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espaeth
Digital Plumber
Premium,MVM
join:2001-04-21
Minneapolis, MN
kudos:2
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3 recommendations

Yeah, let's just ignore the access charges

If metered pricing were about "fairness," carriers would offer the nation's grandmothers a $5 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website.
The first packet is the most expensive one to deliver, because you have to have all of the necessary underlying infrastructure in place to get it there.

The key problem is trying to time your technology refresh cycle so that it lines up with the next generation of available technology so that you get the most "bang for your buck" when you purchase new hardware for replacement or expansion.

Data caps are an imperfect system to try and shape demand into something that meets that refresh cycle. It's been pretty clear for years that caps are about the business model, not congestion.

We had this whole discussion on this site in 2008/9 when there was news every freaking day about the Comcast network management system. This isn't news.


MovieLover76

join:2009-09-11
kudos:1

2 recommendations

It's news because a cable lobbyist admitted it, and it's a huge accomplishment that the opposition had so much proof the network congestion was a farce that they finally had to come clean and admit it.

Of course they just switched to a new argument, but that argument is even weaker in my opinion.


elefante72

join:2010-12-03
East Amherst, NY
reply to espaeth

I might agree, but hasn't Comcast kept the same cap for years? I mean if that is the case, then the D3 upgrade didn't make any bit of difference?

In my neck of the woods, Time Warner nor FIOS have caps and both stream at max rates all the time, especially FIOS. And I only pay $110 for 50/25 and extreme. I think that is perfectly reasonable, and I use about 200-400GB a month (depending upon the kids streaming habits). I would not be happy in a capped world.

What they have to worry about is simple: I drop cable and do only internet. Now I use 600-700GB a month because streaming becomes the only method for getting video. Right now outside of broadcast only 5-10% of the viewing comes from cable. Wife has finally given me the go-ahead to drop cable and save $50/mo.

Also infrastructure costs are often shared w/ the other services (most people actually run TV), so in that case outside the HSI equipment costs, baked into the cost of cable and phone are infrastructure costs.

As we know transit costs (if they have any) --look @ CDN have been plummeting.

So the cost is clearly going down, so why does the price go up every year? Profit, nothing more, nothing less. I don't blame them, they can get away with it for now.

If too many people start dropping cable, then it will start eating into their margins because equipment was sized for distributing cable too. Phone cost is minimal.... That is the balancing act, keeping you signed up for the triple play....


Crookshanks

join:2008-02-04
Binghamton, NY

1 recommendation

reply to espaeth

said by espaeth:

If metered pricing were about "fairness," carriers would offer the nation's grandmothers a $5 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website.
The first packet is the most expensive one to deliver, because you have to have all of the necessary underlying infrastructure in place to get it there.

You hit the nail on the head. The connection itself has a fixed cost regardless of what the actual usage (be it total data or average bitrate) is. Our electric bill costs us $15/mo before we use a single kWh, just for the connection to the grid.

In a fair system, Grandma wouldn't be paying $44.95/mo, but it's equally insane to think that she should be paying $5/mo. Time Warner's tiered option ($5 lousy dollars off your bill for a pathetic 5GB cap) is a blatant rip off, but the point here isn't to save 95% of their customers money. It's to monetize the 95%+ percentile of customers that use the lion's share of the available network capacity.


espaeth
Digital Plumber
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join:2001-04-21
Minneapolis, MN
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reply to elefante72

said by elefante72:

I might agree, but hasn't Comcast kept the same cap for years? I mean if that is the case, then the D3 upgrade didn't make any bit of difference?

It started off a decade ago as a "soft" cap where they kicked heavy users off the system. In 2008 it was defined to be a 250GB cap, and then this year they started to expand the cap / look at strategies for being able to use more capacity for a larger monthly fee. See: »Exclusive: Some Comcast Users Will See 500 GB Cap

I think the problem is that infrastructure updates take years, and our culture is now exclusively focused on short term goals/results.


morbo
Complete Your Transaction

join:2002-01-22
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The problem is that the caps are mostly arbitrary and used in an anti-competitive way to limit competition from streaming content. If the caps were at least updated annually or on a rolling schedule based on average consumption increases then this wouldn't matter.



morbo
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reply to Crookshanks

said by Crookshanks:

but the point here isn't to save 95% of their customers money. It's to monetize the 95%+ percentile of customers that use the lion's share of the available network capacity.

I'm glad you admit that this is strictly about milking the subset of customers that consume above average resources for no other reason that "we can" and a mistaken understanding of costs associated with the above average use.

Crookshanks

join:2008-02-04
Binghamton, NY

said by morbo:

I'm glad you admit that this is strictly about milking the subset of customers that consume above average resources for no other reason that "we can" and a mistaken understanding of costs associated with the above average use.

It doesn't matter what the cost differential is, you can't dispute the fact that someone who has an average bitrate of 5mbit/s (just to pick a number) imposes a greater cost on the ISP than someone with an average bitrate of 100kbit/s. The former requires more infrastructure investment than the latter, yet people defend pricing plans that charge them the same amount of money.

From a business standpoint this policy is hard to argue with. They alienate a tiny slice of their customer base, which happens to impose the greatest cost on them, and they either monetize them or get them to reduce their cost/leave the network entirely. It's a win win for the ISP from a business perspective, and I'd probably be doing the same thing if I was running an ISP.


espaeth
Digital Plumber
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join:2001-04-21
Minneapolis, MN
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reply to morbo

said by morbo:

The problem is that the caps are mostly arbitrary and used in an anti-competitive way to limit competition from streaming content.

Yeah, yeah. We've all heard the blanket statement repeated over and over again on this site.

How many services really compete head to head?

At best, online services chip away at sections of what is available via broadcast TV, but there is not a wholesale replacement option. It's not because of bandwidth caps; it's because anyone with a clue about how that infrastructure is built knows that you can't scale to 100+ million simultaneous Internet video feeds using technology available today.

Caps aren't the reason that service doesn't exist, no matter how badly you want that to be cause.

said by morbo:

If the caps were at least updated annually or on a rolling schedule based on average consumption increases then this wouldn't matter.

Technology refresh cycles are 3-5 years, which is about the rate you're seeing access speed increases and bandwidth cap increases.

Skippy25

join:2000-09-13
Hazelwood, MO
reply to Crookshanks

I can dispute your use of the word "greater" as a person that has an average bitrate of 5mbit/s has a very marginal cost over someone that uses 100kbits/s per second and that is a fact.


tanzam75

join:2012-07-19

said by Skippy25:

I can dispute your use of the word "greater" as a person that has an average bitrate of 5mbit/s has a very marginal cost over someone that uses 100kbits/s per second and that is a fact.

The additional cost of the heavy user is only negligible while the node has extra capacity.

As soon as the node hits capacity, the next bit costs thousands of dollars, for the additional equipment to split the node. And that's assuming you've got unlit fiber available in your existing plant.

As soon as you run out of fiber to do logical node splits, the next bit costs tens of thousands of dollars. You have no choice but to run new fiber to the new nodes.

Now, who pays for it? Do you make grandma pay the same amount as the heavy downloader? That's unfair, because grandma didn't max out the node. Wouldn't it be fair to impose a surcharge on the heavy downloaders, so that they end up paying all of the costs of the additional infrastructure?

You can argue that the caps are too low, or that the price of the surcharges is too high, or that there's no off-peak free-use period. Indeed, the cable industry would have a much easier time justifying the caps if they were to have a separate -- and much higher -- cap for off-peak usage.

But you cannot just blindly argue against caps, as so many do on the DSLReports forums, unless you deliberately ignore the fundamental economics of Internet service. "Bits are almost free!" Yes, but there's an asterisk -- they're not free when the pipes get congested.

InvalidError

join:2008-02-03
kudos:5

2 recommendations

reply to MovieLover76

said by MovieLover76:

it's a huge accomplishment that the opposition had so much proof the network congestion was a farce that they finally had to come clean and admit it.

Congestion would become very real and a very expensive problem to fix if all incentives to moderate usage and artificial speed bumps were removed while people are still expecting dedicated-like performance.

Building the network just to reach the customers is expensive but bulking up the network to sustain high concurrent usage at high speeds quickly gets expensive too.


MovieLover76

join:2009-09-11
kudos:1

Really? how do both cablevision and Verizon FiOS manage uncapped users, while also being two of the Fastest ISP's based on real life speed tests.

The lobbyist gave up the argument man, time to toss in the towel.



Joey1973

@verizon.net
reply to InvalidError

And there ya have it folks... some people still believe the old mantra about caps being an essential part of managing the "network".

No, caps are and have always been about PR and managing customers' perceptions about using the network. ("Don't use it! You might break it!")


InvalidError

join:2008-02-03
kudos:5
reply to MovieLover76

said by MovieLover76:

Really? how do both cablevision and Verizon FiOS manage uncapped users, while also being two of the Fastest ISP's based on real life speed tests.

Just because you can speedtest the highest speed does not mean the network behind those speeds could actually cope with a large percentage of subscribers using anywhere near those speeds at the same time.

Crusty

join:2008-11-11
Sanger, TX
Reviews:
·Embarq Now Centu..
·CenturyLink
reply to espaeth

said by espaeth:

said by morbo:

The problem is that the caps are mostly arbitrary and used in an anti-competitive way to limit competition from streaming content.

Yeah, yeah. We've all heard the blanket statement repeated over and over again on this site.

How many services really compete head to head?

At best, online services chip away at sections of what is available via broadcast TV, but there is not a wholesale replacement option. It's not because of bandwidth caps; it's because anyone with a clue about how that infrastructure is built knows that you can't scale to 100+ million simultaneous Internet video feeds using technology available today.

Caps aren't the reason that service doesn't exist, no matter how badly you want that to be cause.

said by morbo:

If the caps were at least updated annually or on a rolling schedule based on average consumption increases then this wouldn't matter.

Technology refresh cycles are 3-5 years, which is about the rate you're seeing access speed increases and bandwidth cap increases.

I haven't seen a speed increase in nearly 7yrs and I'm forced to either have zero internet or just use one ISP or move across the street.

But yet, my costs rise each year........


morbo
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reply to tanzam75

Yes, it costs money to upgrade a node. However, unless the network is completely mismanaged to the point of incompetence, a single user using above average resources cannot be attributed to the cost. That's like saying that the 3 lane interstate highway is congested for 5 hours a day, and at 5 hours and 1 minute of congestion per day the next driver is responsible for adding an additional lane to the highway (millions and millions of dollars). It's ridiculous.


guppy_fish
Premium
join:2003-12-09
Lakeland, FL
kudos:1
Reviews:
·Verizon FiOS
reply to InvalidError

You Obviously know nothing about FIOS and that for all practical purposes Verizon IS a major backbone of the US internet.

Verizon could care less what its users send/receive as being a tier one provider, it costs the same for one bit or one trillion GB, they have no peering charges



jjo

@comcast.net
reply to Crookshanks

Your point is well taken, and is an argument for basing access charges on bandwidth: provide a 100kbit/sec pipe for a cheap flat rate, and a 5Mbit/sec pipe for a higher flat rate. This is in no way a justification for per-byte usage charges on top of the flat-rate charge for bandwidth.



Simba7
I Void Warranties

join:2003-03-24
Billings, MT
reply to espaeth

said by espaeth:

Technology refresh cycles are 3-5 years, which is about the rate you're seeing access speed increases and bandwidth cap increases.

Um.. Sure the speed increases, but the cap doesn't for most providers.

tanzam75

join:2012-07-19
reply to morbo

It certainly is not ridiculous.

Indeed, fair allocation of fixed costs is precisely the idea behind toll lanes on otherwise-free highways. Because it's the peak-period drivers who are forcing the road to be expanded, it would be fair for them to pay 100% of the costs. In contrast, the off-peak drivers could've gotten by without the extra lanes, so they should pay 0% of the costs. For example, just two months ago, Los Angeles opened High Occupancy/Toll lanes on the I-110.

It's also becoming common for bridge and tunnel expansions to be paid for through time-of-day pricing. If you use it at midnight, you pay one rate, because you could've gotten by just fine on the old two-lane bridge. If you use it during rush hour, then you pay a much higher rate, because you're one of the commuters that forced the government to spend hundreds of millions of dollars on a new bridge.

That "millions and millions of dollars" argument is an illogical strawman. Nobody's asking one person to pay all of the money up-front. The fees are paid a little bit at a time, collectively, by all the people who forced the upgrade. Just like bandwidth cap overages are paid collectively, tens of dollars at a time, by all of the people exceeding the cap.



morbo
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You are not consistent with your own flawed analogy so this discussion is going no where.

With cable admitting that caps are not about congestion, your point is completely debunked. It's also not about fairness. Until grandma is paying $5 a month for checking her email and the torrent users pay $1000 a month for their heavily used connection, this isn't about fairness. It's about cable companies wanting to double dip for services that are already provided and paid for.



Cinematech

@adelphia.net
reply to InvalidError

I am fortunate enough to live in an area with municipal broadband. I'm also fortunate enough to have been given an unrestricted access tour of the local NOC. Granted, the user base is only 15000 users, the lead network engineer reported that typical constant bandwidth usage during prime time stays around 50 MB. If everyone on their program suddenly decided to go hog wild, they would still have sufficient network overhead. Oh yeah, they only charge $35 for a 10 Meg, symmetrical fiber connection.



OSUGoose

join:2007-12-27
Columbus, OH
reply to InvalidError

Yea but that cost comes down if you build a network that is reliable, more customers will subscribe.

Compare DSL and Cable, Where the DSL connection provided frequently has issues and throttles even youtube, yet the cable connection doesn't and provides a predictable consistent connection & speed regardless of content or time of day. The cost to provide the cable network will drop as there will be more rate payers to subsidize the costs for the installed network, while the DSL connection will degrade worse as there are less and less users to foot the costs. Now swap roles, and the argument remains.



OSUGoose

join:2007-12-27
Columbus, OH
reply to espaeth

We look short term because there were times were we were hyped that fixes were coming for years to only have them be canceled or deployed half-cocked, I'm looking at you AT&T U-Verse.


InvalidError

join:2008-02-03
kudos:5

1 recommendation

reply to guppy_fish

said by guppy_fish:

Verizon could care less what its users send/receive as being a tier one provider, it costs the same for one bit or one trillion GB, they have no peering charges

Peering charges have nothing to do with the stuff I was thinking about.

Unless Verizon can break the laws of physics, their costs would start increasing exponentially once they start having to stitch multiple 2M$ routers together to accommodate peak demand across network nodes. Having to do this at few strategic facilities is one thing but having to do it systematically network-wide would kick costs up a few notches.

The biggest single-chassis routers can handle about 5Tbps of non-blocking traffic. Once you need to go beyond that while maintaining close to non-blocking routing, things get a whole lot more expensive and that is definitely where Verizon or any other ISP with millions of subscribers would end up if everyone was trying to use 100+Mbps during peak hours, ignoring potential congestion at the DSLAM or node/CMTS level.

People keep saying that equipment gets cheaper but what they almost always neglect to mention is that density in routed Tbps/rack only doubles every ~5 years, which is much too slow to keep up with peak demand which increases by 50-60%/year which is about 10X over the same period. Since technological progress alone is insufficient to meet demand (about 5X too slow), how many identical switches or routers do you think you need to put together to double the capacity of a single one of the same while maintaining non-blocking performance? You need six of 'em... 2X the capacity = 6X the rack space using same-model equipment. The cost scaling is really horrible.

Not every ISP can afford (or is willing) to use the latest and biggest gear available so don't be surprised if there are more stories about smaller ISPs hitting their equipment's practical brick walls in the future or attempting to extract money from their transit providers to cover some upgrade costs.

tanzam75

join:2012-07-19

3 edits
reply to morbo

Yes, it's unfair that grandma doesn't get to pay $5 for cable Internet, while the bandwidth hog pays $1000. But surely it's fairer to charge grandma $50 and the bandwidth hog $100, rather than charging everyone $60.

The problem is that bits are not like molecules -- they're free to transport, until you have to do a node split. So do you price them like they're free, with a fixed infrastructure charge? Or do you price them like they're expensive, with a metered charge? Why not a combination of both, to account for their hybrid nature?

To point to the lack of a $5 grandma rate as a reason not to charge overage fees is illogical. You think it's unfair not to charge pure usage-based pricing, so you instead advocate a flat rate in which it's even less fair?

I don't understand this "gotcha" mentality when it comes to the guy's comments on congestion. The reason that there is no congestion today is precisely because the cable companies have spent money in the past -- on DOCSIS 3, on logical node splits, on physical node splits. Plus, the fairness argument isn't exactly new.


34764170

join:2007-09-06
Etobicoke, ON
reply to InvalidError

said by InvalidError:

Not every ISP can afford (or is willing) to use the latest and biggest gear available so don't be surprised if there are more stories about smaller ISPs hitting their equipment's practical brick walls in the future or attempting to extract money from their transit providers to cover some upgrade costs.

Then those ISPs can expect to go out of business. and extract money from their transit providers? Please stop making me laugh.

34764170

join:2007-09-06
Etobicoke, ON
reply to OSUGoose

said by OSUGoose:

Compare DSL and Cable, Where the DSL connection provided frequently has issues and throttles even youtube, yet the cable connection doesn't and provides a predictable consistent connection & speed regardless of content or time of day. The cost to provide the cable network will drop as there will be more rate payers to subsidize the costs for the installed network, while the DSL connection will degrade worse as there are less and less users to foot the costs. Now swap roles, and the argument remains.

What you said is far from true everywhere. There are plenty of places where the opposite is true and *DSL networks run fine without congestion and cable nodes are congested to crap. It really depends on the company and how the network is managed and if the components are upgraded appropriately.

InvalidError

join:2008-02-03
kudos:5
reply to 34764170

said by 34764170:

Then those ISPs can expect to go out of business. and extract money from their transit providers? Please stop making me laugh.

Most incumbent ISPs have pretty close to an effective monopoly over their respective service areas so going out of business due to not upgrading is unlikely.

As for ISPs wanting to extract revenue from their transit providers, Comcast has tried it with Peer1 and Free is trying it on Google so there certainly are some who are tempted to test those waters. While the scheme may be upsetting for CDNs and transit providers, it actually has a handful of advantages if the ISPs' savings from it are passed down to their end-users, one of them being that it takes most capacity-related costs out of end-users' monthly fees... pay directly for physical access, pay indirectly for your actual usage.