, VA | reply to r81984
Don't get me wrong, I love the current flat rate structure, but the ISP does not have nearly as much control under this type of system.
By offering flat rates, as the technology moves forward and the speed and latency improves, it opens the door for innovative new products to establish themselves in the market, and with these new products comes consumer demand. The ISP's want to have as much control over when and where they spend resources on improvements. A per-byte billing structure offers far greater control over this aspect, as a properly implemented billing strategy would force customers to ration their bandwidth usage, while creating the ability for the ISP's to manage their revenues more precisely.
It's the dumb pipe panic. Per-byte billing is the most logical method for keeping things under control until the ISP's comes up with their own solutions that they can provide to customers in a way that just barely skirts the anti-competitive laws, gives them nearly exclusive control, and nets the largest profit. |
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r81984Fair and BalancedPremium
join:2001-11-14
Katy, TX Reviews:
·AT&T U-Verse
·AT&T DSL Service
·row44
1 edit | said by jmn1207:Don't get me wrong, I love the current flat rate structure, but the ISP does not have nearly as much control under this type of system. By offering flat rates, as the technology moves forward and the speed and latency improves, it opens the door for innovative new products to establish themselves in the market, and with these new products comes consumer demand. The ISP's want to have as much control over when and where they spend resources on improvements. A per-byte billing structure offers far greater control over this aspect, as a properly implemented billing strategy would force customers to ration their bandwidth usage, while creating the ability for the ISP's to manage their revenues more precisely. It's the dumb pipe panic. Per-byte billing is the most logical method for keeping things under control until the ISP's comes up with their own solutions that they can provide to customers in a way that just barely skirts the anti-competitive laws, gives them nearly exclusive control, and nets the largest profit. Per byte takes the control away from ISPs and makes it harder for them to make the profit they want because monthly usage can change drastically.
Since all the costs are fixed regardless of usage if usage is low one month they are screwed.
It is simple since the costs are fixed and do not increase or decrease with usage it makes no sense to charge by usage.
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Democrats are not Socialists any more than Republicans are. |
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Lazlow
join:2006-08-07
Saint Louis, MO
1 edit | reply to JKM
JKM
Their bandwidth costs (both hardware and transit) are based on peak Mbps not GBs per month. The equipment has to be running 24/7 and the electricity use difference between fully loaded and idle is really minuscule. A fiber/coax/etc will require the same maintenance no matter what the load is on that transport media. How do you figure the number of truck rolls increase with usage? The two greatest enemies of this type of equipment is time and exposure(both of which are essentially a fixed cost). |
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jmn1207Premium
join:2000-07-19
Ashburn, VA | reply to r81984
said by r81984:said by jmn1207:Don't get me wrong, I love the current flat rate structure, but the ISP does not have nearly as much control under this type of system. By offering flat rates, as the technology moves forward and the speed and latency improves, it opens the door for innovative new products to establish themselves in the market, and with these new products comes consumer demand. The ISP's want to have as much control over when and where they spend resources on improvements. A per-byte billing structure offers far greater control over this aspect, as a properly implemented billing strategy would force customers to ration their bandwidth usage, while creating the ability for the ISP's to manage their revenues more precisely. It's the dumb pipe panic. Per-byte billing is the most logical method for keeping things under control until the ISP's comes up with their own solutions that they can provide to customers in a way that just barely skirts the anti-competitive laws, gives them nearly exclusive control, and nets the largest profit. Per byte takes the control away from ISPs and makes it harder for them to make the profit they want because monthly usage can change drastically. Since all the costs are fixed regardless of usage if usage is low one month they are screwed. It is simple since the costs are fixed and do not increase or decrease with usage it makes no sense to charge by usage. If history is any indication of how the pricing would work, the ISP's are not going to create a situation that would cause them to lose money per subscriber. Nobody would be getting a price break with per-byte billing. The entry tier would be no less than your current, coveted fixed rate billing. The only difference would be the drastic change in the amount you would be able to download before incurring expensive overage charges, and they would probably create a "complimentary" tier that cost quite a bit more for those wishing to increase their monthly limits.
A per-byte format would never allow for 75% of the current internet subscribers to save a few dollars because of their limited amount of usage. That is not what this is about. It's all about making it impossible for anybody to use a bandwidth intensive product without either paying an outrageous amount of money, or by using something provided solely by the ISP, on their terms, and at their cost, with no legitimate competition. |
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JKM
join:2009-06-08
Seymour, MO | reply to Lazlow
The ISP I speak of is a WISP, so the load on the radios does change the equation. The more use increases the more the customers have problems, more truck rolls. Usage does affect costs on the last mile infrastructure.
Don't get me wrong.......I don't support caps. Caps are merely the way the monopolies and duopolies, who control the middle mile infrastructure, discourage use.
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Begin with the end in mind! |
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| reply to nixen
Bingo thank you!
Also these are "regulated" utilities granted local licenses for the privilege to operate as such. If these companies could charge $10,000 per person they would. These companies are of course for profit for their owners.
The local governments also has right and obligation to keep the companies in check from pillaging the people who live in that community. |
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CylonRedPremium,MVM
join:2000-07-06
Bloom County | reply to nixen
Been using for quite a long time - I stand by my statements and have yet to see users bail big time for those ISPs for broadband - till then...
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Brian
"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain |
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