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Sonic CEO Discusses The "Five Levels of ISP Evil"
From Clickstream Sales to Rolling Over to the NSA & MPAA
by Karl Bode 12:46PM Monday Aug 15 2011
One of this country's larger independent ISPs is Sonic.net, which not only survived the country's CLECpocalypse -- but is one of the few independent ISPs now slowly building out their own bonded ADSL2+ and FTTH network. Sonic CEO Dane Jasper recently came down in opposition to new data retention laws, arguing they'd make life costlier for ISPs while reducing user security. In an interesting post over at his blog, Jasper talks about the recent Paxfire search hijacking, stating he's "not sure if everyone understands the levels of sneakiness that service providers can engage in." Jasper highlights what he calls the "five levels of ISP evil," including improper NXDOMAIN handling or DNS redirection, clickstream data sales, ad swapping, affiliate program pumping, or rolling over to intelligence gathering organizations (often with a complete disregard for privacy or the law).

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rradina

join:2000-08-08
Chesterfield, MO

Disk is cheap and the data is immutable...

Can we define "costlier"? Even if it's exceedingly large volumes of data, they can use tiered storage, compress the hell out of it and move it off-line onto something cheap. Off-line also adds a security barrier. Furthermore, if they separate url logs, DHCP logs and customer data (i.e. mac address), that's a second security barrier. Access logs are anonymous until cross-referenced with the DHCP logs and customer data. Finally, off-line retention can be encrypted which adds another security barrier.

Of course if the customer is at risk because the ISP is tempted... If you cannot trust the palace guards perhaps it's time to flee.
iansltx

join:2007-02-19
Austin, TX
kudos:2
Reviews:
·Time Warner Cable
·Verizon Online DSL
·Comcast

Re: Disk is cheap and the data is immutable...

Let's say you're streaming data at 5 Gbps (probably the size of Sonic.net's network) on average. That's 1.62 PB of data per month. To cope with the speed at which data is being collected, they'll need to have a rack of Backblaze Pods (cheapest storage system out there) running, at a cost of a few hundred thousand dollars.

Of course, URL logs may be a bit smaller. Maybe one Pod (135TB) gets used per month (remember, lots of AJAX stuff going on). That's still thousands of dollars per month that could be used to add a few more fiber customers, or to add another gigabit or two of network transit...
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

I didn't realize the government is asking them to store ALL the data. I thought it was just the access logs.
iansltx

join:2007-02-19
Austin, TX
kudos:2

Re: Disk is cheap and the data is immutable...

I'm unsure myself. Maybe someone can come on here and clarify
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

I read the bill. It's just DHCP access logs.

DataRiker
Premium
join:2002-05-19
00000

1 edit
said by rradina:

Can we define "costlier"? Even if it's exceedingly large volumes of data, they can use tiered storage, compress the hell out of it and move it off-line onto something cheap. Off-line also adds a security barrier. Furthermore, if they separate url logs, DHCP logs and customer data (i.e. mac address), that's a second security barrier. Access logs are anonymous until cross-referenced with the DHCP logs and customer data. Finally, off-line retention can be encrypted which adds another security barrier.

Of course if the customer is at risk because the ISP is tempted... If you cannot trust the palace guards perhaps it's time to flee.

Costlier means it would cost more money.

And more than likely make us all a lot less safe.
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

OK...I'll reword it just for you...

How much does this raise my monthly bill if they have to comlpy?

DataRiker
Premium
join:2002-05-19
00000

Re: Disk is cheap and the data is immutable...

Whatever your ISP decides it costs to hire people to do this, buy the equipment, and establish new protocols for compliance and various legal fee's for the drove of Patriot act requests.

Take that cost and add at least 20%
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

Regulations are nothing new. I work for a grocery retailer and years ago we were forced to implement country of origin labeling (COOL) in response to the mad cow scare. This required changing package labels and retaining invoice/shipment/PO records in case the worst happened. We're also a wholesaler and our customers looked to us to keep their invoices in electronic format, which we did. Of course now COOL turns out to be a pretty good idea since purposely tainted food supplies are possible with the uptick in terrorism. Did it cost money to implement? Absolutely. Did it run anyone out of business? Not to my knowledge. Given the seasonal volatility of various supply costs and the length of time we had to implement compliance, I doubt consumers noticed whatever tiny price increase that might have been passed on to them.

It's easy to say something costs more but that's like taking a poll and making a statement about how America thinks. Without the supporting methods of data collection (how many samples, what confidence interval, how random is the sample), the results have zero context. In fact I'm sure people have repeated polls until they get the answer they want to serve dubious purposes.

In an era where minorities complain about skewed results on standardized tests because the tests might have context that cannot be universally understood, how can we be so arrogant as to believe those polled even understand the issues or the question?

I'm sure retention will cost more but if we cannot put context to that cost, there's simply not enough information to form an opinion and take sides. Anyone who does is ignorantly coming to a conclusion that they cannot support.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Disk is cheap and the data is immutable...

In whole I would agree with you, but regardless it shouldnt be done.

To implement the scope of this information gathering in hopes of catching maybe 1000 nonviolent criminals and 2-3 violent ones a year is ridiculous at any cost.

The only logs that should be required are DHCP to MAC logs so they can see who had an IP at any one time. And the only time that information should ever be used is when there are crimes against a person that has involved physical or mental harm.
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

I thought that was all that was required. As I said in another reply, I didn't know they required ALL the data to be kept. That's ridiculous and it seems like an unreasonable request that isn't even feasible. Are we sure they want ISPs to keep ALL the data and not just the logs for 18 months?

tubbynet
reminds me of the danse russe
Premium,MVM
join:2008-01-16
Chandler, AZ
kudos:1
said by rradina:

Can we define "costlier"? Even if it's exceedingly large volumes of data, they can use tiered storage, compress the hell out of it and move it off-line onto something cheap.

its not about the size and tier of the storage -- its just as much about the performance of said architecture.
i work in the network architecture/design field and routinely have to engage technical architects around performance requirements for the virtualized compute environments and storage arrays. there are many "gotchas" around each of the major storage vendors and even down to the drives and protocols/access methods in use. it comes down to having a storage architect designing the entire array and infrastructure to handle that.

plus -- you have to start looking at the infrastructure to even capture or log this data. inline taps on the network are great -- but are you simply going to look at them at the egress point(s) on the network? can you find a device or cluster of devices to archive and log this data -- then dump it onto the storage network without losing any information? if you can't -- how do you spread this load out so that it is workable? can you fit it within your existing architecture. what about capex for the gear and redesign work? what about opex for the spin-up, training, and management of these new components in the network?

its not like a home network where you just throw another drive in the nas and go. there is a lot of high-performance infrastructure design needs that need to be met to fit this into a network. there isn't a 'one size fits all' solution -- nor is it something that is easy to overcome. dane has it right -- this is *costly*.

q.
--
"...if I in my north room dance naked, grotesquely before my mirror waving my shirt round my head and singing softly to myself..."
rradina

join:2000-08-08
Chesterfield, MO

Re: Disk is cheap and the data is immutable...

An excerpt from the bill:

(a) IN GENERAL. Section 2703 of title 18, United States Code, is amended by adding at the end the following:
(h) RETENTION OF CERTAIN RECORDS.—A provider of an electronic communication service or remote computing service shall retain for a period of at least 18 months the temporarily assigned network addresses the service assigns to each account, unless that address is transmitted by radio communication (as defined in section 3 of the Communications Act of 1934).

They don't have to capture all the data and it doesn't appear to apply to wireless providers (assuming mobile, not fixed). Mobile wireless would be a nightmare since the IP logs are probably a mess with folks moving from place to place.

Are you honestly going to tell me they cannot retain DHCP logs?!?!?! According to this, they don't even have to keep URL access logs. In my opinion, the ISPs are whining about nothing. And, as usual, information is power and the uninformed crowd has taken sides and is crowing about NOTHING!

What's ridiculous is that I posed a question, "define costlier". I get tripe responses like "it would cost more" or folks going off the deep end talking about the architectural complexities and costs of storing hundreds of terabytes of data per month.

Now I'll be the first to apologize if I missed something in the bill that forces ISPs to keep the DATA and the logs. Keeping the DATA is unreasonable and if true, everyone who said it was crazy is correct. However, I read the ENTIRE bill and the only part that I can find that applies to ISPs seems like a VERY REASONABLE request from our government. ISPs will incur practically NO additional cost to implement regardless of size.

45612019

join:2004-02-05
New York, NY

He forgot a level.

Level 0 - "Bandwidth caps"

There is nothing more evil an ISP can do than this. Censorship can always be bypassed, search hijacking can be ignored, and ISPs handing data over to law enforcement can always be gotten around by encrypting all your activities.

But the evil of bandwidth caps cannot be ignored. There is no solution for this greed and usage limits are the biggest threat to the Internet today.
iansltx

join:2007-02-19
Austin, TX
kudos:2

Re: He forgot a level.

Dane has talked about bandwidth caps before. My guess is that he didn't bring them up again because he already covered the issue, and because sonic.net doesn't have caps.
rradina

join:2000-08-08
Chesterfield, MO
I don't know if I would go so far as to call it a threat. While I agree that caps aren't consumer friendly or pro Internet (at least they way they are currently employed), they really just impede progress. For instance, if I come up with the next social networking craze but it eats bandwidth, even though it's free to use it would suffer because folks would meter their activity to avoid the network nanny charges.

However, if we were to really meter bandwidth (no minimum, no maximum, just pay for what you use) and there was a direct relationship between the true cost to deliver that data (plus a decent profit for the carrier), I think all of our costs would go down.

What we have today is kind of like billing for telephone calls in hour increments. It's just crazy.

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Re: He forgot a level.

said by rradina:

I don't know if I would go so far as to call it a threat. While I agree that caps aren't consumer friendly or pro Internet (at least they way they are currently employed), they really just impede progress. For instance, if I come up with the next social networking craze but it eats bandwidth, even though it's free to use it would suffer because folks would meter their activity to avoid the network nanny charges.

However, if we were to really meter bandwidth (no minimum, no maximum, just pay for what you use) and there was a direct relationship between the true cost to deliver that data (plus a decent profit for the carrier), I think all of our costs would go down.

What we have today is kind of like billing for telephone calls in hour increments. It's just crazy.

It would be impossible to have real metered billing and for an ISP to be profitable.
ISPs would not be able to cover all the fixed costs of the physical line and equipment to your house. Those things are not cheaper because you use your connection less.
Your internet connection is almost 100% fixed costs, so it makes no sense to have metered billing.
Using your connection more or less has almost no effect on the costs of the network.

What works is what we have done from 1995 to 2011. Internet should be unlimited and you pay a fixed price for your tier.
BlueC

join:2009-11-26
Minneapolis, MN

Re: He forgot a level.

While I agree, I think it's still appropriate for residential ISPs to have the contract leverage to (passively) enforce "residential-use only".

I agree that UBB is simply for profit, as it doesn't take into consideration of peak/off-peak usage.

I would disagree that almost 100% are fixed costs. Outside of ILECs, most CLECs and other independent ISPs have significant recurring costs to supply capacity to their network (both WAN and MAN).
Skippy25

join:2000-09-13
Hazelwood, MO

1 recommendation

Re: He forgot a level.

You can disagree if you want, but a network whether it is running at 0% capacity or 90% capacity has little cost difference. Virtually everything in the network is purchased as a fixed cost.

The ONLY time it is not fixed is when you are dealing with a small provider that does not have good peering agreements and then you are talking about fractions of a penny for large amounts of data.

rchandra
Stargate Universe fan
Premium
join:2000-11-09
14225-2105
#include "why ISPs should not be utilities"

Let's just say for a moment I were on board with running an I[SA]P like a utility (with UBB). There are any number of models which could be applied, as there are a wide variety of ways utilities bill; it's not just limited to flat rate and pay-per-(prefix)byte-moved. For example, National Fuel, my gas provider, bills some fixed rate every month, which includes some (small) volume of gas. Then there is a charge per (volume, therm, something), which is further broken down into supply, delivery, etc., then taxes and such are added on. So to make an analogy to an IAP, there could be some flat rate charged per month which goes towards equipment and equipment maintenance, optionally including your first (prefix)bytes transferred, and then a hopefully reasonable charge per (prefix)bytes transferred.

I further really can't be on board with it though because it's my understanding there aren't companies which charge per-byte-moved anymore, just charge for some CIR. I also am very much opposed to this peak/off-peak notion, simply because I have yet to be shown how it costs the IAP anything more to move bytes during some peak period. Again, if this were the upstream policy, I could relate, and change my thinking on that. But as it is, the costs are relatively stable over the course of a day or week. The only minor variation on that which I can think of is local electrical providers and their darned peak/off-peak billing, and the fact that a non-idle processor (such as in a router) will draw more electric power than an idle one. But I doubt the difference is a large enough percentage of operating costs to even matter.

Again, I plead possible ignorance, and I'm thoroughly willing to be told by a credible source that my understandings are wrong.
--
English is a difficult enough language to interpret correctly when its rules are followed, let alone when a writer chooses not to follow those rules.

Jeopardy! replies and randomcaps REALLY suck!

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Re: He forgot a level.

said by rchandra:

#include "why ISPs should not be utilities"

Let's just say for a moment I were on board with running an I[SA]P like a utility (with UBB). There are any number of models which could be applied, as there are a wide variety of ways utilities bill; it's not just limited to flat rate and pay-per-(prefix)byte-moved. For example, National Fuel, my gas provider, bills some fixed rate every month, which includes some (small) volume of gas. Then there is a charge per (volume, therm, something), which is further broken down into supply, delivery, etc., then taxes and such are added on. So to make an analogy to an IAP, there could be some flat rate charged per month which goes towards equipment and equipment maintenance, optionally including your first (prefix)bytes transferred, and then a hopefully reasonable charge per (prefix)bytes transferred.

I further really can't be on board with it though because it's my understanding there aren't companies which charge per-byte-moved anymore, just charge for some CIR. I also am very much opposed to this peak/off-peak notion, simply because I have yet to be shown how it costs the IAP anything more to move bytes during some peak period. Again, if this were the upstream policy, I could relate, and change my thinking on that. But as it is, the costs are relatively stable over the course of a day or week. The only minor variation on that which I can think of is local electrical providers and their darned peak/off-peak billing, and the fact that a non-idle processor (such as in a router) will draw more electric power than an idle one. But I doubt the difference is a large enough percentage of operating costs to even matter.

Again, I plead possible ignorance, and I'm thoroughly willing to be told by a credible source that my understandings are wrong.

I would say you keep thinking about it wrong by comparing unlike things.
Natural gas can be stored and used later. Nothing is lost when you are not using it. They charge you the fixed amount to pay their pipeline costs, everyone must pay this (even when they do not use gas) or their fixed costs are not covered for the money they spent on the 24/7 connection.
Then they charge you usage for what gas you use as it COST them money for the gas separately than their pipelines.

Bandwidth cannot be stored, it is use it or lose it. Most ISPs are not paying for bandwidth, they have paring agreements.
Your internet connection is basically just made of fixed costs and does not have usage costs.

So with internet you would be billed a fixed amount regardless of your usage and the company will be very profitable.

rchandra
Stargate Universe fan
Premium
join:2000-11-09
14225-2105

Re: He forgot a level.

One, you've confirmed my suspicions about IAP costs.

Two, I never said that was an exact analogy; it was just to make the point that many, many billing models have been devised. I apologize of you inferred gas service was anything like providing Internet service. I could have equally stated any one of a number of power company billing scenarios (which is arguably more apt since likewise the ability to store electricity on a large scale is rather limited) ranging from peak/off-peak, tiered KWh, and so on; or telephony which likewise on some plans (not mine) has a fixed per month charge, then adds either per call or per minute charges. The analogy (in terminology only, mind you) of the gas company having a base charge per month for installing and maintaining the pipeline is a good one in the sense of installing and maintaining the Internet pipeline.

Three, I'm not agreeing it's just at all. In fact, unless as stated my assumptions are proven wrong, I'm totally against UBB. See the linked BBR post. My main objection is lack of control.

I'm also against it because UBB doesn't magically come into existence. I oppose it, based on quite a potential for my bill to go up because the IAP needs to install and maintain yet another gadget (for billing purposes), and in general, it just complicates the whole mess.
--
English is a difficult enough language to interpret correctly when its rules are followed, let alone when a writer chooses not to follow those rules.

Jeopardy! replies and randomcaps REALLY suck!
rradina

join:2000-08-08
Chesterfield, MO
So if I apply your reasoning to a brick-and-mortar retail store chain, Sam's and CostCo are probably the only retailers capable of making a profit. The rest are just cooking their books and doomed to bankruptcy.

If I apply it to car manufacturers, they too are cooking their books because I don't have to belong to a car club that pays for their billion dollar manufacturing plants all so they can build and sell me a car.

I just don't understand that line of thought.

What you need to understand is I don't like metered billing either and I agree with you that we should be able to have unlimited bandwidth for some set, monthly fee. However, that doesn't mean that a truly metered service is IMPOSSIBLE. The cost per byte and average monthly usage needs to be set a rate that pays for all the property, plant and equipment depreciation and maintenance. They could even offer a deal so that the cost per byte drops as you reach certain usage plateaus.

We don't have metered services today. We have some bizarre money grab from monopolistic/duopolistic corporations whose investors are expecting get-rich-quick schemes. They aren't satisfied with a 5% dividend payout. They want to double their money every three years and any company that doesn't will be devalued and dumped by the market.

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Re: He forgot a level.

said by rradina:

So if I apply your reasoning to a brick-and-mortar retail store chain, Sam's and CostCo are probably the only retailers capable of making a profit. The rest are just cooking their books and doomed to bankruptcy.

If I apply it to car manufacturers, they too are cooking their books because I don't have to belong to a car club that pays for their billion dollar manufacturing plants all so they can build and sell me a car.

I just don't understand that line of thought.

What you need to understand is I don't like metered billing either and I agree with you that we should be able to have unlimited bandwidth for some set, monthly fee. However, that doesn't mean that a truly metered service is IMPOSSIBLE. The cost per byte and average monthly usage needs to be set a rate that pays for all the property, plant and equipment depreciation and maintenance. They could even offer a deal so that the cost per byte drops as you reach certain usage plateaus.

We don't have metered services today. We have some bizarre money grab from monopolistic/duopolistic corporations whose investors are expecting get-rich-quick schemes. They aren't satisfied with a 5% dividend payout. They want to double their money every three years and any company that doesn't will be devalued and dumped by the market.

Sorry, but you can't compare the costs of how an ISP is to things like retail, manufacturing, etc.
Of course that does not make sense if you want to try to compare unlike things.

If you want to do 100% metered billing and you divide the costs by all the available bandwidth to the byte, then if the network is not maxed out 24/7 then you will not make enough money. If you base your byte rate on 4/7 then those that use their connections more than 4 hours a day unfairly pay more above the cost of the network than others. The easiest thing to do is have no metered billing and just make sure you charge enough to cover the costs of that line so you know everything is paid for.
rradina

join:2000-08-08
Chesterfield, MO

Re: He forgot a level.

I don't buy it. By your own logic, your scheme will have the bandwidth hogs pay less than those who just do some light surfing and e-mail. That's why the ISP's claim we all should welcome metered billing.

You can fix that by dropping the price once you go beyond four hours. Don't the electric, gas and water companies do this? Aren't their business models the same? You don't get any free electricity, gas or water. While electricity and gas companies expenses rise with increased usage because there is a cost to create/acquire the raw product they deliver, what about the water company? Where I live they draw water from the Missouri and Mississippi rivers. As far as I know, mother nature doesn't charge a fee and their sanitation costs should be fixed, sans adding chlorine and fluoride, since they build to a certain capacity just like ISPs.

Try again to convince me why an ISP is so special that it cannot be run like any other business.

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Re: He forgot a level.

said by rradina:

I don't buy it. By your own logic, your scheme will have the bandwidth hogs pay less than those who just do some light surfing and e-mail. That's why the ISP's claim we all should welcome metered billing.

You can fix that by dropping the price once you go beyond four hours. Don't the electric, gas and water companies do this? Aren't their business models the same? You don't get any free electricity, gas or water. While electricity and gas companies expenses rise with increased usage because there is a cost to create/acquire the raw product they deliver, what about the water company? Where I live they draw water from the Missouri and Mississippi rivers. As far as I know, mother nature doesn't charge a fee and their sanitation costs should be fixed, sans adding chlorine and fluoride, since they build to a certain capacity just like ISPs.

Try again to convince me why an ISP is so special that it cannot be run like any other business.

Why do you keep trying to compare unlike things?
The costs for eletricity, water, gas are based off a tangible product that can be stored, bought and sold.
For an ISP you are just paying for the connection and equipment. That connection and equipment costs the same if you use it a lot or a little.
You cannot store bandwidth and the costs of the network are not connected to usage like with those other utilities.

I dont have a scheme, but in reality there is no such thing as a hog, you can only use what your ISP gives you.
In reality your connection costs almost 100% the same if you use it very little or if you use it 24/7.

For an ISP actually who is more profitable is way more based on who calls customer service. The person maxing out their connection 24/7 and who never calls tech support is way more profitable than the customer that only uses email and calls support for every stupid thing.
rradina

join:2000-08-08
Chesterfield, MO

Re: He forgot a level.

Why do you keep drawing distinctions based on whether or not the product is physical or some kind of service?

Does a water company have usage costs? Don't they build to a capacity like ISPs and whether or not they deliver 100 million gallons or 100 billion gallons, the raw material they use is free? Do their sanitation costs really rise that much when they clean a lot more or are they relatively fixed sans minor linear relationships in power consumption and chemical treatment costs?

Expenses are expenses and however a business decides to cover those expenses, if they make money, why isn't that a valid model? Why wouldn't I want those that use a lot to pay a lot and if I use a little, to pay a little? I've explained many times that this can be mitigated by progressively charging less as usage rises but you never seem to take note.

True UBB is perfectly legitimate scheme and the maintenance costs for a physical network running by 100 homes is the same whether or not all of them subscribe or 50 of them subscribe. This is a similar risk to having them all subscribe but paying nothing unless they actually use some bytes.

Retail stores live and die by volume. As long as they have sufficient volume to cover their fixed costs, the rest is gravy. Why can't an ISP operate this same way and have the risk that in some months, usage might be too light to pay the bills and in other months it's like Christmas?

There's a reason the day after Thanksgiving is called Black Friday. It's when retailers finally make a profit. Many lose money the rest of the year. Why do we want to view an ISPs business model as requiring an exception to these risks?

Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL

Re: He forgot a level.

said by rradina:

Why do you keep drawing distinctions based on whether or not the product is physical or some kind of service?

Does a water company have usage costs? Don't they build to a capacity like ISPs and whether or not they deliver 100 million gallons or 100 billion gallons, the raw material they use is free? Do their sanitation costs really rise that much when they clean a lot more or are they relatively fixed sans minor linear relationships in power consumption and chemical treatment costs?

I hope you realize that in some areas they do not charge for water by the gallon, because as you seem to understand it does not make sense when they have plenty of water.
They charge everyone a water fee on their property taxes so you have unmetered water and all the fixed costs are paid for.
Water can be billed much better by the fixed costs than by usage unless your someone that barely uses water then you would rather have a by the gallon so you do not have to actually pay your fair share of the water system.

A retail store could never operate on a fixed fee where you can just take whatever you want as the costs are based on what you buy or use.
The costs for an ISP is not based on what you use thus the UBB does not work.

What you speak of is not a rule and does not make sense for an ISP. Why would you base your billing on something that has virtually nothing to do with your costs???
UBB is not legitimate if you based the usage prices off of something that has nothing to do with the actual costs.
For UBB to work you need to base it on usage that is actually directly tied to the costs.
rradina

join:2000-08-08
Chesterfield, MO

Re: He forgot a level.

I'd change the word "work" to the phrase "make sense". That is, for UBB to make sense to the rest of us, it should be based on something tied to the costs. That doesn't stop them from billing in a manner that doesn't make sense and UBB does work even when usage isn't truly tied to incremental costs.

In my area, I get charged based on how much water I use and then the sewer company bases their monthly bill by looking at the quarterly inbound water consumption. The idea is that's the amount you send into the sanitary sewer system since we don't water lawns, gardens, fill swimming pools or wash cars in the winter quarter.

Whether or not billing like this makes sense, they still do it even though both systems are built to a certain capacity and have few incremental costs.

You keep saying UBB doesn't work for ISPs but it does. Whether or not it makes sense or is a raw deal for who receive the bill is entirely different question.

Regarding the retail example, at one point I believe you claimed that UBB would cause ISPs to never make money. I wholeheartedly disagree. As I said, every day a retailer takes the risk that they won't cover their fixed caused with their variable sales. Why is it different for an ISP just because they have limited or no incremental costs? I agree that a retailer can never offer all you want for a flat fee. (They could but the flat fee would be so high, there would be no buyers.) It just doesn't work for them because they have mostly incremental costs. Just because an ISP doesn't have significant incremental costs, why do you think that invalidates a UBB model?

The only thing that invalidates a UBB model is if it's not feasible to measure the usage by which you bill. For instance, charging someone for every hour they wear a pair of sunglasses. It could be done but it's impossible to determine such a metric short of hiring someone to watch you 24 hours a day. Obviously that kills UBB for the sunglasses industry.

I suppose there is one other thing that invalidates a UBB model. If there's competition and it offers a better deal with their flat-rate plans. This is what torpedoed AT&T when it divested the baby bells and was left with the LD business. Competition stepped in and folks realized they'd been getting screwed for years and AT&T was a rotting corpse until it's child yanked it out of the nursing home and asked it to come live with it.
talz13

join:2006-03-15
Avon, OH
said by rradina:

So if I apply your reasoning to a brick-and-mortar retail store chain, Sam's and CostCo are probably the only retailers capable of making a profit. The rest are just cooking their books and doomed to bankruptcy.

If I apply it to car manufacturers, they too are cooking their books because I don't have to belong to a car club that pays for their billion dollar manufacturing plants all so they can build and sell me a car.

I just don't understand that line of thought.

What you need to understand is I don't like metered billing either and I agree with you that we should be able to have unlimited bandwidth for some set, monthly fee. However, that doesn't mean that a truly metered service is IMPOSSIBLE. The cost per byte and average monthly usage needs to be set a rate that pays for all the property, plant and equipment depreciation and maintenance. They could even offer a deal so that the cost per byte drops as you reach certain usage plateaus.

We don't have metered services today. We have some bizarre money grab from monopolistic/duopolistic corporations whose investors are expecting get-rich-quick schemes. They aren't satisfied with a 5% dividend payout. They want to double their money every three years and any company that doesn't will be devalued and dumped by the market.

Car manufacturers: Once you buy a car, it doesn't cost them anything for that car anymore.

ISPs: Setting a cost per byte is not possible because a byte of traffic doesn't COST them anything! Running their entire nationwide network to transfer 1 byte per month would cost the same as transferring 1PB per month. Peak usage is the issue, since the peak determines how much bandwidth they require. If the usage was spread out, the same amount of data could be transferred at a constant rate, and a smaller pipe could be used. But since the traffic all needs to go through NOW from the hours of 5pm-midnight, they have to use a pipe big enough for that.
rradina

join:2000-08-08
Chesterfield, MO

Re: He forgot a level.

But that car won't last forever just like an ISPs network won't last forever. Eventually the customer will want another car and just like the ISPs network, the car manufacturers property, plant, equipment and deals with suppliers will all have to be maintained so they can make you a new car. The feedback loop is just in a time warp in that it's much, much slower.

It doesn't matter if their per unit of product costs are zero. They still have to deliver it and they can measure what you use and develop average usage and divide their network maintenance costs + profit by those average usages and establish what they need to charge per metered unit.

I'm just not convinced they cannot take their total bytes served (for residential), divide that into their expenses + some profit margin and derive what each byte costs. Now all you have to do is put a meter on everyone and multiply by the per byte cost.

If that's unfair, you develop a tiered approach where the first 10GB is at the top rate and it drops every 10GB after that until reaching some minimum no matter how much more you use. You could look at this as the opposite of our progressive tax system.

For the life of me I just don't understand why this won't work. Perhaps it's not fair or optimal but why do we think these businesses are so damn special because there are no variable costs per unit served?

Is a rental company the same? They charge by the hour but their variable costs are also zero. Why do they meter costs? Why not just let you keep the damn thing as long as you want for one low price? Granted, there are some temporal problems with that analogy because it cannot be in two places at once but networks aren't that dissimilar. Only their speed provides the illusion that everyone works at the same time.

What about water companies? Why do they meter their product? It seems that they don't have variable costs or minimal variable costs.

In fact the sewer district in my area used to charge flat fees based on the size of your house and acreage. They switched to basing your waste bill off of your inbound water usage in the winter quarter.

•••

Gbcue
Premium
join:2001-09-30
Santa Rosa, CA
kudos:8

Hurry Up With The Fiber Build

I want my 1gbps line already!

I'll even move (in town).
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My Blog 2.2

firephoto
We the people
Premium
join:2003-03-18
Brewster, WA

Hardware vendors lobbying too most likely

I'm sure the hardware vendors are right in line with the select copyright holders in lobbying for this along with the mentioned people scraping content and personal habits for money.
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Say no to JAMS!

DataRiker
Premium
join:2002-05-19
00000

Re: Hardware vendors lobbying too most likely

You know it !

ctceo
Premium
join:2001-04-26
South Bend, IN

Eratta

There's really only 1 level of ISP evil and that is charging for access.

The rest is only a problem because the choices are made for them and by proxy their subscribers are coerced to perpetuate the cycle.