There was a guy on Australian radio today saying that international traffic from Australia and NZ has decreased by about 70% over the past few years thanks to the ever-increasing usage of CDN's putting data, in most cases, within the ISPs network. Was something interesting I hadn't thought of.
He also mentioned that in NZ miserly data caps are really not implemented any more, since people just aren't using expensive transits as much (any NZ people confirm?)
Of course you wouldn't know about any of these savings by following the pricing of internet services in Australia. And the government seems intent on making anyone who cares for even basic privacy needing to tunnel their entire connection outside Australia (not to mention content providers and their geoblock rules).
Bandwidth is obviously not the only cost of ISP. The volume of BW even though internal CDN has to get the data from somewhere. For example in the case of GGC (Google Global Cache), for each 1 Gbps of output 100mbps on average is pulled from the internet. So for someone who is serving 10gbps ggc traffic (not that high really) - they are pulling 500mbps from the internet. Of course, a large stack of GGC servers needs power / DC rack space - which has monthly costs. As per NDA with Google - you can't actually sell Google CDN bandwidth separately from your internet BW (though many do). Also because of this large volume of traffic depending on your setup, you may have to upgrade your internal network capacity including all the way to the last mile for a decent user experience. You also need to upgrade your fibre network - if you were previously renting data (100mbps) from your distribution core providers - for small medium and often large ISPs, now you have to either increase the capacity (can be very expensive depending on which part of the world you are) or you rent a whole fibre core capacity.
People often mistakenly associate the main cost of ISPs is BW. But it's the network equipment, the constant upgrading/replacement, an army of support (both physical and phone), and the last mile connectivity is the major costs. BW itself is a small part of the cost.
Getting both Akamai and Netflix cdn has similar issues, but are harder to qualify/get than GGC cache hardware.
Yes, all these CDN providers are providing us hardware and mostly excellent support in helping to set them up - in most cases, it's setup and forgets. But for them, it's a one time cost, but for ISPs it monthly recurring cost that we can't dump on users without losing customers, we can't charge the CDN providers, we just have to silently bear the cost and hope that in 15 years if we have enough customers, we might be profitable someday.
Everyone loves to hate ISPs, and I am sure a lot of it has some justification. But sometimes the cost and pain are real. That's why there is so little competition in this sector because it involves a huge amount of upfront and recurring investment and really long waiting time before you can hope to finally make some money. Then you have brain-dead regulations from the government (not all countries of course) and aggressive competition from well-connected existing companies with deep-pocket.
There is a reason why Google fiber doesn't roll out all over the country, because even with all their money cache and network expertise and well connection throughout the government - what a daunting task it will be for them to ever be profitable. Your Ad sales can only subsidize your last mile cost for so long.
Most NZ ISP's have an ADSL unlimited data cap plan for around $95, and lower cap plans for cheaper. VDSL is a bit more, and fibre a bit more again, topping out at around $130 for 1000/500.
He also mentioned that in NZ miserly data caps are really not implemented any more, since people just aren't using expensive transits as much (any NZ people confirm?)
Of course you wouldn't know about any of these savings by following the pricing of internet services in Australia. And the government seems intent on making anyone who cares for even basic privacy needing to tunnel their entire connection outside Australia (not to mention content providers and their geoblock rules).