

Bit Traffic: Who Pays for Internet Traffic and Why? - josh2600
http://thepbxblog.com/2012/12/03/bit-traffic-who-pays-for-internet-traffic-and-why/

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nathan_long
TL;DR - internet traffic is paid for by users, but high-bandwidth use like
video costs the ISPs more, and they'd like to double-dip by also charging
sites like Netflix.

~~~
josh2600
Yes.

It's important to note just how much video content has grown compared to
revenues though. If you click through to the link on the Deck, you'll see a
bunch of stats about video utilization compared to revenue. The numbers are
pretty mindblowing.

Costs for consumers haven't really gone up, but utilization has increased
considerably. Any idea about what the answer should look like? (Note: you
can't say Google Fiber).

~~~
nathan_long
>> Costs for consumers haven't really gone up

Costs for consumers are whatever the ISPs decide they are. The answer should
look like "if you cost us more, we charge you more," just like every other
business on the planet.

It doesn't have to be X bits = Y dollars. It could factor in load; the meter
runs faster at high-demand times and slower at off-peak times. That solves the
"bandwidth is a renewable resource" argument and the "some people use more
than their share" argument. They'd just have to ensure that the meter is
highly visible to consumers.

~~~
josh2600
Let's be frank, the only real cost for consumer internet is the last mile.
Since Internet access for residential bandwidth was reclassified thanks to the
memo from George W. Bush around 2004 we haven't had real competition because
common carriage doesn't extend to your front door.

Contrast this with Datacenter bandwidth where paying $.10 a megabit isn't
unheard of. The cost structures are not related to the core infrastructure,
but rather the edge.

I think this problem is a lot more complex than you're making it out to be,
but that's just my opinion. In a lot of cases the rates for ISPs aren't set
randomly, they're anchored to standards set by regulatory bodies (particularly
in the case of DSL).

In short, pricing bandwidth is hard. The real cost is the last mile.

~~~
nathan_long
I think you understand this better than I do, so maybe I'm being simplistic.
But isn't the gist of what you're saying "it's complicated because ISPs have
gotten themselves a near-monopoly status and then, in reaction, we've
regulated them?"

If so, that doesn't make me sympathize with them at all. If they want freedom
to charge more according to access, or to charge more according to the
difficulty of running the last mile connection, I'd say "give up your monopoly
protections and we'll remove your regulation."

If they don't want that, I'd say "you start charging both the consumer and the
content provider and we'll pass a regulation saying you can't."

If a company wants the government to be their sugar daddy, they shouldn't
complain when they get grounded. You want your own rules, you move out of the
house and compete in the free market.

~~~
josh2600
In very old industries you often have players who have a monopolistic status.
Markets either become price efficient or competition deficient over time. In
the case of telecom there is stratified warfare.

At the consumer level, competition is scarce. In the SMB Segment competition
is fierce. In the Datacenters world competition is fierce, but at the core of
everything you have to go through 721 Folsom street to get out of the left
coast.

This fight is particularly interesting because it's one of the first to cross
the Commercial-Residential boundary. On the one hand, consumers pay for
access, on the other, large ISPs peer networks. One is a contract, the other a
handshake.

In this particular case, ISPs argue that since usage increases so should
rates, but in order to arrive at such a conclusion, the large ISPs would have
to ignore their monopoly.

Let's take this a step further though; there's a really big problem with
everyone building their own network. That is, no one wants thousands of wires
running to each residence, but that's what a competitive last mile would look
like.

The answer is municipally controlled networks with private operators. The
infrastructure would be owned by the state, but operated by competitive
virtual operators.

Unfortunately, this vision is impossible in America, and that's why we can't
tackle this problem straight-on and instead have to operate through layers of
abstraction.

TL;DR: public networks, private operators is ideal. Impossible in US.

~~~
graysnorf
Why do you say it's impossible in the US?

~~~
josh2600
It's impossible due to regulatory and lobbying pressure. I believe Palo Alto,
CA operates a network similar to this, but that kind of network isn't possible
in a city like San Francisco or LA.

IMHO the incumbent carriers have no interest in competing if they can be a
monopoly.

------
tolos
So I've never really understood why landlines should charge per data
transferred. I mean, after all the communication lines have been run and
hardware has been setup, the only additional fees are for power, right?

~~~
montecarl
Lets say I'm an ISP and I have a gigabit connection to an internet backbone. I
pay $X/month for it regardless of how much data is transferred. If I run fiber
out to each of my customers that can run at gigabit speeds, how should I
regulate/charge each user?

1\. I could artificially rate limit them to less than the physical link speed.
So I could let each user connect at 10 mbit/s. That would let me have many
customers using there max speed at once and if I have 100 or less customers
then they are guaranteed to get their full 10mbit/s. If I have more then they
only get 10mbit/s at off peak times.

2\. I could let everyone connect at the full gigabit speeds and put a quota on
how much data they can send in order to prevent hogging.

Would you rather than 10mbit/s with unlimited data or 10mbit/s * 1 month of
data transfer at a max rate of 1 gbit/s?

I imagine that you might want the first or second option depending on your use
case.

[edit: forgot third option]

3\. I could do fancy traffic shaping and make sure everyone gets at least
1/(number of active users) bandwidth and can burst up to full gigabit speeds
when the connection is idle.

This seems like the best way to share the resource fairly.

~~~
josh2600
See this is only with an even playing field. You're thinking about how you'd
design a network in a world that didn't have all the embedded rules and dogma
that we have in the US.

The biggest question is not network management policies, but last mile access.
There are tons of ISPs with great bandwidth practices. Guess what? None of
them have enough footprint to compete with the big guys.

The problem is not network management, it is edge distribution.

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apenwarr
That powerpoint deck is awful. So video is an increasing percentage of
internet bandwidth - so what? Price/performance of bandwidth is improving
exponentially. It's unsurprising that non-video bandwidth isn't increasing as
fast as video, since video is automatically big (and easy to make bigger: just
move up to higher resolution) whereas "normal" traffic only gets bigger when
users create more stuff. This increasing percentage doesn't say anything about
increasing backbone costs, even though the graphs are meant to imply that it
does.

~~~
josh2600
That deck was done by a research group and yes I think it is intended to imply
that the network costs increase as volume over the network increases.

While this is implicitly true, I agree that there isn't an explicit
relationship, BUT it was interesting how dramatic the growth of video has been
and how much of the network is video.

You do agree that carriers are moving more data than they ever have before, a
fact which repeats itself daily. I'm not necessarily arguing that ISPs should
be able to charge more for video, only that there is more usage on there
network which may or may not impact their backbone costs.

You are correct that the implied linkage is misleading, but I wouldn't call
the deck "awful". It's just a viewpoint, and it does provide some useful
context/information.

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mikemoka
the only way for isps to grow is not to block the progress but to embrace it,
they should try to find a way to improve the technology behind their networks
imho, could 4g networks bring something to consider here?

~~~
josh2600
The problem here is Shannon's law. Ever go to a big event like SXSW and try to
make a call? That's what massive deployments of 4G utilization look like;
similar to downtown SF post-iPhone.

Wireless has a long way to go but fixed-wave might help here. There are also
solutions from Ruckus and Meraki/Cisco which could help, but it's a big
problem with no clear solution.

