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.

Comments

Re:I dont get it...

[dachshund]

I dont see how me having some sort of P2P running off my DSL line is any different than me being on IRC with files offered

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.

The Economics of Bandwidth

[qpt]

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

Re:Time for a post-ISP future?

[bonoboy]

Interesting thoughts. But it's a basic anarchy that will never happen. Your model seems to require everyone running their own mail server, for one. Can you see people doing that? Your model also seems to follow some ideas which IPv6 might. It would have to, because people all being handed their own address blocks is the only way you can sidestep content providers and ISPs. What do you think your plan would do to the routing tables without Ip6? It doesn't make your idea any less valid, we'd need a strictly heirarchical system. That requires some very decent top-down organisation of the address space. Geographic regulation would have to come into play. Not a big deal perhaps.

Bandwidth always costs money. Companies want to get you using their content so that you may never know the rest of the Internet exists. The Walled Garden approach is going to be a big part of the IP networks of the future, believe me. I'm not talking your Mom & Pop ISP here, I'm talking about large fibre networks with cable television services running. This is dedicated content, and has nothing to do with your anarchy model.

Where I am the telcos already run the show. They are the tier one and two providers. They've bought or started the largest ISPs already, and there's no way the independents could ever compete on cost.

Anyway, just some thoughts. The point being that it seems a nice comment with very little thought behind what an 'ISP' is these days. Anyone with an upstream connection is an ISP. not just some guys with modem banks.