
Report: data caps just a “cash cow” for Internet providers - Libertatea
http://arstechnica.com/business/2012/12/report-data-caps-just-a-cash-cow-for-internet-providers/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+arstechnica%2Findex+%28Ars+Technica+-+All+content%29
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olefoo
If there were actual competition in the ISP space anywhere in the US outside
of the densest metro areas it wouldn't be possible for incumbents to exert
their monopoly power like this. It's a drag on US economic activity, and one
of the clearest examples of what institutionalized corruption looks like in
America today.

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larrydag
I've always wondered how one would disrupt the ISP market. Can you only enter
this market with huge capital expenditures to build out a network? Are there
ancillary networks/pipelines/bandwidth that could be utilized that are not
explored?

It seems like Google is going down the road with using huge capital but are
there other ways? Republic Wireless is the only other "similar" product to
disrupt the telecom market.

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stephengillie
Tacoma's click! network has been giving City of Tacoma residents high speed
internet for around 10 years. Seattle's about to join with their own high
speed internet offering.

I'm starting to think that ISPs should be government-regulated utilities just
like electricity, water, sewer, etc. Isn't that how those industries were
disrupted -- through regulation?

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larrydag
I see you're point with govt regulated utilities but some governments have de-
regulated such as Texas with electricity. I'm thinking there might be a good
hybrid solution.

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datasage
The biggest barrier to competition is infrastructure. Both the cost of, and
getting the permitting necessary to build it.

If the infrastructure is managed by a public/private entity, then any number
of companies could provide service over it.

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dsr_
It's called structural separation, and was the reason why we had so many
$20/month ISPs back in the days of 28.8k modems.

The infrastructure business -- for electricity, water, information networks,
and other similar services -- are high-capital cost very long term investments
that typically require some degree of government intervention in terms of
rights of use. There's no reasonable way to provide independent supply systems
if your goal is 100% coverage, and the government must be allowed to dictate
things like "this road can be dug up to install pipes" and "this edge must be
allowed to hold wire poles" and so forth. If you want an efficient
implementation, you have one big infrastructure system that all the suppliers
share.

The trouble usually comes when an entity gets to both maintain the
infrastructure and supply services on it. That's bad. Now they have an
incentive to provide better service for their customers and worse to everyone
else's. For example, if you allow an ILEC (telco owning local wire systems) to
provide DSL service but require them to rent space in their local wiring
centers to their competitors, you will discover that the competitors' service
requests are answered more slowly, accidentally ignored more often, and
generally deprioritized if not actually sabotaged.

The best thing a municipality, county, or state government can do to foster a
robust network environment is to establish an infrastructure provider and
regulate them as the monopoly that they are, forbidding them to provide the
services on top of the infrastructure. Then you can get healthy competition in
those services.

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jpollock
In prepaid and other live billing systems the cost to bill a data session is
higher than the cost to bill a phone call. This is due to data sessions having
longer hold times (months) compared to phone calls (3-5 minutes). Since a
session has a cost to the charging and rating platforms (memory, CPU and
therefore software licenses), the more people use data, the more expensive it
is for the carrier.

As an aside, an SMS has the same cost structure as a phone call. They cost
roughly the same on the signalling side, and roughly the same on the charging
side.

How much data is used also adds cost to the charging system. The charging
system will perform periodic writes to persist the money spent so far. While
this write will typically be performed once per call, it is performed every X
dollars or Y kb or Z min on the data side. If you don't, the carrier loses
money when any machine in the network goes down, tearing down the session.
With shorter periods between writes, they still "lose" a little money, it's
just not several months worth of charges. This is more cost pressure
(increasing writes per minute).

Historically, data was a minimal portion of a carrier's traffic. That meant
that data would fit into the spare capacity of the voice and SMS charging
system. Since data is now an appreciable portion of a carrier's traffic, they
can't ignore it. Even worse, data usage is increasing faster than Moore's law
(doubling every year instead of Moore at 18-24 months), which means that they
can't buy newer hardware to solve the problem. They have to buy more hardware.

There are solutions. Getting to a cost/subscriber model instead of a
cost/transaction one would be a great first start. The hard bit is convincing
product managers and salespeople that their beloved architectures and
protocols don't fit the new world.

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guard-of-terra
From the outside it seems that people in USA will soon have worse Internet
connection than people in (large cities of) developing world.

The situation doesn't make sense if you ask me.

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mjallday
It does to a degree. The established cities will most likely have installed
Internet infrastructure a long time ago whereas developing cities may likely
have only recently installed pipes so they are getting newer generation
equipment.

Once you have invested in infrastructure (or anything else) the goal is to
maximize profit from that so unless there is competition then there is no
reason to continue to upgrade.

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beagle3
Established vs. developing cities is a false dichotomy.

The cities everywhere else in the world where you get 10 or 100 or 1Gb to the
home are all established. None of them has only "recently installed pipes".
They just upgrade things regularly, unlike the US.

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lostlogin
And unlike New Zealand. We are in the midst of a big fibre rollout, but don't
hold your breath for getting anything soon. Stuck at an unreliable 3mb
connection. And strangely, despite living at multiple location, ringing to
complain always gets a puzzled response and a reply along the lines of: just
up the road from you is a really fast connection.

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biturd
In my opinion, the best argument that there is no need for a data cap is to
look at usenet providers. They provide some if the fastest connections I've
ever seen, for dirt cheap prices, throwing in VPN and cloud storage type
services, always unlimited in data, for around 20 to 30 bucks depending on
what package you want.

And I'll bet they are plenty profitable. Plus, they don't get some of the
niceties that the larger isp's are getting. For example I've heard NetFlix
essentially pays all the transit fees right up to Comcasts doormat, so Comcast
actually pays nothing other than the cost to shove the bits around it's own
very large LAN. I'm sure Amazon and YouTube and google as well as any company
of substantial bandwidth use has transit deals like this in place.

It seems to me the ISP's have it pretty easy when you factor all that in.

Personally, I'm pretty bummed that the company that was to bring country wide
access via spectrum that was close to GPS got held up in legacy nonsense. I
think they were called LightSquared. Honestly, if GPS manufacturers made
crappy gear that leaked into a frequency they assumed no one would use, that
is their problem, not LightSquared's. That's like building a shopping center
and letting a portion of it overlap into an empty lot. A few years later the
lot owner comes into town and says "WTF yo!" And somehow he is told "too bad,
we were here first and it would hurt our sales".

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biturd
Why can't we go back to the days of modems. It seems to be the only
potentially accessible set of wires that any company can hook into without
permission, regulation, permits, etc.

Most homes have at least 2 pair wiring, most modern homes have 4 pair. So
minimum is 4 wires and maximum is 8. Even on a 2 wire half duplex Ethernet
connection you should get pretty good speeds compared to DSL and especially
56k. Yes, lots of collisions but hopefully most opt for the 4 wire 2 pair
connection.

Instead of a 56k modem we would have to create an Ethernet modem. What is the
technical limitation that prevents this from happening? Being able to have
"Ethernet Dialup" so to speak? If I have 4 pairs on one end I should be able
to connect up to some telco and get access.

In thinking about this, that does mean the cost of having 4 data lines turned
on. But I had a data line dropped into a colocation cabinet for 9.99 a month.
For around 40.00 a month maximum a home should be able to be lit up. At just
the prices Amazon advertises for S3 storage and that's transit and storage add
another 10.00 a month and I have plenty of bandwidth. Though I would hope to
actually pay wholesale pricing getting costs down even lower. It should be
possible to profit 20.00 or so off each user. Throw in a one time fee for the
Ethernet router and you should be making money. With potential for gigabit
speeds.

The only thing I can think is how do you deal with the line length limitations
of Ethernet runs inherent to that technology itself. I'm hoping there's
something out there. They have been slowly pushing DSL to faster speeds, or is
DSL++ or DSL2 or whatever it's called essentially what I'm talking about?

Maybe this all comes down to the 100 meter limit for Ethernet runs and how
impossible it would be to put repeaters or hubs every 100 meters.

It just seems that the wire is there, why not use it? In 5 years when no one
has a landline are we really going to have millions of telephone poles
scattered around with wire on them that does nothing? Grated we use the poles
for other things like power but it just seems strange that there will be all
this copper just sitting around. I guess then it's time for the mass copper
recycling project to get underway.

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dexcs
It's the same with sms. They are a byproduct at all and telcos earn billions
with them...

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magicmarkker
I can't be the only that thought "duh" when I read the link title right?

