Some Metered Broadband Myths That Need Clearing Up Zeugma systems CEO latest to repeat annoying broadband falsehoods... Andrew Harries, CEO of network hardware maker Zeugma, not too surprisingly has penned a missive in the Financial Times suggesting he's had a change of heart, and that he now likes the idea of metered billing. Harries, who at least admits he has a vested interest in selling hardware that tracks and meters usage, unfortunately goes on to fill his piece with a laundry list of pro-metered billing talking points that ignore countless broadband industry realities. To start, like an author for Slate did a few weeks ago, Harries makes the mistake of confusing idealized pure per-byte billing with the metered billing models most carriers hope to implement: namely plans that offer low caps and high overages, don't really offer consumers value, and are really simply designed to have everybody paying more money, not just heavy users. He also, like most metered billing proponents do, argues there's a bandwidth crunch coming that makes metered billing absolutely necessary lest carriers run out of money: From where does the capital come that is needed to expand broadband capacity further? Even the academics that populate 'public interest' organisations lobbying for greater net regulation recognise, at least abstractly, that broadband operators need to earn a profit if they are to continue to invest in infrastructure. Given these circumstances, don't usage-based billing frameworks make sense? Actually, not really. Once again, if Harries bothered to look at ISP tax records, he'd see that carriers are making remarkable profits off of the flat-rate broadband billing model -- not even mentioning the money made from added services, a litany of fees, and advertisements. The argument that modern ISPs don't "earn a profit" is intentionally obnoxious. Meanwhile, if he looked at substantive network data, he'd see that Internet capacity demand (at least for wired networks) can be met with only modest capacity upgrades. From where does the capital come that is needed to expand broadband capacity further? -Zuegma CEO Andrew Harries, pretending ISPs don't make enough money to upgrade their networks. |
According to Harries, consumers who are opposed to metered billing are the intellectual equivalent of grumpy electricity customers who don't want to pay their bills. Unless you warm up to the idea of metered billing, argues Harries, you'll simply have to be "satisfied with underinvestment in capacity," and clogged tubes. Again, like all metered billing proponents do, he's ignoring the healthy financial reality of most carriers, overstating the looming bandwidth crisis, and insulting consumer intelligence with a broad wave of his hand. Many consumers quite possibly would enjoy a pure, pre-byte billing model but again, that's not what carriers are proposing. True equanimity will never truly materialize under the per-byte pricing models proposed by carriers, because the vast majority of their customers would wind up paying virtually nothing for bandwidth. There's millions of iPhone customers who do little more than check e-mail. What happens to AT&T profits if they suddenly started paying only for the bandwidth they used, instead of the mandatory flat $30 data fee? The existing flat-rate price-by-speed model isn't perfect, but it provides healthy, scalable revenue for carriers (more than enough to handle capacity growth) and is simple to understand for consumers. Again, where's the problem? There is no problem for consumers. They're perfectly happy under the existing model. And the problem for carriers isn't one of capacity, necessity, or fairness. Carriers simply want low caps and high overages so they can make additional money off of Internet video and next-gen content -- and protect their TV revenues from the threat Internet video poses. Investors want metered billing because it's essentially a rate hike. Hardware vendors want metered billing because they can sell more hardware. Right Mister Harries? That's obviously the job of ISP execs, hardware vendors and investors. But their arguments would be immeasurably more honest if they stopped pretending this was an issue of fairness and dire necessity, and simply admitted there's one reason for metered billing: to help already profitable companies make additional money. Dressing up greed as altruism or scientific necessity simply adds consumer insult to injury.
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 EdrickI aspire to tell the story of a lifetimePremium join:2004-09-11 Woburn, MA | Going Green I still dont get it well no I do get it it's all about the money. However looking into futuristic venues shouldn't we be investing in bigger networks, more bandwidth, faster technology to help encourage creativity and development. It's not like we're creating "environmentally" friendly things here by limiting the amount of bandwidth we can use. Going green with things that harm our environment are good because we're not necessarily sacrificing future development we're actually encouraging it by new science and technology. However as metered bandwidth I see as "going green" by limiting what we can do with our connection is just a way to make money and it limits our future society instead of creating a broadband culture. | |
|  | | Duh. Said by Andrew Harries: "So, why is it that broadband, unlike most other services we purchase, costs the same regardless of how much we consume?"
Because it costs no more to deliver 1 million bytes than it does to deliver 1 byte. | |
|  |  | | Re: Duh. "Because it costs no more to deliver 1 million bytes than it does to deliver 1 byte"
Like water or electricity, right? -- "The Secret is in the RITHMATIC" Henry Hudson | |
|  |  |  1 edit | Re: Duh. Yeah, except with water and electricity you're actually paying for the water and the electricity itself (and not so much for the "delivery" of each). The ISPs don't actually generate the bytes/packets you use (unless you're actually visiting an ISP's site--a rarity); they only deliver them. Even the actual delivery costs involved with water and electricity are negligible. Bandwidth is not "generated" either--no matter how much you use, there's always more; and more bandwidth doesn't cost the ISP any more to "deliver". Metering has no validity for broadband in any way, shape, or form. Anyway, "metering" (UBB) for ISPs doesn't mean simply charging x dollars for y bytes; it means charging a base amount--say, $50/mo--for everyone and then charging even more if you go over some artificial limit... total BS. | |
|  |  |  |  rradina join:2000-08-08 Chesterfield, MO | Re: Duh. I agree with some of what you say but until there's virtually unlimited bandwidth to every home that's far in excess of what they could possibly use or want, ISPs are faced with overcommitting their infrastructure. They have to come up with some mechanism to incent conservation. | |
|  |  |  |  |  | | Re: Duh. ISPs build and maintain and upgrade a network with the money we pay them. They sell us back pieces of that network as speed tiers. At any given point in time, every user has the same opportunity to use the network... and the same right. If an ISP "oversells" tiers such that users can only get one-half or one-quarter or one-tenth of the "promised" (and I use the term loosely) maximum speed, well, then everyone waits... it's the nature of networks. The fact that the ISPs already know they're doing this--that they're selling "20mbps per customer" for a network that can only support "10mbps per customer" doesn't justify their attitude that we should pay them again for something we've already paid for. If they truly want to penalize "heavy users", then that's what they should do... and that's all they should do. Of course, that's not really what they want to do. They just want to use that excuse to charge everyone more, again, for that which has already been paid for. It's incredibly easy to implement QoS such that "heavy users" get a lower priority for their traffic than those who aren't "heavy users"; and when there's no congestion, it doesn't even matter. I think you'd be surprised at just how often a network segment is not fully-utilized. So, what's the point of metering (UBB)? I'll say it again: to make customers pay the ISP more for something that they've already paid for. Bandwidth is both infinite and never-ending, which isn't the same as "unlimited", but remember--the limits in place are artificial limits created by the ISP as part of the marketing of their product. Here's a better idea for the ISPs: don't sell what you can't deliver. | |
|  |  |  |  |  |  rradina join:2000-08-08 Chesterfield, MO | Re: Duh. So why do we have toll roadways? Isn't that problem similar to network congestion except we cannot easily QOS people onto the shoulder and make them wait because they've already travelled the road once today? | |
|  |  |  |  |  |  |  | | Re: Duh. Tolls pay for road repairs from deterioration of the road surface due to traffic & weather--something you don't see with network hardware. The only deterioration of network hardware is caused by electricity--heat--when it's on (which it always is), and that's negligible; plus, hardware will more often than not be replaced (upgraded) before it fails. Once circuits move to all-optical, then you won't even have that issue. | |
|  |  |  |  |  |  |  |  rradina join:2000-08-08 Chesterfield, MO | Re: Duh. Disagree. It does deteriorate. Does it matter if it breaks before it's upgraded? It still costs money to keep it running.
Except in Minneapolis and San Francisco, bridges are repaired/replaced before they fail. But you still haven't answered the original question. Why do we have toll roads? And, on top of that question, I'll add another: Do folks ever restrain travel or choose a slower route to avoid tolls?
Let's not also forget the fact that a lot of gas taxes pay for road maintenance so even without toll roads, it's still a consumption based model, not fixed-fee, free-for-all regardless of how much you drive. Nevertheless, it's still interesting to ponder the question as to how toll roads surface in a model that is already consumption-based. | |
|  |  |  |  |  |  |  |  |  | | Re: Duh. I really don't care about toll roads or any analogy you might be trying to make between toll roads and networks--any such analogy will be faulty at best. I've never worked on toll roads, only used them. I have worked on networks. A network is either up (everything powered on) or down (everything powered down). The cost difference between a network that is up and fully utilized and one that is up but little utilized is negligible. Heavy traffic affects the MTBF of network devices hardly at all. Heavy use doesn't cost the ISP more, so there's no additional cost to pass on to users because of how many bytes they send and receive. | |
|  |  |  |  |  |  |  |  |  |  rradina join:2000-08-08 Chesterfield, MO | Re: Duh. I agree that there's no cost difference between an idle or fully-utilized network. There is a difference between one flat-rate customer consuming all the bandwidth and thousands of flat-rate customers consuming all the bandwidth. There's no incentive to conserve. That's all I'm trying to discuss. Similar analogies can be made with any transportation or utility. They are all consumption models because supply is finite.
Early on I conceded that this wouldn't be a problem if we had unlimited bandwidth. For practicle purposes, unlimited would be defined as all devices on the network communicating at the same time, at speed limited by the endpoints, not the network.
Unless we want to socialize the network, we need to create a competitive environment and allow the network owners to craft their own reimbursement strategies. Competition decides what wins. | |
|  |  |  |  |  |  |  |  |  |  | | Re: Duh. I don't believe there needs to be any incentive to conserve. It isn't even possible for one customer to "consume" all of the bandwidth, presuming an ISP hasn't screwed up its limiting mechanisms. Networks have traditionally been first-come, first-serve--each user has the same right to use it as every other user at any given point in time. ISPs don't sell bandwidth; they sell access. Speed tiers are a marketing gimmick. Customers would be better served if the ISPs would stop selling speed tiers altogether (but that's not why ISPs are in business so that's not going to happen). ISPs gain more and more customers, but they don't upgrade their network to support the growth. They raise the speeds for the tiers that they sell without having upgraded their network... all for marketing. Networks do get upgraded eventually, but not in sync with those things that increase usage of the network, so customers get squeezed with respect to how much "bandwidth" they can get for their use. We don't need to conserve... we just need ISPs to stop selling 50mbps connections that can only support 15mbps use based on the number of customers using it and the current state of the network.
Bad planning on the part of the ISP does not constitute any need for conservation on my part. (FYI, typical usage for me doesn't exceed 15GB/month.) I'm not going to pay an ISP more money for something that doesn't cost them more money to deliver. If they want to punish/restrict "heavy" users during times of congestion by reducing the priority of those users' traffic (except for any possible VoIP traffic), then I'm fine with that. Metering isn't about conservation; it's about increasing revenue for the ISPs (without doing anything to justify it). | |
|  |  |  |  |  |  |  |  |  |  rradina join:2000-08-08 Chesterfield, MO | Re: Duh. Don't take my statement of one customer using all of the bandwidth literally. My intent was to refer to the few that use a lot of bandwidth compared to rest who don't.
Regarding ISPs selling access vs. bandwidth, why do the classic telco carriers have all these designations that are associated with bandwidth?
»www.lageman.com/bandwidth.htm
It seems much more than selling access. It seems a speed has always been associated with "access" and the more you pay, the more speed you get. Of course I believe classic telco connections are not capped whereas these days almost all consumer high speed packages have caps. However, the price consumers pay is quite a bit cheaper than even a classic telco T1 ~(1.5mbps).
I guess the thing to do is buy stock in the ISPs. That way you can share in the profits as they "unfairly" milk consumers. | |
|  |  |  |  |  |  |  |  |  |  | | Re: Duh. Yeah, but does it matter at all how much anyone uses when there's no congestion on the network [segment]? I say "no". When ISPs started up many years ago, it was assumed that most, or even all, customers wouldn't be using their connection most of the time, and I'd say that was the case. That just isn't true anymore. Many, perhaps even most, customers use their connection a very significant amount of the time, and I just don't think ISPs have caught up with that for the most part--they still "over-sell" as much as they ever did. Speed tiers have been just as much of a marketing tool by ISPs to say "hey, we're better than they are" than any real association with bandwidth; speed tiers have been more about saving time--for the customer--than about using bandwidth. Every customer should have a reasonable expectation of reaching that best speed any time they use their connection, but that's probably not the case most evenings. However, if you're getting anywhere near 10mbps it's unlikely you'll ever notice you're not getting your paid for 20mbps no matter what you're doing, except for those relatively few that always pay attention to the speeds they're getting.
Fixed monthly fees have been about sharing the cost of having the network at all... and ISPs have made more and more profit with that fee structure--just look at the recent quarterly reports for Comcast et al. They should make a profit, but not a "killing". They already keep raising prices for something that keeps getting cheaper. I'm just not willing to pay them extra for something that I've already paid them for. That monthly fee I pay is my investment. | |
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 |  | | another excellent article You're spot on as usual. And before the shills are out, like flies to astoturf...
There's really two points that break all the telco spin apart: 1) There is no exo-flood crisis. We've been hearing about it for a year and it hasn't happened 2) The ISP are making money hand over fist.
Finally, if the telcos didn't make such moronic statements, like a CEO wanting to tax Google for using its pipes, AND if the telecos didn't blame its paying customers for its woes, like blaming iphone users (which has bit a cash cow for the carrier) for its lack of capacity...
well, then we all might take 'em seriously. But good heavens, please don't insult our intelligence. | |
|  |  | | Re: another excellent article Agreed. I'm beginning to think execs/CEO/CIO blahs... have "Homer Logic" (NOT the Greek kind, the Springfield kind). Actually, if you put Doh! after each utterance of metered billing it gets even funnier. | |
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 rradina join:2000-08-08 Chesterfield, MO | Since when do salesmen tell the truth? I wholeheartedly agree with what you say but all these folks are in sales. Their job is to sell something by creating a "swallowable" perspective.
In my opinion, we need regulation that fosters more competitors and neutrality. If we have enough competitors they'll collectively duke it out and we'll land on what works best. If that's metered, so be it. If it's flat-rate, great. Who knows, it might be a combination of both. | |
|  KearnstdElf WizardPremium join:2002-01-22 Mullica Hill, NJ | Bandwidth is different then gas and electric i dont get spam gas or spam electric, my heat and my lights dont display ads that consume the said resource. i am only billed for what i used or what my devices used
bandwidth is different, spam and all those video ads consume my bandwidth and i didnt want them in the first place. i mean i dont get extra gas sent to me that i didnt need or want. -- [65 Arcanist]Filan(High Elf) Zone: Broadband Reports | |
|  |  dvd536as Mr. Pink as they comePremium join:2001-04-27 Phoenix, AZ kudos:4 | Re: Bandwidth is different then gas and electric said by Kearnstd:i dont get spam gas or spam electric, my heat and my lights dont display ads that consume the said resource. However for gas/electric you pay the small service fee: ~$10 plus your usage UNLIKE what ISPs want to charge THEIR NORMAL FULL RATE plus what you use!!! -- When I gez aju zavateh na nalechoo more new yonooz tonigh molinigh - Ken Lee | |
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 | | Recent Developments Historically, the users used pretty much the same bytes because of limited connection and services. Now ISPs are selling 50Mbps services along with over-the-top video, and usage is skyrocketing. It's killing their old models. The ISPs may make money today, but if usage goes up x20, will they in the future; will we all be sitting around trying to watching "Lost" on ITunes in a herky-jerky fashion because the ISP doesn't have the last mile nor the backbone to transport the traffic? | |
|  |  | | Re: Recent Developments said by Winterman:Historically, the users used pretty much the same bytes because of limited connection and services. Now ISPs are selling 50Mbps services along with over-the-top video, and usage is skyrocketing. It's killing their old models. The ISPs may make money today, but if usage goes up x20, will they in the future; will we all be sitting around trying to watching "Lost" on ITunes in a herky-jerky fashion because the ISP doesn't have the last mile nor the backbone to transport the traffic? My answer to you would simply be, Yes they will always make money if they adapt. That will happen for 2 reasons:
1.) They are in business to make money and though they will try to dictate to consumers how it should be, ultimately consumers will get it their way because it is their dollar they are fighting for.
2.) If providers do not follow #1, then they will whither away and die and someone else will fill that void. They can pretend like they aren't dumbpipes, but ultimately they are and will be more so in the future. | |
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 | | It is America
I read the responses to articles every couple of days and I get further disappointed when people fail to realize that things like gas and electric are a means for survival. Broadband is not. So if you are unhappy with what you are paying for. Stop getting it. On the part of the competition, I don't disagree that there needs to be competition in a market. That ensures the health of the market. But unless you can find someone who will invest a couple hundred million to build the plant, connect the backbone, and overall build the infrastructure, go for it. Till then, deal with what the cable/telco industry built and payed for. Finally, you never see this much outcry when Gasoline goes up. People fail to recognize that cable/telco is government regulated, where as gasoline is not. I find that very strange? | |
|  |  VanPremium join:2009-07-08 New Orleans, LA Reviews:
·Verizon FiOS
| Re: It is America Big picture wise, I don't disagree with you
But that really isn't the point of the article nor the point I think karl was getting at
If companies are jacking up prices, I think it is legitimate to ask WHY and to debate or just talk about the reasons given. If the reasons are complete crap, I think customers should have a right to know.
I enjoyed Comcast last year and Cox years before....but when both raise prices OR make changes to their systems, I don't consider it out of bounds to ask...why? | |
|  |  BF69Premium join:2004-07-28 Camden, TN | said by HMMM :
I read the responses to articles every couple of days and I get further disappointed when people fail to realize that things like gas and electric are a means for survival. Broadband is not. A) My great grandmother lived into her 60's before getting electricity and indoor plumbing. So one could make the point those things are NOT necessary for survival.
B) gas, water electric are utilities. ISPs want to charge like utilities but not be treated as one. Does that sound right? They can't have their cake and eat it too. If they want to meter like a utility then be preapred to be treated as such. They need ot be prepared to have price controls, and be prepared to provide EVERY citizen with access. Until then they can STFU about metered billing. | |
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 | | Disagree with the "they make enough $ already" argument Good editorial and I agree with most of the points except:
...he'd see that carriers are making remarkable profits off of the flat-rate broadband billing model -- not even mentioning the money made from added services, a litany of fees, and advertisements. The argument that modern ISPs don't "earn a profit" is intentionally obnoxious.
Its delicately worded and not wrong, but that quote implies that companies should be satisfied with their current profitability, which would never happen. Taking that argument to an extreme would be suggesting that companies should stop billing for the year after they reach a certain level of profitability.
Of course we should be cynical of any company's professed altruistic motives. | |
|  ThrowDemsOutIf you can't convince 'em, confuse 'emPremium join:2002-03-03 Mullica Hill, NJ kudos:4 | TV revenues cover the infrastructure costs .... .... and if TV revenues dry up, then data costs will sky rocket.
»Some Metered Broadband Myths That Need Clearing Up
protect their TV revenues from the threat Internet video poses Yes. Karl your statement is correct. But you don't take the next logical step. If TV revenues dry up, then the cost of data access will skyrocket. And THAT is what the Access providers are planning for. How to bill for access when the biggest revenue source drys up and the data load increases geometrically as the system morphs from a broadcast model to a unicast model. -- My BLOG .. .. Internet News .. .. My Web Page
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|  |  Lazlow join:2006-08-07 Saint Louis, MO | Re: TV revenues cover the infrastructure costs .... I am not buying it. ATT only relatively recently entered (large scale) in the "cable" business, so while they may want to protect that revenue I am not buying it is necessary in order to survive. If it applies to ATT then it is applicable to all the other ISPs as well(how many major ISPs do not provide phone service too?). | |
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 | | Metered Billing I have Time Warner Cable. They have Tiers for their TV with different package options. I can get Tier options for my Internet as well, 7MB, 10MB, etc. They don't change me for the amount of TV I watch, just a flat bill for a package of channels (I won't get into the fact that I don't watch most of them). So they want to charge me by the MB for Internet. They wonder why we question the two billing systems. I think they need to look at their own logic. | |
|  | | Metered billing. My problem is that as a user I don't know what a 50 mega byte horse looks like. Is it big, heavy, what are it's dimensions? How many web pages can I down load or messages can I send? Of couse one can do calculations which most of us wouldn't understand the output of but that's not the point. Default all you can use fixed rate leads to bandwidth control as carriers have to make money. Most reasonable rate plan in Japan has Hewett Packard as an MVNO using 10 yen per minute on their NetBook which comes preloaded with 100 minutes and a 3G (HSDPA) module embedded. Of course no contract!!! You can recharge in 1000 yen (10$) increments up to 10K yen with one click right from the NetBook screen..... Nice. | |
|  | | Silly Metered broadband is a horrible idea due to the chilling effect it would have on innovation on the internet. Do you think that Youtube would have caught on, had we had metered internet? (On my metered data plan on Verizon, a single Youtube video costs around $100 to download!) Do you think that Steam or other digital delivery systems would exist, when it would cost thousands of dollars to download a huge chunk of data?
It would stop us from moving into the 21st Century. Cold.
And if you don't believe me on the costs, look at how much it would cost to download a single GB on every metered plan out there. And if it was cheaper, the broadband companies won't make any money on it.
Overall, metered internet is one of the worst ideas ever. | |
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