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ISPs 'Exaggerate the Cost of Data'
Barence writes "ISPs are wildly exaggerating the cost of increased internet traffic, according to a new report. Fixed and mobile broadband providers have claimed their costs are 'ballooning' because of the expense of delivering high-bandwidth services such as video-on-demand. However, a new report from Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB. The report labels claims of ballooning costs a 'myth.'"
No fucking shit.
Since Plum Consulting found ways to supply one GB of data for $0.01 to $0.03, and other ISPs can't, the company should be able to undercut anyone else and make a boatload of profit on the way.
It could of course be that they made a very simple mistake: The cost is almost completely for providing the infrastructure to supply bandwidth. Once the infrastructure is there, supplying a GB is really, really cheap. Until you reach the limit of that infrastructure and pay a ton to increase it.
Note that this research was funded by the content providers (like skype) ISPs were asking to pay extra for the bandwidth their services use. I'm not pointing any fingers, but it's something to think about.
Another report by the same Institution concluded that water is wet, electricity is not magic, and that dinosaurs are in fact extinct. The results are still pending on if a duck weighs less than water though. But on a serious note, it's good to see people calling bollocks on these claims. It's not that these things aren't problems, it's that they inflate the cost estimates grossly and delay infrastructure upgrades purposely.
That figure is the amount that I pay for data from my colo, but that assumes that the infrastructure already exists. If you have a cable network with 100Mb/s of bandwidth, then you can sell 10Mb/s connections to 10 people. If you've sold them to 5 people, then the cost of adding another customer is basically zero. You can probably get away with selling 10Mb/s connections to 100 or even 200 people if they have typical modest usage patterns, because each one will still be able to get 10Mb/s for the short periods that they saturate the line. If they start all using the connection at the same time, then you have no choice but to increase your overall network capacity. This means laying more fibre. The cost may still be under three eurocents per gigabyte, but that's amortised over the entire life of the new cable, which may be a decade (or more): the ISP has to pay for it all up front. This is where the increase in costs comes from. They have to make significant capital investments, they don't have a significant change in their operating expenses.
I am TheRaven on Soylent News
the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB
So to work out what the cost is for each gigabyte, we'll need to know how many GBs there are in each gigabyte.
When you shop around for hosting, the price/GB can fluctuate wildly. Amazon's EC2 is almost at the top with $0.12/GB, but Cogent at $5/Mbit (~0.015/GB) is one of the cheapest for transit/paid traffic.
Even less? How about free, using peering agreements on internet exchanges? This way, providers like Hetzner can sell their bandwidth for even less, like 5-10TB included and â 6,90/TB after (â 0.0069/GB).
ISP's should just whine less and do their homework. I can understand small ISP's having trouble when leasing lines from the larger ones (article has Trimco vs BT as example), but the main problem is that the larger ISP's promote this "bandwidth is expensive" myth even harder...
How do you go about setting up an 'open ISP'? I wonder about a business plan for such a thing. There is rent, the connections, lines, equipment. Sounds costly. I'm sure there a way to set up a mesh network without an ISP at all, something like I2P without any ISP, having multiple hubs over cities, that connect one to another directly, getting away from the normal ISPs.
Technically, dinosaurs are not extinct.
Oh there's a big surprise! That's an incredible - I think I'm going to have a heart attack and die of not surprise!
Gee. Do you suppose that the credit and debit card processing banks are exaggerating the cost of a transaction? Nah.
The cost varies. I can get a 30meg bursable to 90 fiber connection in Downtown Ft. Myers, FL for around $1100/month. Getting it outside of Downtown and the cost is more than 3 times that. And there are many places where I could get bandwidth far cheaper than that (Tampa Miami).
If you buy water next to a river it will be cheap. Want water in the middle of the desert it's going to cost. It's not the cost of the water, it's the cost of moving it.
Video on demand (Netflix, Hulu, etc) uses 10 times the bandwidth of all other uses of the Internet combined, except maybe bit torrent (probably downloading videos anyway).
Video is one of the reasons we have so few CLEC and alternative ISPs willing to provide residential services here. Lots of companies wanting to sell to businesses (at least 6 CLECs/WISPs I can think of), we are the only one that will sell residential service. We have several individual residential accounts that use the same amount of bandwidth as an office with 50 computers. Business customer=$250/month, residential customer=$44.
People are using the increasingly using there Internet connection to get the same services they used to pay a Cable or satellite provider twice the money for. Many of the companies that provide these services are also the only ISPs most people can get service from (cable and phone companies). I am sure that in lots of board rooms they are talking about how Netflix and Hulu are eating their lunch and how they can stop it.
Davies said this is especially the case for smaller ISPs who rent lines on a wholesale basis from BT.
Nice how he compares being overcharged by an internet service provider as the cause behind the need to overcharge people for internet service provision.
Having to work for a living is the root of all evil.
the companies officers over compensation?
Really they are just jealous/greedy that someone else is making money (sometimes more) on their transport system.
Rick B.
I just got a report from Webster, Webster and Cohen that their analysts find that bears are catholic and the pope shits in the woods.
Probably due to that new bear pope, Pope Maulington XXIII
Non impediti ratione cogitationus.
What seems to be missing from this analysis is the constantly changing infrastructure. While the cost for additional traffic may be low given that infrastructure, in the real world the intrastructure - especially the mobile one - needs regular updates, increasing the costs of the future additional traffic that drives the needs for these infrastructure updates.
In the past decades we've seen regular modems, 56K, ISDN, ADSL in many varieties, Internet over cable TV, fiber, GSM, WAP, GPRS, UMTS, Edge, HDSPA, all requiring massive infrastructure upgrades.
The pace at which customers demand such upgrades seems to be increasing with their data demands. So the ISPs may have a point but this article does not since it does not factor in the cost of the infrastructure.
0x or or snor perron?!
I run a wireless ISP in Texas. The cost of buying upstream bandwidth doesn't change much, it in fact gets cheaper per Mb/s as the pipes get huge. The real cost change is in delivery. The backbone between towers, and especially in the access points all have to be increased to accommodate the additional load. In some instances, the access points cannot technologically accommodate the load yet. The ISP model was designed on a over-subscription basis. In other words, you could have 10:1 users using a give bandwidth. With the advent of video like Netflix, this model is no longer going to be viable. We are seriously looking at having two different account types. One that will allow short video bursting, and one that will allow continuous video feeds. The latter account will cost much more than the former since it is what is driving the costs.
Water is wet.
This seems to be a general practice of business. Isn't that how the banks have been explaining minimum balance fees? It costs them so much to maintain these particular accounts that they are forced into charging onerous fees.
Roads are a public good. Internet is very similar in many ways. It is clear that physical internet connectivity isn't really a competitive market, because having ten network drops to every house, much like having ten highways between the same two cities, makes little, to no sense. You end up with natural monopolies, or at best duopolies, These monopolies interests are always going to be to raise the tolls as normal private sector motivations apply. They will try to minimize investment (because that just kills profits, and improvements drive down profits) and maximize margin. It's the rational thing for them to do. If a government regulator is put in place, they will just argue with them in that direction. There is no rational free market reason for the rent seekers to do anything else. This is not an argument against private sector involvement. For example: Government often doesn't actually build it's own roads. Rather, it contracts with private sector to build roads. then owns them, and lets contracts for their upkeep. Private sector would still be doing all the heavy lifting, and still be competing on construction and maintenance contracts, they just don't own the infrastructure.
So the real question is: Do you encourage greater overall economic growth by leaving ISP service captured by rent seeking, or does this hurt the rest of the economy that relies on the infrastructure? In the case of roads, there is a lot of public road building, as well as toll roads. Private sector only moves in on profitable highway projects where the tolls are limited by the amount of competition provided by public roads, and the un-profitable feeder roads are typically all public. The goal of citizens, and their commercial activities, is to have a decent road system that enables the economy and other societal activities.
The rational economic goal of encumbent isp's is to maximize the rate they can charge for a minimized level of investment and maintenance.
There is an inherent conflict.
Does the duck weigh the same as witch, and is it therefore made of wood?
Countries outside of the U.S. have no problem offering high speed unlimited data at affordable prices without any of the problems that the U.S. carriers are claiming. And the best deals are often on mobile! And, yes, there is heavy audio and video traffic in other countries as well.
Where I am the 'business' model is exactly what the 'home' model is, except businesses pay twice the price for the identical service.
There needs to be a standard package for all users. Businesses just pass the extra cost to their consumers.
I hate mandated stuff, but the US is becoming an Internet third world. I would settle for 40 Mbsec in both directions.
South Korea, Sweden, Norway and many other countries have superior speeds to most of the US. WTF?
Spend the money you ISP's, we ALWAYS want more and faster. Get a clue.
Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB
Is that €0.03 or €0.0003 ?
> that dinosaurs are in fact extinct
According to the current understanding, birds are a subfamily of dinosaurs.
Unless by 'current understanding' you mean you saw it in Jurassic Park.
and water is not wet. It causes things to be wet, but it by itself is not wet. What else did the institution get wrong?
yes it costs nothing to support more traffic during nonpeak hours
and it'll cost nothing to support more traffic until lines hit capacity
and then when you reach some limit the cost will explode
According to the current understanding, birds are a subfamily of dinosaurs.
According to the definition of the word "dinosaur", birds are not dinosaurs. (Note that, although one definition on that page says "one group of dinosaurs evolved into birds", that doesn't mean that they continued to be dinosaurs after they became birds.)
Yeah, and a dictionary has never been out of date on a scientific topic before...
When you want an answer on current science, look to the journals, not to Funk & Wagnalls.
It's not a question of "current science". No-one's disputing the evolutionary history; the fact is that the word "dinosaur" has a meaning in the English language, and that meaning does not encompass birds.
Learn to read actual research journals from the past five years dimwit.
Linking to some bird dinosaur fanboy's webpage at Berkeley is about as silly as linking to wikipedia.
The meaning of the word 'dinosaur' has nothing to do with the dead Bird Dinosaur Theory.
Finds over the past few years have put a definitive nail in the coffin of the Bird Dinosaur Theory. There are still people who still have a tremendous emotional investment into the now dead theory and of course the dead theory continues to linger in the public minds because so many people latch onto the silly 'your eating a dinosaur with each chicken dinner' meme.
Is power. And power had been fairly stable. Add to that the fact that newer routing gear isn't as power hungry as the old and you can see we are getting raked over the coals.
It's the same thing with telephony. The long distance market fell apart because the cost to carry the calls kept dropping with increased levels of automation. Now long distance is bundled in with the normal monthly cost of most phone plans wired or wireless.
And even wireless services, they're getting increasingly less expensive to provide too. But they'll try to charge all the market will bear.
And need I bring up banks that rely on some of the technologies above? Why do you pay a foreign ATM fee that's a full 30% of the average $20 withdrawal when we KNOW that the cost for the network transports are hundreths of a cent per transaction? The bottom dropped out, but banks being greedy, rapacious bastards, will charge all the market will bear.
This is like saying "'one group of mammals evolved into humans' but that doesn't mean we continued to be mammals after we became humans."
FTFY. We now know better.
(captcha: scorner)
Shockingly enough, replacing words in a sentence and coming up with something false doesn't mean the original sentence was false too. Your variation is false because the definition of "mammal" includes humans, but mine was true because the definition of "dinosaur" doesn't include birds, and any attempt to claim otherwise is just Newspeak.
Yeah, and once upon a time the definition of "animal" didn't include humans. I suppose redefining humans as animals was just false and "Newspeak" too.
Actually, on rereading your post more carefully I take the previous reply back. Your version is correct, in the fact that a group of mammals evolved into humans doesn't mean that humans are mammals. However, it also doesn't mean that humans are not mammals. In the bird/dinosaur case, birds are not dinosaurs because they do not possess the key characteristics implied by the term "dinosaur", but humans are mammals because they do possess the key characteristics implied by the term "mammal".
she just doesn't care.
What does "better" mean? Is there something in the sequence of letters that makes the word inherently more suitable for a meaning that includes birds than the meaning that everyone uses it for?
Call me when this has been subjected to something resembling peer review and still holds up. As it is, the source of this report has suspect motivations given who paid for it. This could be 90% confirmation bias.
You really have no idea what you're talking about, so just quit while you're closer to being ahead.
You really are a deluded little shite, so just kill yourself.
Here's a fucking clue: mammals are a class, okay? So any "characteristics implied by the term" mean they are mammal characteristics. The fact that humans evolved from mammals sure as hell means they are mammals, because you can't evolve out of a class.
Same with dinosaurs - for example, they're classified as diapsids which were defined by characteristic holes in the sides of their skulls. Not all diapsids have these - some have lost them, such as snakes, but they are still classified as diapsids and all their descendants forevermore will be diapsids, no matter what other features they evolve, until they go extinct.
If birds are descended from dinosaurs they will always be classified as dinosaurs because evolution is a branching tree.
You get it now? Done talking out of your ass? Kindly shut the fuck up and go read a book.
Almost all of these types of reports citing how cheap *additional* gigabytes cost only reflect the marginal costs. They don't reflect the underlying infrastructure cost, the cost of workers (often union) and their healthcare benefits. This is why when we look at broadband providers financials, the gross profit margin will be in the 60% range but the net profit margin will be in the sub 10% range.
So something can't evolve out of a class even if its characteristics are different? So all life on Earth is bacteria?
No, and no. Read a fucking book.
The colo biz has used data transfer as a b/w measure forever, and very few complaints result. Tenants pay for what they use, and everyone enjoys the same speed - fast. Not saying you could just flip a switch and make this work for consumers, but the sooner we can establish two things, the better it will be for everyone (including the ISPs): a clear correlation between what I use and what I pay, and a network that gives me performance and speed I don't feel stoopid about paying for.
Of course not. They're still around, running the ISPs.
"City hall" in German is "Rathaus" Kinda explains a few things......
Yeah, well if you go by the dictionary, "wet" can mean "consisting of, containing, covered with, or soaked with liquid (as water)" and "in a liquid form or state." Sounds like water qualifies!