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P2P Will Lead To Higher ISP Charges?
Lumpish Scholar writes "This Interactive Week article suggests that P2P is a wonderful thing, the direction the Internet is going ... and utterly breaks ISPs' business models, to the extent they may raise their monthly rates, or at least offer two-tier plans that will charge some users more. If true, ISPs might be seeing cost increases from two directions: more dialup ports (because users are staying on longer, so peak usage increases), and fatter pipes to their upstream or peer ISPs. On the other hand, to quote the article: "We're seeing greater decreases in the cost of the bandwidth than we are seeing increases in individual bandwidth usage." A price increase might or might not be justified, but Slashers will surely be interested if increases are coming." People have been making this arguement for a while - remember when web surfing started to become common, and people stayed on for longer, the ISPs claimed the same things.
I don't see how any ISP can make any money offering xDSL for a fixed rate. I know the gamble is most lines sit idle most of the time (mine averages 58/bytes second, w/BIND, Sendmail, Apache and three PCs connected), but at the same time it only takes a a few dozen people maxing their lines out to seriously dent an OC-3, and not every ISP has that much bandwidth.
The idea of metering isn't as bad as it sounds -- one thing that keeps ISPs from rolling out serious bandwidth (1.5Mbps SDSL for everyone) is that ISPs are afraid that they won't be able to meet the demands of that much bandwidth because the marginal income outpaces the marginal cost. Charging by the packet, ISPs could easily offer as much bandwidth as you want WITHOUT having to worry about where the cash for the next OC-3 will come from.
When it comes to Napster-style applications (insofar as they are "new"), I have very specific doubts, please refer to my reply to one of the other replies to my comments, if you want to hear them. As for the vague notion of P2P that is hyped, I find they're almost always: old applications with buzzwords attached, ill-concieved ideas, or simply undefined.
Let me just briefly hit some of your bullets:
Well I'd argue with GNutella, every point IS a point of failure, not just a potential one. Where are the practical and feasible applications of a truely decentralized application of this nature?
So what? With bandwidth costs dropping, why bother with such a hokey structure? If repositories like Tucows, mp3.com, various mirrors, and many others can survive, what is the need for it?
Again, this sounds great in theory, but what does this mean in reality? First, that same information can be added to a central server, so the argument is largely an economic one. Second, do we really want "information" from people? The simple and brutal fact of the matter is that most people are not artists, are not terribly intelligent, etc, thus I question the value of a decentralized system. There is a large need for filters, to pickout things out value and to reduce the S/N ratio. Centralized techniques take to this much better...
Again, costs are plummeting. What's more, even though the total amount of storage space may be greater on a widely distributed network, is the value greater (or less)? In other words, how much of the data is going to be redundant? Generally, most of it. How much of the data is going to be of sufficient quality? Very little.
In short, I have lots of questions and doubts, and so many P2P pundits are full of hot air, vague notions, and fuzzy thinking.
That's exactly what P2P is. And ISPs don't like it. They want you to take your files off of the pretty web pages, many of which (in their master-plan) will have local caching servers ala Akamai. If you look at the TOS for most cable-modem and residential DSL providers, they specifically say "don't operate a server or file sharing program." The unpredictable downstream and upstream bandwidth that P2P generates might eventually require them to spend more money.
This is really too bad for them. As long as people have these relatively powerful machines hooked up to the net, it's inevitable that they're going to use them for more than one-way downloads and web surfing. ISPs will adjust.
People are missing the point here. So P2P will cause a surge in bandwidth usage and connect times? Look at the Internet. It is evolving. Look at bandwidth. Just as any other technology evolves and expands, so does the amount of bandwidth available. Five years ago, how many people had 512Kbps(+) pipes coming into their bedrooms. Not many. Now, cable modem and DSL connections are becoming the norm. Analog connections are certainly still the majority, but look around at the advertisements. Bandwidth is big business. People are demanding more of it. Usage has already been increasing radically. The number of people getting on the 'net is increasing at a phenomenal pace. Just like anything else, the more you sell, the cheaper it gets. The price per amount of bandwidth has plummeted over the years. The consumer costs are not going to go up. With usage and volume ever increasing, the worst that could happen is prices may not fall as radically as they have in the past. Or, you may see less of the $7 Internet access offers. BFD. People will still be willing to pay their $50 a month for their cable modems. The majority of the people out there have jobs and are not savvy enough to schedule downloads all day while they're at work. It's pretty safe to assume that your grandma will not be on Gnutella downloading the latest ICP track. But she'll still like that cable modem because it makes her marthastuart.com pop up quicker..
It'll all be okay. Really.
-=e
The Internet has *always* been a peer-to-peer network, from day one. Only for a brief period of about 5 years in the mid-90s when a large number of non-wealthy new users came on board and were forced to live without bandwidth was this not the case. If you look at the design of the protocols, and the way the internet actually works, it's fairly obvious to me that it was always fundamentally designed to be peer-to-peer. Not in the hip new let's-steal-music way, but in the sense that every machine would function as both a client and a server. Remember when every machine ran telnetd? When there were no firewalls? When "PPP" meant going to the bathroom? This ain't new, folks. But I did like it better when peer-to-peer meant the Internet was a community, not just a place to steal stuff and run DoS attacks on irc servers. The model didn't really break until people started being allowed on the Internet without an Internet-supporting OS. They never joined the community, just babbled senselessly and joined AOL in droves. It's amazing how well their OS reflects their attitude and behaviour - no services provided, but a client for everything. Take, take, take, give nothing. That's peer-to-peer? Fuck this noise.
I forsee that when broadband comes, the telecoms companies will be in the most powerful position. They own the fibre that travels into the consumers home. This gives them the power. ISP's are a temporary phenomenon.
With broadband and more powerful computers, there is no reason why the average users computer cannot connect to the internet directly, and bypass the ISP model entirely.
ISP's, with their ridiculous dreams of providing direct media content and products, will die and be replaced by a devolved and more democratic network.
It is better that the communications and telecoms companies have the power than ISP's, for ISP's aim to pump media and ideas into the home whereas telecoms companies are only interested in the almighty dollar.
Communicative equality in America, land of free and equal speech, could be reborn through the arrival of P2P, IMHO.
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On the one hand, it seems hardly a matter of debate that if people use more bandwidth, they are going to have to start paying more. It is a well accepted economic principle that a large quantity of a good or service will cost more than a small quantity.
:)
On the other hand, bandwidth is an odd sort of resource. Unlike coal, iron or wheat, it is wholly manmade. While it is correct to point out that the physically devices such as routers and switches are in fact made of natural resources, this is not the limiting factor of their production.
Rather, human ability and inginuity is required for the manufacture of IP networks. To build larger networks, effort must be taken from some other task and applied to its construction.
How does this relate to ISP prices? Quite simply, the opportunity cost of network construction goes down as demand for the service rises. Thus, even though more net bandwidth will be used, the total cost will actually be less than it is now. The tradeoff, though, is that some other good or service will lose manufacturing precedence and increase in price and lose market priority. It is anyone's guess what this good or service may be.
I suppose we could always hope it is Microsoft
- qpt
--
Domine Deus, creator coeli et terrae respice humilitatem nostram.
In many areas the local monopolies have driven competition right back out the door. I get my DSL through Verizon the ONLY game in town. While they do have increased costs for the benefit of always on, or nearly always on connections, you will have to forgive me if I do not feel they are losing money on this deal. Aside from most people shutting down their connections, ISP can/do enable software shutdown/wakeup so a dead connection is truly a zero resource user.
The price "scare" is very similar to what the cable companies did a while back. First mention you have to have a large increase [Sorry the price is going up $20/month]. Let everyone get outraged at the ridiculous increases and get the utilities commission involved. Then "relent" to a meager increase of $8. Everyone thinks they win.
--The problem is not that most people are sheep, it is that most people think they are wolves.
The biggest barrier to consumer broadband has been the myth that you can get high-bandwidth, uncapped service for $40/month. Obviously, the people selling that myth were hoping that consumers would hardly use the bandwidth at all. When that turned out not to be true, profitability was threatened. Universities respond to this by trying to restrict the rights of their captive consumers. The crop of quotes in this article suggests that commercial ISP's, on the contrary, are seeing this as a legitimate usage that should be charged for. Ideally, I'd like to see them charge for transfer, rather than adopting a tiered scheme. But even the tiered scheme is a huge step in the right direction, away from the idea that "people who move lots of bits are troublemakers" towards the idea that "people who move lots of bits are our best customers".
This could have two wonderful effects. First, mega-corporations might find that it's more profitable to sell consumers transport, and remain content-agnostic than it is to build proprietary lock-in schemes and badly admin'ed caching proxies.
Second, of course, the US government tends to see only profit-making activities as legitimate. When the ISP's are profiting from p2p, they might serve as a counterbalance to the IP cartel that is currently 'educating' Congress on the evils of p2p.
Anyhow, charging per GB transferred is by far the healthiest business model because it gives ISPs incentives to upgrade their bandwidth, since pipes now show up as revenue producers to the bean counters. Anyone who sells 'bandwidth', on the other hand, is incentivized to minimize the customer's use of that bandwidth, whether by outages, restrictive AUP's, or other hassles.
ISPs will (hopefully) start moving away from the model where they try to provide everything they can on their homepage and will change focus to doing things like hosting e-mail and handing out IP addresses. Basically, the system will just be setup to do the basics and support (believe me, there will be incompetent Winblows users for YEARS to come that don't know how to do internet, and they WILL pay...)
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SIG: HUP