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A Layman's Guide To Bandwidth Pricing

Posted by timothy on from the don't-grant-local-monopolies dept.

narramissic links to IT World's A Layman's Guide to Bandwidth Pricing, writing "Time Warner Cable has, for now, abandoned the tiered pricing trials that raised the ire of Congressman Eric Massa, among others. And, as some nice data points in a New York Times article reveal, it's good for us that they did. For instance, Comcast says it costs them $6.85 per home to double the internet capacity of a neighborhood. But the bit of the Times article that we should commit to memory is this: 'If all Time Warner customers decided one day not to check their e-mail or download a single movie, the company's costs would be no different than on a day when every customer was glued to the screen watching one YouTube video after another.'"

7 of 203 comments (clear)

  1. NYT quote is a bit unfair ... by xmas2003 · · Score: 5, Informative
    While it is true that most costs are fixed and therefore the costs are no different if every customers takes an Internet break one day, one has to plan to for peak capacity ... or something like a 95% threshold. No different than other utilities such as electricity, plumbing, etc.

    So the reverse is also true - if every customer decided to say, watch grass grow one day, the costs are also the same!

    This is exactly why Tony Werner, Comcast chief technical officer said they engineer for the peak hour. Having said that, it would be nice to get 160mbps for $60/month (as in Japan) ... although I always find it disappointing that almost all of these stories focus on the download speeds and ignore the upload speeds which are at least of interest to folks such as /. readers.

    --
    Hulk SMASH Celiac Disease
    1. Re:NYT quote is a bit unfair ... by DomNF15 · · Score: 5, Informative

      It is actually different from other utilities - the electric company doesn't cap how much electricity you use, neither does the water company, you can use as much as you want, or rather, as much as can flow through given the physical limitations of your electric wires/breakers and plumbing pipes. Your bandwidth, on the other hand, is capped, and is well below the theoretical limits of the coax or fiber optic medium it travels through. When Time Warner etc. design their systems, they do so with these caps in mind. So they only reason they would need to add capacity (spend money) would be to add more users (make more money).

    2. Re:NYT quote is a bit unfair ... by SatanicPuppy · · Score: 5, Insightful

      Well, upload is a niche market (though I admit, I'd love to be able to get at least a megabit...Even half a megabit would be nice).

      I think the whole lesson to be learned from TFA can be summed up with the following quote: "Why (is the 160mbit commection offered) so cheap? JCom faces more competition from other Internet providers than companies in the United States do."

      We talk a good line about capitalism, but we don't walk the walk. Competition would change the whole game.

      --
      ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
    3. Re:NYT quote is a bit unfair ... by mcrbids · · Score: 5, Informative

      Except that power companies charge by the unit. So do water companies. This is fine, because it costs money to create a KwH, and the price of delivering more KwHs rises as more KwHs are delivered, as it costs real energy and money to pump water.

      Internet is flat-rate, and should be, IMHO because it represents nothing real. Although it costs something to provide infrastructure for more demand, once that infrastructure is created, the cost of delivery is very near zero.

      Here's an experiment, in case this isn't absolutely clear:

      1) Buy/borrow a 2 Kilowatt gas generator. Start it up, and run it for 1 hour with no load. Note how much gasoline it burns. This represents the energy used to overcome internal friction. Then run it for 1 hour with a 1,500 watt blow-dryer running continuously. Note how much gasoline it burns. You'll be surprised at the difference in fuel consumption!

      2) Get a Gb switching hub, 2 computers, and an amp-meter. Plug the computers into the wall, plug the switch into the amp meter. Note the power usage of the switch with no load. Then set up a load where you are using 1 Mbps of traffic between the two computers, and note the Amp load. Then try 10 Mbsp, 100 Mbps, and 1000 Mbps. You'll notice that the amperage (for most switching hubs) climbs very little as you do so, and that the total power consumption is insignificant.

      * * *

      So bandwidth usage represents nothing "real". There isn't a significant energy or material consumption per bandwidth unit. After the cost of infrastructure, and a small fixed cost for powering the equipment, the cost of delivering 1000 Mbps is only marginally higher than the near-zero cost of 1 Mbps. There *is* an infrastructure cost that needs to be amortized over the life of the connection, and this represents the vast majority of the true cost of bandwidth.

      It's just idiotic that the Nation responsible for building the Internets in the first place is so far behind other industrialized nations for using it!

      --
      I have no problem with your religion until you decide it's reason to deprive others of the truth.
    4. Re:NYT quote is a bit unfair ... by moderatorrater · · Score: 5, Interesting

      Read further into the article. The companies tell their shareholders that they're paying the same amount for the newest, fastest equipment that provides 50megabit connections as they did for the equipment for 6 megabit, but they're charging a couple times more for it than they've charged for their highest internet in the last 5 years. Their profit margins are solid but the amount they invest in the networks is falling. This at a time when youtube is drawing more and more bandwidth and sites like Hulu are becoming more popular. It's a pretty solid case of the ISPs milking their monopolies for all they're worth.

    5. Re:NYT quote is a bit unfair ... by Wrath0fb0b · · Score: 5, Insightful

      2) Get a Gb switching hub, 2 computers, and an amp-meter. Plug the computers into the wall, plug the switch into the amp meter. Note the power usage of the switch with no load. Then set up a load where you are using 1 Mbps of traffic between the two computers, and note the Amp load. Then try 10 Mbsp, 100 Mbps, and 1000 Mbps. You'll notice that the amperage (for most switching hubs) climbs very little as you do so, and that the total power consumption is insignificant.

      That's great, you've created an intranet and demonstrated it's pricing. Now, of course, try to get a peering agreement with a tier-1 ISP so that your bits can travel to and from the internet at large. Try one month at 10 Mbps and another at 1000 Mbps and see if your bill changes.

    6. Re:NYT quote is a bit unfair ... by Araxen · · Score: 5, Informative

      Wrong...Karl Benz from Germany invented the Automobile.

      http://en.wikipedia.org/wiki/Automobile

      "Although several other German engineers (including Gottlieb Daimler, Wilhelm Maybach, and Siegfried Marcus) were working on the problem at about the same time, Karl Benz generally is acknowledged as the inventor of the modern automobile."