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ISPs 'Exaggerate the Cost of Data'

timothy posted more than 2 years ago | from the learned-it-from-the-telcos dept.

The Internet 173

Barence writes "ISPs are wildly exaggerating the cost of increased internet traffic, according to a new report. Fixed and mobile broadband providers have claimed their costs are 'ballooning' because of the expense of delivering high-bandwidth services such as video-on-demand. However, a new report from Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB. The report labels claims of ballooning costs a 'myth.'"

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Yea. (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37647012)

No fucking shit.

Maybe Plum Consulting should become an ISP? (-1)

gnasher719 (869701) | more than 2 years ago | (#37647032)

Since Plum Consulting found ways to supply one GB of data for $0.01 to $0.03, and other ISPs can't, the company should be able to undercut anyone else and make a boatload of profit on the way.

It could of course be that they made a very simple mistake: The cost is almost completely for providing the infrastructure to supply bandwidth. Once the infrastructure is there, supplying a GB is really, really cheap. Until you reach the limit of that infrastructure and pay a ton to increase it.

Re:Maybe Plum Consulting should become an ISP? (4, Informative)

tech4 (2467692) | more than 2 years ago | (#37647054)

It's not only infrastructure. Not even starting at wages for workers and other recurring costs, ISP's have to pay each other to buy bandwidth from them. Only the tier 1 ISP's can get away with peering without extra costs.

On top of that, their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.

Also, it requires there to be actual connectivity available - for example, my country as a whole has something like 30Gbps in/out. Still they're selling 100Mbps for customers to use. It's perfectly sure that if everyone would use that 100Mbps at once to download content off the country, it would not be enough. However, it works out because home users rarely need that kind of bandwidth 24/7.

If you want dedicated bandwidth that is guaranteed, then buy it. Just be willing to pay over $1000 a month for your 100Mbps line. This isn't new to anyone - it's the same in server hosting world too, but there it's more clearly marked if the bandwidth is shared or dedicated as it matters more and some people actually have real need and are willing to pay up to that $1000 a month for it. With home users, no one would do that.

Re:Maybe Plum Consulting should become an ISP? (2)

realityimpaired (1668397) | more than 2 years ago | (#37647196)

It's not only infrastructure. Not even starting at wages for workers and other recurring costs, ISP's have to pay each other to buy bandwidth from them. Only the tier 1 ISP's can get away with peering without extra costs.

If your ISP's business plan is to make up those costs on overage charges, I suggest you find a new ISP, as they will go bankrupt as soon as their customer base starts watching what they're doing.

That kind of cost, and everything else you mention in your post, is supposed to be budgeted for in your monthly tithe err... monthly subscription fees. Overage fees are just that... fees for going over the allotted amount of monthly usage. Those fees are completely unreasonable. At that point, it does not cost them $2.50/GB to deliver that data to you, because your monthly subscription fee has already covered the lion's share of those costs. It really does only cost $0.01/GB at that point, or at least, it should only cost that little if they're doing it right.

Re:Maybe Plum Consulting should become an ISP? (1, Insightful)

tech4 (2467692) | more than 2 years ago | (#37647254)

The overage charges aren't supposed to make them lots of money, it's supposed to keep heavy bandwidth users in control so that the rest of the network doesn't suffer. Also, it doesn't matter how much it actually costs to the ISPs at that point. Nowhere they say it costs them $2.50/GB, but that's the price they're billing from you if you use over something like 250GB a month, which most people won't. They're free to do so. You're also free to choose your provider. However, don't bitch if there are no providers that sell you at the price you want.

Note that sometimes just upgrading their network doesn't work. There is a limited amount of bandwidth available between ISPs and from city to city and to and from overseas. It costs billions to lay down new such cables in the bottom of the atlantic. When your ISP is the size of major ISP's, they just don't have the possibility to offer everyone dedicated bandwidth. It has to be shared.

If they have a need to control the amount of bandwidth some heavy users use on their network, then that's the best way to go about it. Or in fact, they could either offer overage fees or severely limit your bandwidth. However, they have saw the need to do it make sure the rest of the customers aren't affected. Those torrenting and using full 100Mbps home line 24/7 are just leeches that are bringing down the network quality for rest of the customers.

Of course, if you don't agree you can always go start your ISP. Seems like you'd make a fortune since you've suddenly found so easy and cheap way to do.

Re:Maybe Plum Consulting should become an ISP? (3, Insightful)

Servaas (1050156) | more than 2 years ago | (#37647302)

Of course, if you don't agree you can always go start your ISP.

The 12 year olds approach to arguments.

Re:Maybe Plum Consulting should become an ISP? (-1)

The Dawn Of Time (2115350) | more than 2 years ago | (#37648146)

so the adult approach is to whine that you deserve Internet for free? oh slashdot I love you so...

Re:Maybe Plum Consulting should become an ISP? (3, Insightful)

lolcutusofbong (2041610) | more than 2 years ago | (#37648312)

No, the adult approach is to realize that in countries without a common-carrier law for ISPs, it's prohibitively expensive to start a new ISP, so effort is better spent getting better deals out of existing ISPs.

Re:Maybe Plum Consulting should become an ISP? (2, Informative)

realityimpaired (1668397) | more than 2 years ago | (#37647374)

The overage charges aren't supposed to make them lots of money, it's supposed to keep heavy bandwidth users in control so that the rest of the network doesn't suffer. Also, it doesn't matter how much it actually costs to the ISPs at that point. Nowhere they say it costs them $2.50/GB, but that's the price they're billing from you if you use over something like 250GB a month, which most people won't. They're free to do so. You're also free to choose your provider. However, don't bitch if there are no providers that sell you at the price you want.

depends on the ISP... Bell Canada, for example, includes 2GB/month usage with their cheapest plan, and charges $2.50/GB for overage. That is obscene, and considering that they're charging you $30/mo for a 2mbit connection, there's no way you're going to convince me it actually costs them that much when I can get a 5mbit w/ 300GB/mo and $0.25/GB overage charge for $32/mo, and if I were willing to pay $37/mo, I could get 5mbit w/ no bandwidth cap at all, both from a different provider that uses the same network, meaning I'd be connected to the same port, with the same copper.

Re:Maybe Plum Consulting should become an ISP? (2)

Anonymous Coward | more than 2 years ago | (#37647568)

Of course, if you don't agree you can always go start your ISP.

Sure, just as soon as I get the same billion dollar check from our government they all did to put in their networks back in the Clinton years.

You think they'd even let you do it if you could? Not [arstechnica.com] likely. [fastcompany.com]

Re:Maybe Plum Consulting should become an ISP? (4, Insightful)

slackbheep (1420367) | more than 2 years ago | (#37648340)

Oh come on, you think Bell is charging $13/gb overage just to "keep us in line" and not to line their pockets? If they wanted to keep users in line, they'd throttle or contact the account owner and advise them of the issue/threaten fees. Instead they're skipping those steps and laughing all the way to the bank.

Re:Maybe Plum Consulting should become an ISP? (1)

mabhatter654 (561290) | more than 2 years ago | (#37647338)

The point is that at the ISP level you buy bandwidth in large dollar amounts. If an ISP decided from historical data they needed 2 pipes they can't just get a third without massive outlay of dollars. On the best case they just increased fixed costs 50% (on longvterm contract) for pipe they don't have enough customers to pay for. In the worst case they have to pay for new fiber and digging.. A huge up front capital cost.

Re:Maybe Plum Consulting should become an ISP? (1)

misexistentialist (1537887) | more than 2 years ago | (#37647278)

If you want dedicated bandwidth that is guaranteed, then buy it. Just be willing to pay over $1000 a month for your 100Mbps line.

Prices are significantly based on what the customer can pay, so comparing a home pricing to business pricing is deceptive. Businesses pay more for everything because they have more to pay, not because they are getting precious high-grade products.

Re:Maybe Plum Consulting should become an ISP? (2)

Bengie (1121981) | more than 2 years ago | (#37647582)

"comparing a home pricing to business pricing is deceptive"

Residential Cable Internet: $60 for 18/2 250GB cap
Business Cable Internet: $100 for 18/2 no cap, uses separate fiber routes that have dedicated bandwidth(only shared bandwidth is on the cable infrastructure), ToS claims you get dedicated bandwidth 24/7, personal representative, no wait tech-support queue, 1 business day guaranteed service

That $40 sure gets you A LOT. I'm eventually upgrading, but it is an extra $40/month that I must come up with.

Prices (1)

zoomshorts (137587) | more than 2 years ago | (#37647658)

Where I am the 'business' model is exactly what the 'home' model is, except businesses pay twice the price for the identical service.

There needs to be a standard package for all users. Businesses just pass the extra cost to their consumers.

I hate mandated stuff, but the US is becoming an Internet third world. I would settle for 40 Mbsec in both directions.
South Korea, Sweden, Norway and many other countries have superior speeds to most of the US. WTF?
Spend the money you ISP's, we ALWAYS want more and faster. Get a clue.

Re:Maybe Plum Consulting should become an ISP? (2)

noems (942524) | more than 2 years ago | (#37647300)

I used to work tech support for an ISP. Its called over selling and they all do it. They make people fight for bandwidth and just make excuses that its peak hours instead of buying more bandwidth. Our company though refused to over sell. You could buy a line from our company and one from the company we got our lines from and I promise you. Your line would be down a lot, take forever to get fixed and not get max speed. You would buy the same line from my company and hit everything you paid for and get a tech support that would bend over backwards to help you with any problems you had even if it wasn't "our problem". When our peaks came close to hitting max bandwidth we bought more. Not so with all the major ISPs.. So this article is nothing new.

Re:Maybe Plum Consulting should become an ISP? (0)

tech4 (2467692) | more than 2 years ago | (#37647412)

They all do it because it's the only feasible way to do business as an home customer ISP. Just think how many customers someone like Verizon has and think if there is enough bandwidth to provide them all with 100Mbps guaranteed. No, there isn't. Home users for the most part don't need that much bandwidth 24/7, but they have a need to peak at such speeds momentarily. However, they all do it at mostly different times so it works out.

I rather take 100Mbps burstable bandwidth to home than 128kbps guaranteed. But whatever floats your boat.

Re:Maybe Plum Consulting should become an ISP? (2)

noems (942524) | more than 2 years ago | (#37647496)

So lying to your customers is the only feasible way of doing business? Then the business has no business being in business. And who are you or anyone to dictate what people need at home? If you say you are selling something to someone, you better deliver, because even if you are not breaking the law explicitly, you are breaking a general moral law that most people in the world agree with that I have met. Over selling is straight up lying to your customer. Its not the only feasible way to do business. Our ISP did not do that. And is still in business.

Re:Maybe Plum Consulting should become an ISP? (1)

tech4 (2467692) | more than 2 years ago | (#37647598)

World doesn't have enough total bandwidth to provide everyone with guaranteed 100Mbps. Overselling and calculating from usage meters is the only way to deliver faster speeds to everyone. Otherwise we would be stuck at 128kbps. Even that is probably too much 24/7 guaranteed to everyone, it would be more like 48kbps if even that.

Re:Maybe Plum Consulting should become an ISP? (0)

Anonymous Coward | more than 2 years ago | (#37647566)

128kbps amounts to about 11 Gbit/day
With 100Mbps you use that up in less than 2 minutes.

With the specification you have given you say you would prefer to have a 100Mbps bandwidth for 2 minutes and than be completely cut off compared to 128kbps guaranteed.

I find that hard to believe, perhaps you meant that you would prefer 100Mbps burstable with 1Mbps guaranteed inbetween. In that case I agree; that would be preferable to 128kbps.

Without a guaranteed minimum bandwith you have pretty much agreed that it is OK for your ISP to not deliver at all.

Re:Maybe Plum Consulting should become an ISP? (3, Informative)

Stalks (802193) | more than 2 years ago | (#37647330)

> their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.

Actually its a combination of link speed and bandwidth used.

The majority of upstream links are billed based on the 95th percentile. This allows for your upstream to have more bandwidth then you require during average usage, but can handle your peak times without affecting your bill too much.

http://en.wikipedia.org/wiki/Burstable_billing [wikipedia.org]

Re:Maybe Plum Consulting should become an ISP? (1)

anne on E. mouse cow (867445) | more than 2 years ago | (#37647360)

You countries pathetic internet link is less than 1/4 of the potential speed of a single optical fiber and probably costs less than $100 - $500k.

In the future UK FTTC will be delivering bandwidth potential of your country to 10's of thousands of cabinets across the country.

If you're in the ISP business, maybe you are doing it wrong.

sources (see vid on youtube page)
http://www.youtube.com/my_speed# [youtube.com]
https://secure.wikimedia.org/wikipedia/en/wiki/Fiber_to_the_x [wikimedia.org]
https://secure.wikimedia.org/wikipedia/en/wiki/Fiber-optic_communication [wikimedia.org]

Re:Maybe Plum Consulting should become an ISP? (2)

Bengie (1121981) | more than 2 years ago | (#37647476)

There is a T1 global back-bone that sells dedicated internet bandwidth at a flat rate of $1/mbit/month in 10gbit increments. That's about $1 for 316GB(bytes)/month. I'm sure a T1 ISP gets it cheaper than that.

Outside of of infrastructure costs, bandwidth is nearly free.

Re:Maybe Plum Consulting should become an ISP? (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37647084)

You obviously don't understand that Plum Consulting is just pointing out that these companies are using price fixing. They all make an excuse, then all jack their rates. It's collaboration, which carries some hefty fines.

Re:Maybe Plum Consulting should become an ISP? (-1)

Anonymous Coward | more than 2 years ago | (#37647104)

Yea, shame on them for trying to make profit on top of the actual cost. They should sell it at cost! After all the internet is free right?

Re:Maybe Plum Consulting should become an ISP? (2)

cheaphomemadeacid (881971) | more than 2 years ago | (#37647112)

Yea, shame on them for trying to make profit on top of the actual cost. They should sell it at cost! After all the internet is free right?

well, i don't think you've considered that free markets might actually work ALOT better if infrastructure was non-profit ;P

Re:Maybe Plum Consulting should become an ISP? (4, Insightful)

jenningsthecat (1525947) | more than 2 years ago | (#37647204)

I've been saying the same thing for years - as soon as any technology reaches the stage where it becomes essential infrastructure, ownership should gradually transfer to the public. And to those of you who say, "What about capitalism and free enterprise", I say "What about all the tax breaks, government handouts, favourable legislation, and public rights-of-way that these 'free market' 'capitalist' companies took advantage of to get where they are?"

It strikes me that privatized infrastructure is like patents and copyrights in this regard. A period of full ownership and control is required in order to ensure a fair return on investment and to incentivize creation; after that period expires, the thing created belongs to the public. Everyone who complains about the screwed-up patent and copyright systems ought also to be complaining about the continued private, for-profit ownership of such things as communications infrastructure.

Re:Maybe Plum Consulting should become an ISP? (1)

Grave (8234) | more than 2 years ago | (#37647248)

With so many public officials throughout the developed world saying that broadband internet access is a necessity and a right for modern society, I have to agree that the infrastructure needs to be moved to public control. Just as roads are essential infrastructure, so to is the internet. I would extend this argument to cell phones, as the current system in the US is ridiculous as well, but that's rather off-topic.

Government control of the infrastructure can be a cost-neutral endeavor, with the costs of expanding, repairing, and maintaining the system paid for by the ISP licensing fees for the bandwidth.

Re:Maybe Plum Consulting should become an ISP? (1)

dead_user (1989356) | more than 2 years ago | (#37647264)

It's bad enough that law enforcement can easily get subpoena's to track individual users now. Imagine if the government was IN CONTROL of the internet. You think we have security/privacy issues now? Shit. You ain't seen nothing yet.

Re:Maybe Plum Consulting should become an ISP? (1)

I_Voter (987579) | more than 2 years ago | (#37648930)

.(US).. law enforcement can easily get subpoena's to track individual users now. Imagine if the government was IN CONTROL of the internet.
Are you saying that although the US government can gain large amounts information it wants quite easily from private enterprises now - if it became a publicly regulated utility they could gain more? That may be true, but I view it more as a question of political power. My rule of is that those without power tend to suffer. Back in the 60's - when the "Russkies" terrorized our corporate state - It seemed to me that privacy laws were much stronger. That would include publicly regulated utilities.

How do Slashdot people feel about the regulation of political parties in the U.S.? People who tend to oppose government regulation never mention this subject. It doesn't seem to interest them.

Great Quote from 1927
Here in the last generation, a development has taken place which finds an analogy nowhere else. American parties have ceased to be voluntary associations like trade unions or the good government clubs or the churches. They have lost the right freely to determine how candidates shall be nominated and platforms framed, even who shall belong to the party and who shall lead it. The state legislatures have regulated their structure and functions in great detail."

ref What is a Political Party?
http://i-voter.tripod.com/US_PoliticalParties.html [tripod.com]

Re:Maybe Plum Consulting should become an ISP? (1)

Ihmhi (1206036) | more than 2 years ago | (#37648830)

I agree with you on this. I wonder how long phone and/or telegraph lines were private before they were turned over into a government utility. What about electric?

It'd be nice to be able to change Internet or Cell providers as easily as you can change landline providers.

This can go the wrong way, though, too... look at ESCOs (Energy Service Companies). Google "IDT Energy New York" and see the sort of dirt shenanigans they've been up to. I've yet to meet anyone who actually saved money switching to an ESCO.

Think Roads... (1)

anon mouse-cow-aard (443646) | more than 2 years ago | (#37647454)

If we had only a few companies making roads across entire countries, how high do we think the tolls would be? It's hard to get around using roads. It's hard to set up a competing road, without having to connect into the existing roads, and having to deal with the encumbents. It is hard to havea business case for 'competing roads' that makes much sense in the private sector. People like roads, so governments tend to be involved in getting them built, such as expropriating when needed, giving rights of way, etc... It is never a purely private sector thing because the permitting process is quite complex.

Roads are a public good. Internet is very similar in many ways. It is clear that physical internet connectivity isn't really a competitive market, because having ten network drops to every house, much like having ten highways between the same two cities, makes little, to no sense. You end up with natural monopolies, or at best duopolies, These monopolies interests are always going to be to raise the tolls as normal private sector motivations apply. They will try to minimize investment (because that just kills profits, and improvements drive down profits) and maximize margin. It's the rational thing for them to do. If a government regulator is put in place, they will just argue with them in that direction. There is no rational free market reason for the rent seekers to do anything else. This is not an argument against private sector involvement. For example: Government often doesn't actually build it's own roads. Rather, it contracts with private sector to build roads. then owns them, and lets contracts for their upkeep. Private sector would still be doing all the heavy lifting, and still be competing on construction and maintenance contracts, they just don't own the infrastructure.

So the real question is: Do you encourage greater overall economic growth by leaving ISP service captured by rent seeking, or does this hurt the rest of the economy that relies on the infrastructure? In the case of roads, there is a lot of public road building, as well as toll roads. Private sector only moves in on profitable highway projects where the tolls are limited by the amount of competition provided by public roads, and the un-profitable feeder roads are typically all public. The goal of citizens, and their commercial activities, is to have a decent road system that enables the economy and other societal activities.

The rational economic goal of encumbent isp's is to maximize the rate they can charge for a minimized level of investment and maintenance.

There is an inherent conflict.

Re:Maybe Plum Consulting should become an ISP? (1)

Bengie (1121981) | more than 2 years ago | (#37647600)

If they sold at cost, we'd be paying closer to $15/month.

I was reading an interview with one of the top consultants for ISPs. He said the average broadband ISP pays under $1/month/customer in bandwidth costs and about $8/month/customer in infrastructure and support costs. The rest is profit.

ohh, and bandwidth costs drop about 33%-50% each year(for Teir1) because supply keeps increasing.

Re:Maybe Plum Consulting should become an ISP? (1)

Desler (1608317) | more than 2 years ago | (#37647802)

Yeah, they can't possibly survive at all without their over 10,000% profit margin (assuming the .01 - .03 figures are accurate)!

Even if the figures are an order of magnitude off they are still making ((10 - .1) / .1) * 100 = 9900% or ((10 - .3) / .3) * 100 = 3233% If they are extracting such high margins then they should be more than able to pay for new infrastructure to meet demand, and thus lower costs, rather than whining and raising prices even higher.

Re:Maybe Plum Consulting should become an ISP? (1)

gnasher719 (869701) | more than 2 years ago | (#37647376)

You obviously don't understand that if they were all just price fixing, then by the laws of capitalism some new ISP could easily come in and undercut them and still make tons of profit.

Re:Maybe Plum Consulting should become an ISP? (0)

Anonymous Coward | more than 2 years ago | (#37647592)

Do you have any ideas how isps work? What you say is not possible in this technologically backwards ass country.

Re:Maybe Plum Consulting should become an ISP? (0)

Anonymous Coward | more than 2 years ago | (#37647194)

Yes, obviously, if you're a moron and don't plan for growth, it's an expensive business.
If however you do, costs are flat, if not decreasing. For instance, a pair of 10gb cards and two dark lamdas are less than 10 1gb cards and 20 lamdas. 100gig is just moving to less cost than 1x 10gig, which means *more* (dark, at least) capacity is being freed up every day.

The real increasing costs are in the management overhead of increasing resiliance - customers won't accept facebook/youtube/whatever being down for an hour anymore, which means for each 1gig of data, you need 1 gig pipe, plus a 1gig of 'overflow' somewhere if the pipe breaks.

Re:Maybe Plum Consulting should become an ISP? (1)

mabhatter654 (561290) | more than 2 years ago | (#37647312)

Exactly.
Those cell towers in BFE all have to have 10x the pipes versus plain voice calling. If you have 7meg to your phone... A hundred other users on the same tower adds up to fat pipes... And lots of digging for new fiber.

In addition you have the politics going on. You'd think AT&T owning air and land could upgrade cheaply... But they made a lot of network decisions 5 years ago "for competition" ie to get more money out of other providers for simple upgrades. All those decisions add up to a bunch of the work that was "subsidized" needing to be dug up and replaced.

Re:Maybe Plum Consulting should become an ISP? (1)

karnal (22275) | more than 2 years ago | (#37647336)

Why dig a trench? They could just use wireless!

(yes, it's meant to be funny, not a flame)

Re:Maybe Plum Consulting should become an ISP? (0)

Anonymous Coward | more than 2 years ago | (#37647516)

you're implying that the costs would have been high up front and not afterwards. ballooning costs implies that the costs would go up with use - high fixed up front infrastructure cost business is the exact opposite of that you dumbbell.

Carefull (4, Informative)

Trubadidudei (1404187) | more than 2 years ago | (#37647036)

Note that this research was funded by the content providers (like skype) ISPs were asking to pay extra for the bandwidth their services use. I'm not pointing any fingers, but it's something to think about.

Re:Carefull (2)

lennier1 (264730) | more than 2 years ago | (#37647046)

... Option C: All sides are talking out of their asses and the truth is somewhere in the middle.

Re:Carefull (4, Insightful)

gmack (197796) | more than 2 years ago | (#37647094)

Not really, In places where the b/w costs are competitive (server hosting) I don't pay much more than that. ISPs only get to charge more because there are fewer options, on the other hand, last time I was in a telco building pretty much everyone was using ATM switching equipment and that will drive the costs up.

Re:Carefull (2)

tech4 (2467692) | more than 2 years ago | (#37647124)

I'm sure they would provide you bandwidth at that price if you moved living inside server farm and one of the large peer exchanges.

Re:Carefull (4, Insightful)

gmack (197796) | more than 2 years ago | (#37647170)

That is exactly my point. The entire cost of running an ISP is the costs associated with the "last mile" and they are using that to overcharge. I would be much more understanding if the limitations I faced were due to the copper rather than artificial charges from the ISP side.

Re:Carefull (2)

tech4 (2467692) | more than 2 years ago | (#37647274)

Which is far from cheap, even less so as technology in this area has been advancing really fast the recent 20 years and they've had to do it several times. It costs several thousands to bring those cables to just one building and even more in cities as you need to open up the streets. They are making it as an investment, hoping to get it back in subscription fees within several or more years. It's hard from artificial charges.

Re:Carefull (2)

gmack (197796) | more than 2 years ago | (#37647488)

The monthly rate more than covers that cost of installation and maintenance of those lines. The technology advance is quite honestly not expensive even at $60 per port on ADSL2+ equipment (slightly high) they can expect to make that money back long before the next technology rollout. And quite frankly, they haven't had to worry about changing the actual cable (and no, it shouldn't involve tearing out streets at this point because most of that is in conduit) until recently with the moves to fiber.

To be clear: I don't mind being charged a monthly rate. What I object to is being charged $15/ GB for over b/w fees.

Re:Carefull (1)

Richard_at_work (517087) | more than 2 years ago | (#37647096)

You mean, the truth is ... Option B?! Wow! Now, what exactly was Option B?

Re:Carefull (0)

Anonymous Coward | more than 2 years ago | (#37648374)

> Wow! Now, what exactly was Option B?

Kicking your ass, and collecting $200!

Re:Carefull (4, Informative)

TubeSteak (669689) | more than 2 years ago | (#37647562)

Even for ISPs running their own network, such as BT, Davies [CTO of communications provider Timico and a member of the board at the Internet Service Providers' Association] claims the figures of â0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.

One order of magnitude.
So.. â0.10-0.30 per GB?

The difference between â0.01 and â0.10 doesn't strike me as "somewhere in the middle."
Not when they're charging â10.00 for a gigabtye.

Re:Carefull (1)

Xugumad (39311) | more than 2 years ago | (#37647974)

Actually, they're charging £2.25/GB for overage ( http://www.timico.co.uk/soho/ip_connectivity/adsl [timico.co.uk] ), although Timico have the most insane pricing I've seen in an ISP. Two lines on their 50GB/month service (£22 each) are a cheaper option than their 100GB/month server (£50).

A much saner (business) pricing example can be found from Demon: http://www.demon.net/broadband/business-broadband [demon.net] - if you're in an exchange with LLU, £19/month gets you a 200GB allowance during peak hours and unlimited off-peak. If you're not on an LLU exchange (and this also says volumes about BT's pricing), £30/month gets you a 100GB allowance during peak hours (and did I mention the line speed is a quarter of the LLU package?)

Re:Carefull (4, Insightful)

zippthorne (748122) | more than 2 years ago | (#37647832)

The truth is never in the middle. Sometimes the truth isn't even on the same axis as the claims. The truth is what the truth is, and you can't find it by simply averaging the claims of interested parties.

The truth, in this case, is that the ISPs are balkanized monopolies. Except for a few places, you've only got one or two options in any given area. Since there's no real competition, they can basically charge what they want. The costs don't really come into it.

Re:Carefull (0)

Anonymous Coward | more than 2 years ago | (#37648492)

... The actual costs required to supply the service don't really come into it.

Fixed that for ya. In there somewhere are the real costs but one would need to cut out non-essential costs in order to have an accurate view. Given $10/GB, it wouldn't be surprising if +/- $4/GB was used to pad the executive salaries and cover existing debt.

Re:Carefull (3, Interesting)

mabhatter654 (561290) | more than 2 years ago | (#37647450)

The point of asking content providers is that they are a fixed quantity with deep pockets. ISPs know they can't go to the regulators because if the books on the situation got opened they'd get smack from legislatures.

The big problem is that "the Internet" is still very much a series of nonuniform networks with lots of people trying to make toll booths rather than a "fabric" across the country. For instance my Comcast connection to the Internet shows up 30 miles away in the next city when the route is traced. When I had AT&T I think it went over 100 miles before it was "on the Internet".

This is a problem because when you use Skype to call your friend across town with a different ISP the ISPs are holding Skype up for cross-state traffic that should just go across town. That's the problem that needs to be addressed.

Re:Carefull (1)

WorBlux (1751716) | more than 2 years ago | (#37647690)

The internet was designed to be p2p.Mesh networks seem bery promising, at least for local traffic and telephony.

Re:Carefull (1)

richlv (778496) | more than 2 years ago | (#37647610)

wait, what "their services" ? is skype now financing internet connections to households ? last i heard it was households/individuals getting an internet connection to use for data transfer... which would be like somebody buying a car and then getting told by the manufacturer "oh, you will transport pumpkins with it ? there's a 30km limit on it, after that it's 2.5 units per km !" (there's a car analogy; and i might be in favour of it as i don't like pumpkins)

Another Report by the Same Institution Concluded.. (4, Funny)

Alcoholic Synonymous (990318) | more than 2 years ago | (#37647038)

Another report by the same Institution concluded that water is wet, electricity is not magic, and that dinosaurs are in fact extinct. The results are still pending on if a duck weighs less than water though. But on a serious note, it's good to see people calling bollocks on these claims. It's not that these things aren't problems, it's that they inflate the cost estimates grossly and delay infrastructure upgrades purposely.

Re:Another Report by the Same Institution Conclude (0)

Anonymous Coward | more than 2 years ago | (#37647114)

Technically, dinosaurs are not extinct.

Re:Another Report by the Same Institution Conclude (2)

RyuuzakiTetsuya (195424) | more than 2 years ago | (#37647324)

I just got a report from Webster, Webster and Cohen that their analysts find that bears are catholic and the pope shits in the woods.

Probably due to that new bear pope, Pope Maulington XXIII

Re:Another Report by the Same Institution Conclude (1)

thue (121682) | more than 2 years ago | (#37647960)

> that dinosaurs are in fact extinct

According to the current understanding, birds are a subfamily of dinosaurs.

Re:Another Report by the Same Institution Conclude (0)

Anonymous Coward | more than 2 years ago | (#37648568)

and water is not wet. It causes things to be wet, but it by itself is not wet. What else did the institution get wrong?

Re:Another Report by the Same Institution Conclude (0)

Anonymous Coward | more than 2 years ago | (#37648728)

According to the current understanding, birds are a subfamily of dinosaurs.

According to the definition of the word "dinosaur" [reference.com], birds are not dinosaurs. (Note that, although one definition on that page says "one group of dinosaurs evolved into birds", that doesn't mean that they continued to be dinosaurs after they became birds.)

Re:Another Report by the Same Institution Conclude (0)

Anonymous Coward | more than 2 years ago | (#37648978)

According to the definition of the word "dinosaur", birds are not dinosaurs.

Yeah, and a dictionary has never been out of date on a scientific topic before...

When you want an answer on current science, look to the journals, not to Funk & Wagnalls.

Re:Another Report by the Same Institution Conclude (0)

Anonymous Coward | more than 2 years ago | (#37649006)

It's not a question of "current science". No-one's disputing the evolutionary history; the fact is that the word "dinosaur" has a meaning in the English language, and that meaning does not encompass birds.

Misleading (1)

TheRaven64 (641858) | more than 2 years ago | (#37647042)

That figure is the amount that I pay for data from my colo, but that assumes that the infrastructure already exists. If you have a cable network with 100Mb/s of bandwidth, then you can sell 10Mb/s connections to 10 people. If you've sold them to 5 people, then the cost of adding another customer is basically zero. You can probably get away with selling 10Mb/s connections to 100 or even 200 people if they have typical modest usage patterns, because each one will still be able to get 10Mb/s for the short periods that they saturate the line. If they start all using the connection at the same time, then you have no choice but to increase your overall network capacity. This means laying more fibre. The cost may still be under three eurocents per gigabyte, but that's amortised over the entire life of the new cable, which may be a decade (or more): the ISP has to pay for it all up front. This is where the increase in costs comes from. They have to make significant capital investments, they don't have a significant change in their operating expenses.

Re:Misleading (2)

jgreco (1542031) | more than 2 years ago | (#37647186)

We used to have this thing called Ma Bell that had the same problem: they amortized costs over decades. It worked.

It doesn't bother me too much that service providers would prefer a shorter timeframe in which to recapture their invested funds, but the problem is that they then want to keep charging the higher prices even after they do, make only modest further improvements, and rake in profits at insane rates. Where I live, cable Internet prices have been basically flat for more than a decade, and performance has maybe doubled in that time. It's hard to buy the crying when I know the bandwidth costs are dropping, the networks can handle it, and the companies are reporting record profits.

Re:Misleading (2)

TheRaven64 (641858) | more than 2 years ago | (#37647850)

Amortising costs over decades works for a telephone system. They transitioned the exchanges from loop-disconect to DTMF, but aside from that the wires laid in the '20s still work today. They've had almost a century to make back the initial (taxpayer subsidised) investment. The demands of an analogue voice channel have remained constant for that entire time.

When it comes to Internet access, the demand changes much more rapidly. In 2001, I had a 1Mb/s Internet connection, and it was the fastest that my ISP provided. Now I have a 10Mb/s connection and they've just finished deploying infrastructure to support 100Mb/s in my area. That's the third major upgrade that they've done in that time. They can't amortise the cost over decades, because the new infrastructure is obsolete after just one decade. I pay less for 10Mb/s as they were charging for 512Kb/s back then (much less if you include inflation), and for the cost of my 1Mb/s connection in 2001, they'll now sell me a 50Mb/s connection today.

Re:Misleading (1)

Commontwist (2452418) | more than 2 years ago | (#37648066)

Easy way to dismiss the charges is to for the ISPs to reveal every single cost and bring the truth to light. Let truth and justice prevail!

Uh huh. Not going to happen unless you pry that data from their cold, dead hands.

Re:Misleading (0)

spire3661 (1038968) | more than 2 years ago | (#37647980)

Its interesting that the example you use was a company forcefully dismantled by a court of law. Good choice.

Re:Misleading (2)

fluffy99 (870997) | more than 2 years ago | (#37648130)

That figure is the amount that I pay for data from my colo, but that assumes that the infrastructure already exists. If you have a cable network with 100Mb/s of bandwidth, then you can sell 10Mb/s connections to 10 people. If you've sold them to 5 people, then the cost of adding another customer is basically zero. You can probably get away with selling 10Mb/s connections to 100 or even 200 people if they have typical modest usage patterns, because each one will still be able to get 10Mb/s for the short periods that they saturate the line. If they start all using the connection at the same time, then you have no choice but to increase your overall network capacity. This means laying more fibre. The cost may still be under three eurocents per gigabyte, but that's amortised over the entire life of the new cable, which may be a decade (or more): the ISP has to pay for it all up front. This is where the increase in costs comes from. They have to make significant capital investments, they don't have a significant change in their operating expenses.

Which is exactly what's happening. The ISPs are badly oversubscribed because customers in the past were barely using the bandwidth they bought. They just wanted a faster download on occasion. Now they're all demanding streaming netflix in the evening hours and the telcos are having to increase the infrastructure bandwidth to keep up. This is especially true for cell service. You might have 4G speeds to the tower, but that tower is heavily oversubscribed

This is really their own fault for advertising high speed service and suddenly everyone is demanding that they provide it all the time.

Units per unit (0)

Anonymous Coward | more than 2 years ago | (#37647060)

the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB

So to work out what the cost is for each gigabyte, we'll need to know how many GBs there are in each gigabyte.

Not just consumers ISP's (2)

Big_Mamma (663104) | more than 2 years ago | (#37647088)

When you shop around for hosting, the price/GB can fluctuate wildly. Amazon's EC2 is almost at the top with $0.12/GB, but Cogent at $5/Mbit (~0.015/GB) is one of the cheapest for transit/paid traffic.

Even less? How about free, using peering agreements on internet exchanges? This way, providers like Hetzner can sell their bandwidth for even less, like 5-10TB included and â 6,90/TB after (â 0.0069/GB).

ISP's should just whine less and do their homework. I can understand small ISP's having trouble when leasing lines from the larger ones (article has Trimco vs BT as example), but the main problem is that the larger ISP's promote this "bandwidth is expensive" myth even harder...

Re:Not just consumers ISP's (1)

Anonymous Coward | more than 2 years ago | (#37647310)

Even less? How about free, using peering agreements on internet exchanges?

Ports on internet exchanges are not free: someone has to pay for the switching equipment, rack space and power after all. Nor is a private peering arrangement generally free, as most data centres charge for every cable run outside your racks.

There is no such thing as a free lunch.

Re:Not just consumers ISP's (2)

petermgreen (876956) | more than 2 years ago | (#37647640)

Cogent at $5/Mbit (~0.015/GB)

Remember service sold by the megabit per second is typically based on 95th percentile usage, NOT average usage. So what you say is only true if your usage is near constant. Most people/companies usage isn't.

Also IIRC cogent is known for getting into peering spats that cut them off from large parts of the rest of the internet. So afaict they should only be used as part of a multihoming strategy, not as a sole provider.

open ISPs (1)

rim_namor (2454342) | more than 2 years ago | (#37647106)

How do you go about setting up an 'open ISP'? I wonder about a business plan for such a thing. There is rent, the connections, lines, equipment. Sounds costly. I'm sure there a way to set up a mesh network without an ISP at all, something like I2P without any ISP, having multiple hubs over cities, that connect one to another directly, getting away from the normal ISPs.

Re:open ISPs (1)

sgt scrub (869860) | more than 2 years ago | (#37647292)

Setting up a mesh network in heavily populated areas, like London, would be easy. It would simply require everyone use wireless routers with no password protection. The cost of connecting between heavily populated areas would be disgustingly cheap. The reason it isn't happening is there is liability attached to transferring content. Instead of a world free to communicate -- free of charge -- we have a morality laws and copyright laws and sensor-shit...

To quote Iago from Disney's Aladdin (1)

BeShaMo (996745) | more than 2 years ago | (#37647128)

Oh there's a big surprise! That's an incredible - I think I'm going to have a heart attack and die of not surprise!

Exaggeration is normal (0)

ElmoGonzo (627753) | more than 2 years ago | (#37647202)

Gee. Do you suppose that the credit and debit card processing banks are exaggerating the cost of a transaction? Nah.

Data center bandwidth=cheap rural bandwidth=$ (1)

pcjunky (517872) | more than 2 years ago | (#37647228)

The cost varies. I can get a 30meg bursable to 90 fiber connection in Downtown Ft. Myers, FL for around $1100/month. Getting it outside of Downtown and the cost is more than 3 times that. And there are many places where I could get bandwidth far cheaper than that (Tampa Miami).

If you buy water next to a river it will be cheap. Want water in the middle of the desert it's going to cost. It's not the cost of the water, it's the cost of moving it.

Video on demand (Netflix, Hulu, etc) uses 10 times the bandwidth of all other uses of the Internet combined, except maybe bit torrent (probably downloading videos anyway).

Video is one of the reasons we have so few CLEC and alternative ISPs willing to provide residential services here. Lots of companies wanting to sell to businesses (at least 6 CLECs/WISPs I can think of), we are the only one that will sell residential service. We have several individual residential accounts that use the same amount of bandwidth as an office with 50 computers. Business customer=$250/month, residential customer=$44.

People are using the increasingly using there Internet connection to get the same services they used to pay a Cable or satellite provider twice the money for. Many of the companies that provide these services are also the only ISPs most people can get service from (cable and phone companies). I am sure that in lots of board rooms they are talking about how Netflix and Hulu are eating their lunch and how they can stop it.

Love the rebuttal (1)

sgt scrub (869860) | more than 2 years ago | (#37647250)

Davies said this is especially the case for smaller ISPs who rent lines on a wholesale basis from BT.

Nice how he compares being overcharged by an internet service provider as the cause behind the need to overcharge people for internet service provision.

The ballooning costs are, (1)

Grand Facade (35180) | more than 2 years ago | (#37647258)

the companies officers over compensation?

Really they are just jealous/greedy that someone else is making money (sometimes more) on their transport system.

There's more (1)

zmooc (33175) | more than 2 years ago | (#37647380)

What seems to be missing from this analysis is the constantly changing infrastructure. While the cost for additional traffic may be low given that infrastructure, in the real world the intrastructure - especially the mobile one - needs regular updates, increasing the costs of the future additional traffic that drives the needs for these infrastructure updates.

In the past decades we've seen regular modems, 56K, ISDN, ADSL in many varieties, Internet over cable TV, fiber, GSM, WAP, GPRS, UMTS, Edge, HDSPA, all requiring massive infrastructure upgrades.

The pace at which customers demand such upgrades seems to be increasing with their data demands. So the ISPs may have a point but this article does not since it does not factor in the cost of the infrastructure.

Incomplete Picture (3, Informative)

argontechnologies (865043) | more than 2 years ago | (#37647418)

I run a wireless ISP in Texas. The cost of buying upstream bandwidth doesn't change much, it in fact gets cheaper per Mb/s as the pipes get huge. The real cost change is in delivery. The backbone between towers, and especially in the access points all have to be increased to accommodate the additional load. In some instances, the access points cannot technologically accommodate the load yet. The ISP model was designed on a over-subscription basis. In other words, you could have 10:1 users using a give bandwidth. With the advent of video like Netflix, this model is no longer going to be viable. We are seriously looking at having two different account types. One that will allow short video bursting, and one that will allow continuous video feeds. The latter account will cost much more than the former since it is what is driving the costs.

Business exagerates cost of X. (2)

taxman_10m (41083) | more than 2 years ago | (#37647448)

This seems to be a general practice of business. Isn't that how the banks have been explaining minimum balance fees? It costs them so much to maintain these particular accounts that they are forced into charging onerous fees.

Just Look Outside the U.S. (2)

Nishi-no-wan (146508) | more than 2 years ago | (#37647590)

Countries outside of the U.S. have no problem offering high speed unlimited data at affordable prices without any of the problems that the U.S. carriers are claiming. And the best deals are often on mobile! And, yes, there is heavy audio and video traffic in other countries as well.

Re:Just Look Outside the U.S. (1)

Anonymous Coward | more than 2 years ago | (#37648054)

Other countries are funded by their governments. In some, the entire government owns the whole infrastruture.

Re:Just Look Outside the U.S. (0)

Anonymous Coward | more than 2 years ago | (#37648168)

Well, Europe has high roaming fees, even with the EU starting to regulate it now. There's been some rumors about some carriers providing reasonable data roaming fees, but it's yet to manifest.

And I think some european countries in UK and Germany (and possibly others) have ISPs that have caps on their fixed connections.

That said, there are also reasonably priced high speed connections available around Europe with no caps aswell as some ridiculously cheap ones.

Re:Just Look Outside the U.S. (0)

Anonymous Coward | more than 2 years ago | (#37648278)

There might be heavy audio and video traffic in other countries, but my understanding is that services like Netflix and Hulu are almost exclusive to the United States.

Re:Just Look Outside the U.S. (1)

Glendale2x (210533) | more than 2 years ago | (#37648630)

There's also a lot of countries outside of North America that are smaller than many single US states or Canadian provinces. It's easier to do things on a small scale. Bandwidth is cheap in the US, too. It's the loop costs that get you.

Hold on (3, Informative)

Dwonis (52652) | more than 2 years ago | (#37647786)

Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB

Is that €0.03 or €0.0003 ?

it's not a gradual thing (0)

Anonymous Coward | more than 2 years ago | (#37648590)

yes it costs nothing to support more traffic during nonpeak hours

and it'll cost nothing to support more traffic until lines hit capacity

and then when you reach some limit the cost will explode

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