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ISP Data Caps Just a 'Cash Cow'

Soulskill posted about a year and a half ago | from the i-am-totally-shocked-said-no-one-ever dept.

Businesses 353

An anonymous reader writes "Ars summarizes a new report into the common practice of ISPs implementing data caps, ostensibly to keep their network traffic under control. The report found a much simpler reason: money. Quoting: 'The truly curious thing about the entire debate has been the way in which caps have mostly remained steady for years, even as the price of delivering data has plunged. For example, paying for transit capacity at a New York Internet exchange costs 50 percent less now than it did just one year ago, and many major ISPs aren't paying at all to exchange data thanks to peering. So why don't prices seem to fall? ... The authors of the new paper contend that all explanations are more or less hand-waving designed to disguise the fact that Internet providers are now raking in huge—in some cases, record—profit margins, without even the expense of building new networks. ...While Internet users have to endure a ceaseless litany of complaints about a "spectrum crunch" and an "exaflood" of data from which ISPs are suffering, most wireline ISPs are actually investing less money in their network as a percentage of revenue, and wireless operators like AT&T and Verizon are seeing huge growth in their average revenue per user numbers after phasing out unlimited data plans—which means money out of your pocket. In the view of the New America authors, this revenue growth is precisely the point of data caps.'"

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This is Market failure in action... (5, Insightful)

Anonymous Coward | about a year and a half ago | (#42329423)

... it must be faced for the US to whom the free market is as much a religion as anything.

Re:This is Market failure in action... (5, Insightful)

colin_faber (1083673) | about a year and a half ago | (#42329565)

I disagree, the reasons the ISP's can continue to charge outrageous rates is because they have a government sanctioned monopoly on last mile delivery. Even if I wanted to setup a cable ISP I couldn't as I have no access. I could setup a telco based one using DSL, but I would be limited to the transit charges the owner (Centurylink in my case) wants to charge my customers.

OK, so how is that monopoly removed? (5, Insightful)

Anonymous Coward | about a year and a half ago | (#42329749)

You can't let someone dig up the roads because a person on the street has decided to change ISP.

You can't let someone use the radio bands willy nilly because there's a new customer for wireless internet.

It's rather the intent of every single Randian faithiest to INSIST that any failure in the Free Market is due to government interference.

Given that you INSIST they should do some things such as enforce contracts and prosecute theft, murder, et al, that there is ALWAYS going to be government interference.

One thing that always shows up the idiot libertarian is that they blame government interference without ever considering evidence for the stance. Just "Government exists? Well, they did it".

If government got out of it and stopped enforcing contracts, then the ISP customers would be able to not pay for the connection and that would fix the failure, wouldn't it? But that's not allowed, government MUST interfere then!

Re:OK, so how is that monopoly removed? (5, Insightful)

jythie (914043) | about a year and a half ago | (#42329835)

Well, for phone companies (and in the past, DSL) there was a rule saying they have to make their lines available to other companies.. which is why, say, in the days of dial up you could buy your phone service from one company and then dial in to any ISP you liked. DSL used to work the same way, you bought your line and then could use any ISP you wanted. Cable modems never had this, and when DSL providers complained it was unfair, rather then extending the policy to cable they dropped it for DSL, resulting in pretty much the eradication of competition over night.

Putting that bit of regulation back in place would probably spawn all sorts of consumer choice without having to deal with the barrier to entry that is laying physical lines.

Re:OK, so how is that monopoly removed? (1)

Anonymous Coward | about a year and a half ago | (#42330061)

That would be reasonable. It also would allow companies to have their own "themed" ISPs.

Say I want to get some sysadmins together, have a no-nonsense ISP made where one could have some unique features [1] that are just one WAN hop away. Right now, this is impossible, but if we go back to how the laws were in the past, it would be a win/win for all involved, even the telco that is rebranding the lines.

[1]: Would be nice to have a cable or DSL ISP that offers local mirrors of RedHat, Debian, Ubuntu, and other popular operating systems, as well as the availability of space, so one could just use rsync over SSH, WebDAV, or some other protocol for stashing critical documents somewhere fairly secure. Since the ISP would be a relatively small shop, one can know personally who has access to what data. Plus, one can also just bring a hard disk to "seed" a large rsync directory or a github to a local office without much fuss.

Re:OK, so how is that monopoly removed? (1)

geminidomino (614729) | about a year and a half ago | (#42330121)

Would this Monastary-ISP bring back NNTP? Pretty please?

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42329751)

And in what way is a government-sanctioned monopoly not just a specific example of a market failure? The GP post is more accurate, because there are market sectors with more that one supposedly competing suppliers, yet they seem to be deliberately deciding not to compete on price for bandwidth.

Re:This is Market failure in action... (5, Insightful)

Concern (819622) | about a year and a half ago | (#42329803)

The free market fairy simply cannot wave her magic wand over everything. The government cannot avoid playing a role in i.e. wireless communications if you want them at all. Someone has to decide who can use what spectrum. Someone has to enforce the rules. There is a finite supply - meaningful competition is not possible even when this is done efficiently. These are not like newspapers, where anyone can buy a printing press for relatively cheap. This is a multi-billion dollar cost of entry to put up thousands of towers on whatever spectrum you can license.

No amount of ideology can give you a laissez faire market in wireless broadband. Arguing otherwise just makes you sound like one of those old-line Soviet Communists trying to explain how the shortage of bread must be a Capitalist Conspiracy. You can deny reality as much as you want, but it won't fill your stomach, or give you a "free market" cellular internet connection.

Since we inevitably have to have a quasi-governmental broadband industry, I'm all for regulating it better. Fixing this is not rocket science. We did it for generations after our great grandparents got sick of enduring these scams. Set up a commission, give them unlimited fact-finding authority over the ISPs. They examine network load, operating costs, and approve new budgets and prices. Charter them to permit a steady, single-digit profit margin, while ensuring adequate ongoing investment and modernization. You know, how we used to run electric utilities for generations, before we privatized those and the rates jumped and the lights started going out all the time.

Doing anything else is bad for business. Letting ISPs price gouge is the same as letting congress pass a (largely regressive) tax increase. It's just one where the tax money doesn't even have the courtesy to visit the US Treasury on its way to some insider's pocket.

Re:This is Market failure in action... (1)

Anonymous Coward | about a year and a half ago | (#42330227)

There is NO Free Market ISP they are regulated MONOPOLIES... only an idiot would suggest the current ISP pricing is the result of Free Market Capitalism...

Re:This is Market failure in action... (1)

dywolf (2673597) | about a year and a half ago | (#42330263)

not a free market.

Re:This is Market failure in action... (2)

pclminion (145572) | about a year and a half ago | (#42330273)

The free market fairy simply cannot wave her magic wand over everything. The government cannot avoid playing a role in i.e. wireless communications if you want them at all. Someone has to decide who can use what spectrum. Someone has to enforce the rules. There is a finite supply - meaningful competition is not possible even when this is done efficiently.

Right now there is a finite supply of spectrum, because all of our technologies are broadcast technologies. If we can find a way to shift from broadcast transmission to directional transmission, the sky will be the limit (quite literally). I realize there are deep technical challenges with directional radio, but over time we may overcome most of those.

Until such time, though, I agree some form of regulation is obviously necessary.

Re:This is Market failure in action... (1)

AK Marc (707885) | about a year and a half ago | (#42329879)

That's simply not true. The monopoly has nothing to do with it. The monopoly has maximum rates for the lines. The non-phone company ISPs rent the lines and get the data back to a central point. The cost of the line isn't that much. The line you rent doesn't cost you more if more bits are moved over it, so the monopoly is irrelevant to the issue.

Re:This is Market failure in action... (2)

DragonTHC (208439) | about a year and a half ago | (#42330001)

That monopoly was removed back in the late '90s with the telecom act. I remember in 2000 when there were about 30 different DSL companies to choose from.

Now, there's 2. AT&T, and Comcast.

Those are the choices with no regulation.

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42330193)

Maybe we should treat the last-mile infrastructure and long-distance infrastructure differently. The local government could pay for the last-mile infrastructure and lease the bandwidth out to long-distance ISPs. The government would then take the funds from leasing to pay for local infrastructure upgrades and maintenance. They could contract out the line maintenance to local companies. This would at least allow for competition in the long-distance and local maintenance areas.

Re:This is Market failure in action... (1, Informative)

TemporalBeing (803363) | about a year and a half ago | (#42330275)

I disagree, the reasons the ISP's can continue to charge outrageous rates is because they have a government sanctioned monopoly on last mile delivery. Even if I wanted to setup a cable ISP I couldn't as I have no access. I could setup a telco based one using DSL, but I would be limited to the transit charges the owner (Centurylink in my case) wants to charge my customers.

Exactly. Instead of allowing competion, they fight it. DSL is required to allow competition because of the old regulations on the telephone lines that carry it. But Verizon and AT&T are changing the game by going to fiber instead, and letting DSL languish. Meanwhile, the Cable companies get contracts from the counties/municpalities to be the sole providers for the region so there is no competition in the same technology, and they're not required to share like the telcos are.

Even then, when communities have gotten together to setup their own provider the telcos (via shared fiber) and cable companies have filed lawsuits to prevent them from actually using it.

Short of moving, there's no way you can simply change your providers.

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42329621)

... it must be faced for the US to whom the free market is as much a religion as anything.

I was a mobile phone customer with AT&T (originally Cingular) from Nov 2003 to Jul 2011.
I had no issues with my service and would have gladly continued.
When I decided to upgrade to an Android phone, AT&T was no longer offering Unlimited Data plans.
Sprint was (and still is) offering a truly Unlimited Data plan. Thus, in Jul 2011, I became a Sprint customer.
I have no issues with my service and will gladly continue to be a Sprint customer.

To me, it seems the free market system is working as designed.

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42329847)

Only when you HAVE a choice.

You have a choice in wireless providers, most people do not have a choice when it comes to wired Internet connectivity. I have access to Comcast and no other ISP for connectivity. That is where the market fails, as there is no market, its a monopoly.

DSL (1)

tepples (727027) | about a year and a half ago | (#42330237)

most people do not have a choice when it comes to wired Internet connectivity. I have access to Comcast and no other ISP for connectivity.

I thought most customers in urban or suburban areas lived within 3 kilometers of a DSLAM and could thus get DSL.

Re:This is Market failure in action... (1)

alen (225700) | about a year and a half ago | (#42329747)

not really

lots of ISP's like verizon have legacy money losing businesses like POTS lines, especially in flyover country where all the freedom lovers think everyone else should pay for their infrastructure

the current high growth business like wireless subsidizes POTS, DSL and whatever else they have

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42330183)

You mean the POTS lines the government granted them free, with competition prohibited by force of law? It is amazing how people forget that Verizon gets freebies, then people gripe about how Verizon has to do a duty doing their part in fulfilling the contract.

Don't forget all the Congressional subsidies they get for infrastructure improvements.

Look at other countries. China is far more populated, but their telcos are not whining to the Party; they are laying fiber and building infrastructure. Hell, while we were selling cars cheap and having old ones crushed, China did the same amount of money as grants for laying cable and building airports to lesson ground congestion.

It is only in the US where we have providers who can't handle demand and have to whine to Congress so they can jack up the monthly fees. Every other country, they expand infrastructure and handle the demands put to it.

Car example: You don't see the toll road companies whining to Congress about their congestion, or charging extra fees when the roads are gridlocked [1].

[1]: Except for growth-hostile one Texas town where there is planned construction replacing a core highway with a toll road that charges more with the more cars on it.

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42329799)

Government sanctioned monopoly. Ain't nothing more ANTI-free market than that. More power to the government = less power to the people. In this case, thanks to the TELCOs lining the politicians pockets, the customers have little to no choice.

IF anything, I'm shocked that it has taken this long to bend the customers over a hard wooden chair like this with respect to data caps.

Re:This is Market failure in action... (1)

AK Marc (707885) | about a year and a half ago | (#42329985)

There are subsidies to "authorized" providers to ensure equal access to all, but there is no government "enforcement" of that monopoly (except on a local level, if any). When cable companies came around, they laid cables next to the existing "monopoly", and some places have build out of multiple copper networks.

Re:This is Market failure in action... (0)

Anonymous Coward | about a year and a half ago | (#42330197)

You're absolutely right. In the country just north of the US the regulations are much tighter and mobile phone service is basically free compared to US pricing. //sarcasm

Re:This is Market failure in action... (1)

Johann Lau (1040920) | about a year and a half ago | (#42330217)

If you're an invisible hand, sooner or later you'll start robbing people, if not worse. Invisibility and not having a body can fuck with your mind that way... reminds me of the song "I Wouldn't Pee On You Unless You Were A Invisible Hand Because Then People Could See You And Attach You To A Spare Body Which Would Make You Happy And Me Proud" by The Helpful.

I'm shocked! (0)

Anonymous Coward | about a year and a half ago | (#42329473)

Shocked! To find gambling going on in this establishment.

Corporation makes profit (-1, Flamebait)

Anonymous Coward | about a year and a half ago | (#42329481)

News at 11.

You people are such fucking morons.

Don't worry, Obama and the Democrats will soon outlaw profit, we know you all vote socialist.

Re:Corporation makes profit (1)

h4rr4r (612664) | about a year and a half ago | (#42329591)

Then why would they vote for a center right party?

It's one or the other you dolt.

Re:Corporation makes profit (4, Insightful)

Urban Nightmare (147344) | about a year and a half ago | (#42329899)

What upsets most people (in the western free mark world) isn't that they make a profit. It's that the companies don't reinvest some of that profit in actually increasing capacity. They (the companies) just complain about to much traffic and crank on the rates again. That and there is a complete lack of competition and almost zero ability for a new entry in the market. This makes it at best an oligopoly and at worst a monopoly in 99% of the towns and cities.

Also why do republican morons always think that the democrats/liberals are against profit?

Oh look its the big scary socialists again. They don't want anybody to own anything! See they want corporations and millionaires to pay TAXES!!!!

AC is a moron

Re:Corporation makes profit (0)

Anonymous Coward | about a year and a half ago | (#42330173)

"It's that the companies don't reinvest some of that profit in actually increasing capacity."

Who says they don't? And besides that it's not your decision what they do with their money.

"republican morons"

I am the AC and I am not a Republican.

"AC is a moron"

I know you are but what am I?

Re:Corporation makes profit (1)

JoeSchmoe999 (782579) | about a year and a half ago | (#42330279)

Oh, I was hoping for something a little better than that from you, sir. A man of your education.

well, of course (5, Insightful)

Trepidity (597) | about a year and a half ago | (#42329499)

Just about anything a mobile phone company does is aimed at maximizing revenue. The reason they would even pretend otherwise is that it can be easier to convince people to pay more for things, and avoid being as angry about it, if you can feed them some kind of cover story to mollify them.

Re:well, of course (4, Insightful)

fredprado (2569351) | about a year and a half ago | (#42329577)

Yes you are right, but the problem is their being allowed to maximize their profits at the cost of consumers by avoiding competition because they hold monopolies or oligopolies in most areas.

Re:well, of course (0)

spcebar (2786203) | about a year and a half ago | (#42329647)

This. It would be a different story if there were actual options for the consumers, but there really aren't that many choices- and no choice is especially greater than the others.

Re:well, of course (1)

jythie (914043) | about a year and a half ago | (#42329867)

Combine that with such things are near nessesities at this point if one wishes to participate in modern society,.. you end up with a significant captive audience.

Re:well, of course (0)

Anonymous Coward | about a year and a half ago | (#42329599)

Just about anything done in the United States is about maximizing revenue rather than value. We're all about scamming a buck off of our fellow Americans.

Re:well, of course (5, Insightful)

Impy the Impiuos Imp (442658) | about a year and a half ago | (#42329729)

This, along with credit card companies raising your rate after you borrow a lot because you're "riskier", coincidentally trapping you and making it hard to pay off, and banks charging you overdraft fees, $35/incident, over and over to "protect you", are a nice trio of fine print fraud.

In all cases, the surface argument has the lie put to it because their business model hopes you get into trouble, and the business doesn't fear it. It is the desired state.

It is thus fraud and should be treated as such.

Well, duh... (0)

Anonymous Coward | about a year and a half ago | (#42329501)

Free market FTW!

Re:Well, duh... (3, Insightful)

denis-The-menace (471988) | about a year and a half ago | (#42329585)

The market isn't free because the incumbents buy laws to keep status quo.

So trash all laws is what you are saying? (0)

Anonymous Coward | about a year and a half ago | (#42330109)

Get rid of all laws and the market will be free, right?

Or are you talking complete disassociated bollocks? Again.

$45 a month unlimited Everything (0)

Anonymous Coward | about a year and a half ago | (#42329507)

http://www.straighttalksim.com/

Re:$45 a month unlimited Everything (1)

Andy Prough (2730467) | about a year and a half ago | (#42329527)

I've got a plan from another carrier for only $40.

Re:$45 a month unlimited Everything (0)

Anonymous Coward | about a year and a half ago | (#42329543)

Please share it.

Re:$45 a month unlimited Everything (1)

Hatta (162192) | about a year and a half ago | (#42329745)

Waiting until I get home is free. Have some patience.

Re:$45 a month unlimited Everything (1)

Desler (1608317) | about a year and a half ago | (#42330147)

Yeah like when your car breaks down. Let me just walk home instead of being able to use my cell phone.

Average consumer intelligence level declining. (1)

Andy Prough (2730467) | about a year and a half ago | (#42329511)

Millions of cell phone subscribers are paying big money monthly in order to consume advertising, in a way TV viewers in the 60's and 70's were never stupid enough to fall for.

Re:Average consumer intelligence level declining. (1)

i kan reed (749298) | about a year and a half ago | (#42329603)

You aren't really familiar with how cable TV worked, are you?

Re:Average consumer intelligence level declining. (1)

Andy Prough (2730467) | about a year and a half ago | (#42329759)

Cable was not popular in most areas of the US until the early '80s. Used to be the 4-channel free TV programming game - NBC-ABC-CBS-PBS.

Re:Average consumer intelligence level declining. (5, Insightful)

mcgrew (92797) | about a year and a half ago | (#42330205)

No, you're the clueless one. When cable first came out in the early eighties (it was around in a very limited form in very few places in the seventies) there was no advertising whatever. None. Not on the cable channels; the only time you saw a commercial was when you were tuned to an over the air channel. Uncut, uninterrupted, commercial-free TV. Then when everybody got hooked on cable, THAT is when they started introducing ads... between shows. Then they started breaking the shows for commercials like OTA TV. Then they got even greedier and started showing commercials at the bottom of the screen while the actual content is playing.

No, son, YOU are the one unfamiliar with early cable, simply because you never saw early cable and assumed it was always fucked up like that.

Guess what else? Empty-V used to play music videos instead of stupid "reality" shows. Discovery used to have science instead of "trick my truck." History used to have the history of the Roman Empire and the History of Beer instead of "ice road truckers."

Guess what else? I shut my cable off. It's no longer worth the money. OTA, DVD, and web for me. Comcast can go fuck themselves, the greedy, shiftless bastards.

Obvious article is obvious? (4, Insightful)

earlzdotnet (2788729) | about a year and a half ago | (#42329519)

Am I the only person who has known this for years? No matter how much data goes through infrastructure, it's not going to change the cost of running the infrastructure (significantly). That's like keeping a huge lightbulb on in town square but making people pay for the priveledge of removing the curtains from their house to let the light in. Doesn't change the cost, just another way for ISPs to gouge consumers. However, there is an exception. Satellite internet it makes sense right now for their to be caps. It's a behavior adjuster. A single satellite can only transfer so much data at once, so they commonly have off-peak times where if you want to download a few gigs, you can do it in those times and it won't go towards your cap. This is required because satellites are a fairly precious resource. Where I use to live no one in a 50 mile radius could get satellite internet because the only satellite serving the region was already over utilized and they didn't want it to get even worse.

Cellular the same way (2)

tepples (727027) | about a year and a half ago | (#42329553)

However, there is an exception. Satellite internet it makes sense right now for their to be caps. It's a behavior adjuster. A single satellite can only transfer so much data at once

In theory, caps on cellular (3G and 4G) data are the same way because of limited spectrum and limited space to put up cell towers. Except for some reason, cellular doesn't have an off-peak discount like satellite does.

customers are too stupid for off peak pricing (0)

Anonymous Coward | about a year and a half ago | (#42329945)

You don't remember cell phone commercials from 10 years ago, ridiculing competitors and their complex minute plans. The cell phone companies simplified their plans.

I think smart grids in America will fail, because consumers will not understand them and variable rate electricity pricing.

Re:Obvious article is obvious? (2)

negRo_slim (636783) | about a year and a half ago | (#42329783)

Am I the only person who has known this for years?

Anyone that's cared over this past decade has known, the problem is not enough of us care.

Re:Obvious article is obvious? (1)

Quila (201335) | about a year and a half ago | (#42330145)

I don't mind such a model. Bandwidth for wireless or landline is finite. At times when that finite resource becomes scarce due to high usage, a higher charge or a bandwidth cap makes sense. Or for cellular, pay more for a plan that isn't subject to the bandwidth caps, and the rest of us who don't care so much can live with the cap. Note bandwidth caps to adjust to traffic patterns, not a data amount cap. You normally have 4 Mbps, but it's rush hour on the networks so you only get 1 Mbps.

But they won't do it for the reasons set forth in the article. Basically, they're greedy. They don't want to give us the best service, they want to squeeze every last penny out of us. They can do this because competition is not that good. I was thinking of going to Virgin Mobile, but I can't live with their coverage, so I'll be staying with my sucky provider. Nobody around gives the bandwidth that the cable company does for home (the DSL is a joke).

orly (0)

Anonymous Coward | about a year and a half ago | (#42329537)

Sorry to say it as such, but ...

No. Shit.

Surprising? (3, Informative)

Cinder6 (894572) | about a year and a half ago | (#42329559)

I doubt anyone here is really surprised by this. On the one hand, the arguments made by the ISPs make some sense: as more and more people go online and download more and more multimedia and apps alongside simple web browsing (which also uses more data than it used to), then of course bandwidth usage is also going to go up. However, that argument ignores the other side of the coin--namely that the technology the ISPs use continues to improve, becoming more and more capable of meeting (or exceeding) that demand. The caps also ignore usage patterns, peak hours, etc.

If the ISPs cut you off entirely when you exceed your cap, then their argument might have some weight. But they don't do that. They let you keep going, at the same speed you were before. Only they charge you extra money.

What borders on criminal is that they're so bad about informing you of when you approach the cap. Though she claims never to use the Internet on her phone, my mother always goes over cap. She has only twice received a notification from AT&T that she was approaching the cap--both of which came two days(!) after she had already gone over her allotted amount.

I'm still on a grandfathered unlimited AT&T account. I come nowhere near 3GB of usage each month (I'm almost always on WiFi), but I have no intention of dropping down to a cheaper account. It's maddening that I can't get tethering (officially...) without going to one of their crap capped plans.

Re:Surprising? (1)

tangelogee (1486597) | about a year and a half ago | (#42329637)

I'm still on a grandfathered unlimited AT&T account. I come nowhere near 3GB of usage each month (I'm almost always on WiFi), but I have no intention of dropping down to a cheaper account. It's maddening that I can't get tethering (officially...) without going to one of their crap capped plans.

Exactly the reason I'm still on Verizon's unlimited. Although I try to use the mobile data as much as possible, and with 3rd party tethering apps. Hopefully something changes before my next contract so I don't have to shell out full price for a phone though...

Re:Surprising? (0)

Anonymous Coward | about a year and a half ago | (#42329857)

You know that's going away when you renew, right? I am also grandfathered into the now-defunct "unlimited" tier, and will be switching over to Boost when my contract is up at the end of this month -- for a total plan savings of ~$100/month for the exact same service.

Re:Surprising? (0)

Anonymous Coward | about a year and a half ago | (#42330177)

If you keep replacing your phone with an unsubsidized phone you can go month to month unlimited at your contract rate indefinitely.

Re:Surprising? (0)

Anonymous Coward | about a year and a half ago | (#42329907)

Verizon lets you tether now.

Verizon notifies (1)

Quila (201335) | about a year and a half ago | (#42330039)

For my kid I automatically get texts for (IIRC) 50%, 75%, 90% and limit hit (she can't go over).

Re:Surprising? (0)

Anonymous Coward | about a year and a half ago | (#42330225)

If they were smart, after you reach your bandwidth limit, your speed should go uncapped. That way they can gouge you even faster.

ISP bashing (0)

Anonymous Coward | about a year and a half ago | (#42329567)

While I haven't looked into this seriously, I'm starting to wonder if there is a general ISP bash going on. I understand that some of their policies are seedy, however I'm thinking about the cost.

They invested huge amounts to create the infrastructure they currently have, and it could be that it is only paying off now? Or it could be that it started off as this, with companies attempting to recoup the costs and start making profit, but then found that they could continue the status quo and make large amounts of money?

Do they need to justify what they are doing? They have a responsibility to their shareholders, they serve their customers in the way they think their customers deserve, what stops the customers from leaving to another company? Honestly is there? Lack of competition? In my country we have had low caps consistently, but recently the biggest company has been forced to lease their lines and as a result caps are rising and costs are dropping. Is the solution forcing the large companies to lease their lines out just above cost?

The point the article makes is interesting, but I'd hope people would think about it rather than jumping on the usual train, either the 'I know what I know' or the 'me too'.

Re:ISP bashing (0)

Anonymous Coward | about a year and a half ago | (#42329873)

Well of course the solution is line leasing. Good luck selling that to Congress and the American public.

This surprises who? (2)

Urban Nightmare (147344) | about a year and a half ago | (#42329573)

Of course they are. Just like the telco's and long distance charges. The lines where long paid for but they just keep say that to many people are making LD calls so to help increase the number we need more money. All the while they don't actually increase capacity and just pocket the money.

How we solve this I don't know. The only thing I can think of is to move to the ISP's that aren't gouging as much as the next guy. I know that's hard. I also live in a small town and have very limited choices of ISP's.

Here's one way to try and save your self some money. Buy shares in the ISP (if public). Just like the banks. Try and get some shares so you to can get in on the profits. Yes again easier said then done. I don't have solutions for everything and everyone just ideas, and not always good ones.

Nothing new here (5, Insightful)

xtal (49134) | about a year and a half ago | (#42329613)

This is the exact behaviour you'd expect from a largely-monopoly or entrenched oligopoly market.

Governments or municipalities should own the infrastructure. Everything should be fiber. Most of the costs in those rollouts are administrative, not technical in nature.

There is a huge economic cost in not having gigabit FTTH infrastructure; it's big enough that companies like Google are stepping in.

Re:Nothing new here (1)

Mashiki (184564) | about a year and a half ago | (#42329931)

Yep, I agree. But I don't like the idea of the government owning the infrastructure unless it's needed. I do live in Canada, so crown corporations(government run businesses that fill niches where private industry refuse to run--or are run because they screwed over the public so badly that their licenses have been revoked to operate in that area) are a way of life up here. The biggest problem I have with the government owning the infrastructure is I don't trust the government not to abuse it. Unless an independent 3rd party is monitoring it to ensure that they're not trying to screw people over with warrantless searches/tapping.

First Rule (1)

jazman_777 (44742) | about a year and a half ago | (#42329625)

is "Follow the money." Many things become clearer then, without even a white paper.

Dividends of ISP's should be heavily taxed (2)

hwstar (35834) | about a year and a half ago | (#42329633)

From TFA:

"The best way to resolve chronic network congestion in the long term is to invest and expand capacity. Yet, a review of the publicly available financial document for some of the largest ISPs in the country shows a decline in capital expenditures—the costs associated with building, upgrading and maintaining a network, such as construction, repairs, and equipment purchases—for their wireline networks.Many ISPs are spending less money on capital expenditures now, both as a ratio to revenue but also even in raw dollars,than they have in years past."

Lack of competition coupled with the payment of lucrative dividends by telecommunications is the culprit. AT&T pays 6% and Centurytel pays 7.5%. There needs to be an incentive to redirect the money to modernizing the networks. Maybe a tax credit for re-investing in plant and equipment, or a lower corporate tax rate if the dividend rate is reduced, and the money used for plant and equipment.

Why is data paid both ways? (1)

sohmc (595388) | about a year and a half ago | (#42329641)

This may seem like a really stupid question but it has always bugged me: why do both me and the content provider pay for data?

Back in the bad old days of Long Distance Calling, whomever initiated the phone call (assuming you're not calling collect or on a 800 number) paid for the call. It made sense: why pay for something that you didn't start?

However, in data, both sides pay. Am I the only one confused by this? I understand that I should have to pay for a connection (like the phone company) but why do I get a bandwidth meter along with the other side?

The only reason I can think of is because the data is "asynchronous" (e.g. the same amount of data isn't being exchanged). But this reason only goes so far since once side is uploading and the other side is downloading.

Re:Why is data paid both ways? (1)

denis-The-menace (471988) | about a year and a half ago | (#42329685)

Because you will pay for it anyhow.

If you don't, you will be teased at school/work for being wise with your money.

Re:Why is data paid both ways? (1)

swschrad (312009) | about a year and a half ago | (#42329731)

because the ability to service the traffic is required on both sides, and since staff, fiber, electricity, and "call-a me Bob" in support are not free, you got to pay for it.

Re:Why is data paid both ways? (2)

Hatta (162192) | about a year and a half ago | (#42329921)

Because you're not really paying for data, you're paying for network access. It's more like local calling, where both sender and receiver pay a flat charge to get access to the network. Since the local network is owned by the telco, they don't have to pay anyone for usage, so you get to use it as much as you want once you have access.

With ISPs it's similar. They have to pay for what exits their network and goes to the internet, but that's pretty much a flat cost. That link should stay saturated. If you're sending too much data to Japan or wherever, TCP/IP has mechanisms to limit that. There's absolutely no reason to charge per byte for internet access.

Capitalism (5, Insightful)

girlintraining (1395911) | about a year and a half ago | (#42329651)

This is precisely why capitalism doesn't belong in some markets. Cue rabid "the free market is always right" retorts in 5...4...3... but the truth is when you have any infrastructure service; sewer, electricity, communications, roads, etc., that everyone needs access to (or at least a majority of people in the community use often), without regulation this kind of thing will happen. It creates a natural monopoly; And no, the government doesn't create the monopoly. It would happen whether the government even existed or not. This is the quintessential example of where and when government regulation is needed to rebalance things so that the service provided retains its usefulness to society without becoming parasitic. The government is the only thing besides an even larger monopoly power that can influence this kind of market dynamic.

And yet here we are, getting put over a barrel and raped because of our idealized notion of how the market will "correct itself", and how government regulation "hurts businesses". You know what, fine: Let one company's profits suffer a little for the greater good, rather than letting everyone suffer a little so the company can be massively profitable at our expense. We need to put a stop to the nickle and dime death march that is killing our middle class off. We need regulation.

Re:Capitalism (-1)

Anonymous Coward | about a year and a half ago | (#42329861)

And currently I am watching debates between the DNC and GOP as they decide how much of my money they are going to take, without any of my input. I am being hurt so that the DNC can look like heros handing out free cell phones and giving grants to their buddies at A123 and Solendra.

Amazing at how your solution to free markets involves the biggest, least caring monopoly in existance the government. I literally give HALF of what I earn on a 1099 to people who call me a bigot because I think they are theives, and people like you support them telling me that having choice in ANY part of my life is wrong and I should be forced to take what the government tells me I should get through "regulation". Sorry, but the evil companies here don't throw me in jail or take half my money before I see it, yet your hero does exactly that while attempting to stifle my rights at every possible opportunity. The evil companies don't force me to do business with them and I am more than willing to stop giving money to those I disagree with, yet your hero the government radiates me every time I go on an airline and then tell me to pay more or face jail, all the while the government leaders (Daschle, Geither, Rangle) don't pay their "fair share of taxes".

Sorry, you are so delusional it is painful to read your words.

Re:Capitalism (1)

Anonymous Coward | about a year and a half ago | (#42329925)

I'd call it more corporatism than capitalism and price setting.Eliminating the free market is the problem.If a new company came along (and had the means) they could offer unlimited bandwidth for a set cost.Providing they offered comparable service I would use them even if they were a little more.Currently, I use a local ISP called Service Electric.A couple of years back they capped people at 40GB a month.Then I heard it jumped to about 100GB until Comcast came in.Comcast is 250GB so Service Electric matched them.If these companies had competitors in a truly open market and one came in who could offer more believe me they'd buckle.

Re:Capitalism (3, Informative)

ElectricTurtle (1171201) | about a year and a half ago | (#42329979)

I challenge you to name one instance in history where a monopoly has existed where government wasn't playing either or both of two roles:

1) Creating barriers to entry on behalf of corporate lobbyists that make competition illegal (as only government can do) except for the existing major players who coincidentally* are the only entities with the infrastructure to meet the arbitrary legal (government) requirements.

2) Looking the other way while corporations bribe government agents to allow criminal acts including intimidation and violence to prevent competition in an extrajudicial way.

Telecom is not a free market because even if I bought a ton of equipment and hired a bunch of people, I could not enter the market as an ISP, because the market is regulated. These regulations make competition illegal for any entity other than the players that "helped" draft the regulations in the first place.

*Sarcasm

Crony Capitalism != Free Market (0)

Anonymous Coward | about a year and a half ago | (#42329997)

ISPs are quite heavily regulated, and are commonly given local monopolies (or oligopolies) - THAT's why service is so bad and the prices are so high.

Bring on a free market, and you might see prices come down, while quality rises, just like with the unregulated electronics sector (phones, computers, tablets, TVs).

Re:Capitalism (1)

MyLongNickName (822545) | about a year and a half ago | (#42330093)

You are kinda right. When a monopoly or other form of heavily restricted competition and/or there is a public good that goes beyond a strict consumer/supplier relationship, then you are right in that we should not be left to the mercy of the suppliers. Where I think you are wrong is that this does not spell out "capitalism doesn't belong". You even say so later in your post that "We need regulation". So, capitalism DOES belong, but it should be regulated to ensure it conforms with the broader public good.

Re:Capitalism (0)

Anonymous Coward | about a year and a half ago | (#42330099)

This is precisely why capitalism doesn't belong in some markets. Cue rabid "the free market is always right" retorts in 5...4...3...

The free market is always right. But it's not stable. Government intervention, growing megacorps turning into monopolies, pooling risks via insurance, these are all ways in which a free market can become non-free. Left to its own devices, the free market often (and you might even make the argument for "usually") ends up no longer free.

but the truth is when you have any infrastructure service; sewer, electricity, communications, roads, etc., that everyone needs access to (or at least a majority of people in the community use often), without regulation this kind of thing will happen.

It has nothing to do with whether everyone needs access to it. It has to do with there being only a single source of the commodity. There's one sewer system, one electrical grid, etc. There's no reason to believe that internet access has to be this way, especially with the push toward wireless communication. Multiple ISP's could compete on price if they were ever given a chance.

It creates a natural monopoly; And no, the government doesn't create the monopoly.

Except in this case, it did. Go back and review the history of the internet in the mid 90's. The government granted the big telco companies huge incentives, essentially forming monopolies, under conditions that they then did not meet. It was basically a blank check. You can argue whether things would have been even worse if the government hadn't gotten involved, but you can't argue that the current situation is due to the free market.

It would happen whether the government even existed or not. This is the quintessential example of where and when government regulation is needed to rebalance things so that the service provided retains its usefulness to society without becoming parasitic.

I agree with you, but not for the reasons you believe. The government created the problem, the government is needed to clean it up.

The government is the only thing besides an even larger monopoly power that can influence this kind of market dynamic.

And yet here we are, getting put over a barrel and raped because of our idealized notion of how the market will "correct itself", and how government regulation "hurts businesses".

No, the market will not correct itself in this case. That ship sailed a long time ago; it would take a massive change to restructure it at this point. So I can only argue hypothetically at this point. IF we managed to split the monopolies into small businesses and got rid of the regulations, it's possible that we could have a free market in internet service. But I don't see us getting there any time soon.

You know what, fine: Let one company's profits suffer a little for the greater good, rather than letting everyone suffer a little so the company can be massively profitable at our expense. We need to put a stop to the nickle and dime death march that is killing our middle class off. We need regulation.

We don't "need" regulation in the sense that it is a necessary component of internet service. But perhaps we need it in this environment that was artificially created by government intervention in the first place.

Re:Capitalism (0)

Anonymous Coward | about a year and a half ago | (#42330101)

It's not a free market; they have local monopolies: http://theoatmeal.com/pl/state_web_winter_2012/google_fiber

Re:Capitalism (1)

TheFlamingoKing (603674) | about a year and a half ago | (#42330141)

If you're going to pick an example of the failure of free market capitalism and call for regulation, maybe you should choose an industry other than the one that has an entire agency of the federal government dedicated to regulating it.

One of the FCC's main goals is to promote competition. Instead, look at the concentration of power of radio, television, telephony, and increasingly the web, in the hands of a few powerful corporations. If "deregulation" looks like a $350 Million dollar FCC budget with 2000 employees and the dismal selection choices I have for mobile phones (4 companies), cable TV (2 in my area) or dish (2 companies), radio (all owned by ClearChannel), and high speed internet (nothing at Google/FiOS speed here)... then I really don't want to know what the limitations created by more regulation will bring us.

There are 5 commissioners that head the FCC. It is so much easier for a corporation to convince 5 people that competition is bad than it is to have to convince 200 million plus people that you have the best product or service. You fear a monopoly. I say the monopoly is already here. It's a cartel corporation called Verizon Sprint AT & T Mobile, and they're working the FCC and the Senate to make sure you and I never get another company to choose.

well it just makes sense. (0)

Anonymous Coward | about a year and a half ago | (#42329661)

I mean, surely the free market is working efficiently when i am charged fifteen cents to send a 200 character text message once i exceed my generous allotment of 400 per month. it's a price that accurately reflects the costs of offering the service, right?

oh but seriously, can someone explain how anything other than collusion can explain the market price for testing?

Duh (5, Insightful)

Hatta (162192) | about a year and a half ago | (#42329671)

Bandwith is not a commodity like water. We don't save anything when we under utilize it. The cheapest per bit cost is when the network is maximally utilized. Incentives that encourage people to use less bandwith are economically unsound.

Re:Duh (2, Interesting)

choprboy (155926) | about a year and a half ago | (#42329917)

No... As someone who works for a small ISP, and runs the backbone among other things, bandwidth is exactly a commodity like water. Bandwidth is extremely cheap at the source, but the source is not where the end users of that water are. The bandwidth must be distributed across a vast area to many, many endpoints. I can get water out of a river for (nearly) free. But as an ISP, if you want that "water" delivered to your doorstep and I have to pipe it uphill, 50miles from the source, the water is no longer "free". It costs real money to distribute...

Now, my above statements are not meant to imply that the premise of bandwidth caps are not financially sourced... they are. But to extrapolate that backbone peering is cheaper now than previously and that therefore end users are being overcharged, is a complete farce. The entire premise of the article is flawed by a complete misunderstanding of the costs an ISP experiences.

As an ISP, we get offers of dirt cheap peering bandwidth all the time, on the order of a couple dollars per Mb per month for 1GB+ circuits.... But when you question their quoted price in depth the result is always the same... this isn;t bandwidth delivered to your door, to our POP, this is bandwidth delivered on a switch port at the datacenter the peering provider is already located in. I.e. selling me access to the river assuming I already have my feet in the muddy bank. Actually getting that river out of the banks and to my office door costs far far more than the river itself.

So yes, bandwidth is a commodity exactly like water....

Re:Duh (1)

Hatta (162192) | about a year and a half ago | (#42330229)

But as an ISP, if you want that "water" delivered to your doorstep and I have to pipe it uphill, 50miles from the source, the water is no longer "free". It costs real money to distribute...

Not really. Sure, building and maintaing the *capacity* costs money. But that's a fixed cost regardless of how much of that capacity you actually use. That's very different from water.

Re:Duh (3, Insightful)

vux984 (928602) | about a year and a half ago | (#42329973)

Bandwith is not a commodity like water.

Bandwidth is not like water, it is like water pipes.

. The cheapest per bit cost is when the network is maximally utilized.

Q: And what exactly happens if it is maximally utilized and you want to send 1 more packet?

A: It doesn't go through.

Incentives that encourage people to use less bandwith are economically unsound.

Nonsense. Another equivalent for bandwidth is the road network. Sure, perpetual gridlock maximizes the 'cars per unit of pavement' metric, and in some twisted logic divides the cost of the pavement between the most vehicles... hurrah!... but only a complete idiot would argue that encouraging people to drive less is economically unsound because it means the roads aren't getting "maximally utilized".

Saturated networks are not optimal.

Re:Duh (1)

Hatta (162192) | about a year and a half ago | (#42330181)

Q: And what exactly happens if it is maximally utilized and you want to send 1 more packet?

A: It doesn't go through.

Or rather, it doesn't go through with an equal probability that other packets won't go through. We all get our fair share of the network, regardless of oversubscription.

Sure, perpetual gridlock maximizes the 'cars per unit of pavement' metric, and in some twisted logic divides the cost of the pavement between the most vehicles... hurrah!... but only a complete idiot

Only a complete idiot would compare IP networks to the roads. Packets don't slow down when there's not enough room. The cost of fuel per packet is negligible, not so with cars. It's not the same at all.

Re:Duh (1)

CastrTroy (595695) | about a year and a half ago | (#42330199)

I understand what you are referring to, but has anybody actually measured something like the amount of power consumed by a switch under 0 and maximum load? I imagine there is a slight difference in cost between running a switch at full load and running it at zero load.

Also, the big problem is that most home users want high speed, but don't want to pay for a dedicated line that guarantees that speed. I want to be able to download at 25 mbps, because my pages load faster, and I don't have to wait long for the video to buffer. However I really don't think I should be allowed to use 25 mpbs, every second, for the entire month. So you have a problem. People want high speeds, but you don't want them going at full speed for the entire month, or they will over-utilize your network. Can you propose a better billing solution then billing them by throughput?

Ohs Noes (0)

Anonymous Coward | about a year and a half ago | (#42329697)

Profit! Must recoil!

and now for something inconveniently different... (2)

swschrad (312009) | about a year and a half ago | (#42329699)

over on the ISP and backbone side of life, data traffic is growing 50-60 percent per year, and it's a wild race to try and keep ahead. an expensive race. at this point, at least one company I'm familiar with is asking do they raise the backbones to 400 gig or to one terabit inside the centers.

that ain't the flower fund they have to raid for it.

argue caps all you want, NostrilDrippus Predicts! (tm) that tiers of usage or per-gig usage charges are your next fightin' words in mere years of time.

Breaking news! (0)

Anonymous Coward | about a year and a half ago | (#42329753)

Also in breaking news, the sky is blue!

Anyone else want to take the time out to point out the completely obvious?

Bmod Up (-1)

Anonymous Coward | about a year and a half ago | (#42329755)

NetbSDD posts on [goat.cx]

An easy solution? (1)

Synerg1y (2169962) | about a year and a half ago | (#42329825)

So this is something that big brother is there to help us out with, there's a real simple solution imho: the government owns the backbone and leases it to the ISPs, fuck level 3, fuck comcast, give it to uncle sam. Comcast can lease from sam, so can Syn, Syn doesn't like comcast, I lease the backbone all the way to a public gateway and comcast needs to be competitive or Syn will charge less (A LOT less in current market state) and take all it's customers.

Now the problem with this is that ISP's install their own backbone, so they own it, the government would have to lay down a backbone of similar nature house to house costing billions.

Yep, yep, yep (1)

sribe (304414) | about a year and a half ago | (#42329947)

As another point: I live out in the middle of nowhere, and according the the major telco/cable companies it's "not profitable" to provide any decent service to me. Yet, not 1 but *3* local ISP's have started up here--the newest one is close to 2 years old, the others have been around for substantially longer than that and are still in service, therefore presumably making money.

Qwest or Comcast could easily have owned the entire market here and left no room at all for these upstarts, but they just did not care.

Do people really care? (4, Interesting)

Anonymous Coward | about a year and a half ago | (#42329981)

I live in Toronto, Canada and there's two options for cable and cell phone: 1) get gouged. 2) don't get gouged but deal with a smaller player.

I have friends who complain about their overage bills using the internet with Rogers and Bell. I tell them that they can get unlimited usage (or 300 gb / month limits if you want to save a few more dollars/month) for half of than what they're paying via Teksavvy and they don't want to switch.

I have friends who complain about paying $70 / month for a cell phone that only gives them 1 gig of data use and tell them about the unlimited data/calling/texting/voicemail plans Wind offers for $40 / month and am met with "wow, that's a good deal, I should switch," but no one ever actually switches.

I understand that some friends say this just to be polite so I'll leave them alone, but there is something to be said for momentum that people have with a company even if it's ripping them off.

not just the cost of transit (1)

Anonymous Coward | about a year and a half ago | (#42330135)

I actually work for an ISP in the UK. I don't know about the states, but here the big cost to us is the backhaul from the customers premises to one of our PoP's. Transit costs are going down dramatically but backhaul costs are not. People are using more bandwidth, which means overall it is becoming more expensive to provide services.

Anyone ever hear of WSCA? (1)

otakusensei (1145167) | about a year and a half ago | (#42330159)

The Western States Contracting Alliance is an agreement that AT&T Mobility and Verizon Wireless extend to their government and non-profit customers. Aside from no early termination fees and some other sweet deals that make mobile much more palatable, they offer users unlimited data standard. Not "5 gigs and you're out", but truly unlimited mobile data at full 4G speed. I pushed 12 gigs last month as a personal best without being throttled or sent a nastygram. While I'm glad they extend this service to the IRS recognized do-gooders out there, I know that it came about because your senator doesn't want to worry about data caps and speed and those peasant concerns. They worked for this, they dictate the terms and I think everyone should know about it.

And the crack team at the FCC... (1)

seven of five (578993) | about a year and a half ago | (#42330239)

remains sound asleep.

Netflix (0)

Anonymous Coward | about a year and a half ago | (#42330253)

In Canada major ISPs also happen to be the biggest satellite and cable TV companies.
With more and more people now subscribed to Netflix, caps have yet another "justification" besides those mentioned in other posts.

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