

ISP Bandwidth Caps are Really Rate Hikes - Deprecated
http://www.cringely.com/2011/07/bandwidth-caps-are-rate-hikes/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ICringely+%28I%2C+Cringely%29

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MikeCapone
As a Canadian who went through the debate here, I can say that caps and rate
hikes aren't the same thing. The psychological impact on the average internet
user is very different, and so online behaviour will be impacted in a
different way.

Paying 40$ a month instead of 30$ for an unlimited or very high amount of data
means you'll grumble a bit, but you'll still do whatever you did before.

Going from a very high cap or unlimited to a very low cap + expensive
additional data means you'll very probably try to restrict your data transfers
and do whatever you can not to exceed your cap.

You don't have a sunken cost like with a normal rate hike..

~~~
baddox
What's surprising to me is that, at least with Comcast, there's simply no way
to get the cap-free service I had before. I don't have the option to pay more
to remove the cap (other than paying per gigabyte over the cap, which is
silly).

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wmf
Business service?

~~~
e40
Yes, but it's expensive. I pay $89 + $10 for static IPs per month. The data
rates I get: 50+Mbps/6Mbps. I torrent tv shows and I've never noticed any
problems seeding. My downloads usually start out at 3-5MB/s, and drop down to
2MB/s. Clearly they are throttling the downstream, but I can live with that
rate.

EDIT: I don't know what the advertised rates were, but they were less (20/5?).

~~~
ComputerGuru
e40, what's the name of your plan? I can't seem to find rates like that on
their site, the 50/20 plan is for 280 dollars.

~~~
e40
On my bill it says: 16m Business Class HSI Preferred, for $89.95. The 5 static
IPs are $9.95.

I don't remember there being a specific name for it.

I would not be surprised if they don't offer the exact thing anymore.

My advice, get some relatively low speed (16Mbps) and hope it's much higher,
like I got.

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sgrossman
While I don't argue with the title of the article - bandwidth caps really are
just a way to deal with infrastructure costs by passing it on to some
consumers - the use of IP transit as a reference for an ISPs cost of service
is inaccurate.

IP transit costs are what a carrier or ISP would pay to get traffic from their
main datacenter/CO in a given metro area to the Internet. This is an operating
expense and is a drop in the bucket compared to CapEx they spend on the last
mile.

The cable operators and mobile carriers are freaking out because they are
constantly pouring money into nodes splits and QAM carriers(cable) or radios,
backhaul, and spectrum(mobile). These are the real money pits of their
businesses and their motivation to enforce data transfer caps, throttling,
etc.

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baddox
I don't understand why ISPs aren't offering _some_ benefit to their users when
they introduce these transfer caps. Why not add caps to the lower plans and
lower the price as well? If it's true that the vast majority of users don't
get anywhere near the caps, then this would be beneficial to most users.

For heavier users, offer a plan with no cap (or, say, a cap 10x larger) and
higher speed, and charge more for it. I think power users would be much more
accepting of a price increase along with higher speeds than a simple addition
of caps to all plans with no price change.

~~~
rexf
In the US, cable companies are often monopolies in providing broadband
internet. They get away with offering mediocre product and poor service simply
because there are no alternatives.

I've had the backwards situation where it was cheaper to buy basic cable TV +
cable internet than stand alone cable internet.

It would be foolish of them to offer a cheaper, limited cable internet plan
when they can make everybody pay more for their standard, unlimited (that is
not unlimited) plan.

~~~
baddox
From my small town of 10,000 people, to my college town with 100,000, to my
current home in San Francisco, there has always been at least two broadband
providers: usually the local cable company and AT&T DSL. Perhaps this isn't
the norm, or perhaps two companies with completely separate local
infrastructures isn't enough competition.

~~~
Game_Ender
DSL is not good competition for any reasonable cable internet service. In
Pittsburgh Comcast's $60 a month service is 5 times the speed of the $25 a
month 1-3 mbps DSL service offered by Verizon DSL. The DSL connection is
barely enough for reasonable quality video streaming, but it's not enough if
you want to have two people use pipe at the same time. FIOS does provide
decent competition but it's availability is limited.

~~~
cma
You can get two lines and bond them.

~~~
nitrogen
That's about as useful as taking two slices of bread, gluing them together,
and declaring the result a complete bakery. You'd have to get _ten_ bonded DSL
lines to compare with the speed of a cable modem in my area.

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MrVitaliy
The default 2Gb wireless internet cap from Verizon is pathetic.

It is even more pathetic with their 4G network advertisement. All it takes is
1(maybe 2) HD movies from Netflix to hit a monthly cap.

~~~
Ronkdar
the 2-5 GB caps are for wireless networks, aka 3G. How often do you download
HD movies onto your phone? In the very next sentence it mentions 250 GB for
desktop connections.

~~~
MrVitaliy
Netflix client has been out on Android phone OS for awhile and is quite
popular.

[http://www.verizonwireless.com/b2c/mobilebroadband/?page=pla...](http://www.verizonwireless.com/b2c/mobilebroadband/?page=plans)

Default data plan for smart phone is $30/mo, capped at 2Gb/mo, on a 4G
network.

Their maximum cap is 10Gb/mo for an outrageous price of $80/mo.

It is evident that the whole point of 4G network for Verizon is to bring their
customer to the monthly cap at a blazing speed and start over-charging them by
$10/Gb as soon as they can.

~~~
Nrsolis
Ya know, I can't help feeling that this quote is apropos:

"Everything is amazing, and nobody is happy." --Louis C.K.

It used to be the case that you couldn't get ANYTHING approaching 5mbps
download speed in your home. Now we regularly get 15, 25, and even 50mbps
download speeds.

You also couldn't get decent wireless data. Remember EDGE? 1xRTT? Try
streaming Netflix back then.

I remember Airphone and using a MODEM to get 9600bps data so I could send an
urgent IM and followup email via the Airphone on a flight to a co-worker. Now
I can get GoGo inflight internet pretty regularly. I'm looking forward to my
next transatlantic on Lufthansa when I can have access to the Internet for
almost the entire flight.

Need high-speed internet out in the middle of NOWHERE? You can get two-way
high-speed Internet via satellite for a very reasonable sum.

It's all amazing and nobody is happy.

I've spent the past 20 years working in the Internet industry for almost EVERY
major ISP out there. It's quite disheartening to see your router capacities
double every two years when you're locked into a 7-year depreciation cycle for
network hardware. Ditto for long-haul transmission.

This wireless is different? Maybe you weren't there for the tower space
leasing negotiations I witnessed. You think broadband is expensive? Try
sticking 3 antennas along with hardline 150' up a pole and tell me that your
broadband is expensive when you see the monthly bill for tower leasing for a
SINGLE site.

WOW.

The long term trend for high-speed internet pricing is DOWN. We get more and
more downstream and upstream capacity per dollar with each passing year. Wired
AND wireless. What was once IMPOSSIBLY expensive is only going to get less so
in the future.

I used to pay $12.80 PER HOUR for 1200bps access.

BTW, You're Welcome.

Too expensive? Don't pay it. I think you can still get a 56kb modem on Ebay.
Dialup ISP service is something like $7.95/mo now.

And that's in 2011 dollars.

~~~
nitrogen
_Ya know, I can't help feeling that this quote is apropos:

"Everything is amazing, and nobody is happy." --Louis C.K._

Whenever this point is raised, I always argue that human progress depends on
the amazing becoming commonplace, luxuries becoming essentials, etc. If we
were always walking around being bewildered by everything, we'd have no reason
to improve.

~~~
Nrsolis
My main point was to illustrate just how far we've come in absolute terms.

My second point was to point out that there are real reasons why the
assumptions made about what broadband "costs" aren't really relevant to what
you "pay" for it.

Without putting too fine a point on it, CAPEX on equipment/fiber tend to be
dwarfed by the OPEX of leasing and labor costs associated with running a
telecomm business for profit. Somewhat distended depreciation schedules
mandated by GAAP compound the problem of removing obsolete assets from
production networks and replacing them with newer equipment.

BTW, pricing for "Internet" has been "metered" almost from the beginning of
commercial availability. UUNET did 95th percentile pricing for almost all of
its dedicated access customers because that was the best way to tie
consumption patterns to bandwidth availability.

If bandwidth seems expensive now, it's only because you've been paying for it
for a very, very short time.

~~~
nitrogen
My first encounter with the Internet was on a 10hr/mo. dial-up connection with
a 14.4kbps modem, and I'd been using BBSes before that. I definitely
appreciate how far we've come :). Still, ISPs have reached the point where
they're holding back technological progress to satisfy their own ends.
Municipal fiber projects and independent ISPs often don't impose the same
restrictions as the monopoly players, which suggests that it's possible to run
a network without, for example, forcing Netflix to pay an extra fee on top of
its existing bandwidth payments.

So does the extended depreciation force equipment owners to pay the taxes they
would've written off for the extra years if they just disconnect the equipment
and let it sit in a closet?

~~~
Nrsolis
How many municipal ISPs are there? Municipal fiber companies?

Careful. I used to work for a municipal fiber company and they are FAR from
being the best group to build the kind of Infrastructure we need. Don't even
get me started on the problem of politicizing the communications
infrastructure of a city.

The only path forward is for us to get some real competition between the
cablecos and the telcos.

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zheng
Thanks for those normalized graphs. Really gives a striking visual rebuttal to
ISP's baseless claims.

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joelhaus
Does anyone feel that the new white space standard (up to 22Mbps over 12,000
sq mi; 802.22) could be a game changer?

Original article was posted here yesterday:
<http://news.ycombinator.com/item?id=2814917>

_Cross-posting my question from this thread:_

Is this spectrum encumbered by any regulations that would prevent an
enterprising individual from leasing some land near a backbone connection and
setting up a startup ISP?

Would LOVE to see the regional cable monopolies face real competition. 22Mbps
is about 30% more downstream and 4000% more upstream speed than I get from
Time Warner Cable in NYC.

~~~
wmf
22 Mbps _shared by hundreds or thousands of customers_ is much worse than
cable or DSL. You can already do ~100 Mbps at decent range in 2.4 GHz using
Ubiquiti or similar equipment; there are dozens of WISPs doing this and if
they're lucky they barely break even.

~~~
joelhaus
Thanks Wes - If I understand correctly, it's the density of end-points within
range that would determine whether the economics are favorable.

Wondering then, what is the use case for this new standard? Only very rural
areas?

~~~
Nrsolis
No. You're missing the point ENTIRELY.

As average bandwidth consumption PER ENDPOINT increases and moves from very
bursty to somewhat constant bit rate, the effects up the cost chain start to
chip away at the design parameters that went into building the infrastructure
we're going to live with for some time. Replacing that infrastructure is
costly so pricing pressure is used to delay that replacement event. It's all
about ECONOMICS.

This is the case whether we're talking about urban or rural areas. It's
definitely more acute when we're in a rural area, but the first-mile is only
part of the cost of delivering b/w. The rest of that cost is driven by
indirect factors.

Case in point: a very recent government regulation resulted in a network
upgrade that cost $71 million in new hardware ALONE. Add in the labor costs
associated with testing and installing all of that hardware and you're
somewhere north of $100 million. That "upgrade" added not a single bit of
capacity to the network.

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wmf
Cringely doesn't mention ISPs' claims that they will increase the caps every
year. I'm willing to wait for them to renege before breaking out the torches
and pitchforks.

~~~
ericd
And if they reneg, are you going to be able to get enough pitchforks to make a
difference?

~~~
wmf
No, which is why Cringely's rant is pointless.

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noonespecial
I wish it was just a rate hike. Instead, you are often simply cut off with no
recourse for exceeding the cap. You _can't_ pay more and get more.

If you're not granny checking her email and facebook, you're not welcome here.

I think its more about quietly but forcefully sending the message that your
internet is not for tv.

