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An Iowa ISP's Metered Pricing: What Will the Market Bear?
An anonymous reader writes "The East Buchanan Telephone Cooperative started charging cellular prices for home DSL internet service starting on January 1st, 2014. A 5GB plan costs $24.95 a month while a 25 GB plan will run $99.95 per month. 100 GB is the most data you can get in a package for $299.95 per month. Each additional GB is $5. They argue that the price increase is justified because their costs have increased by 900% since 2009. About half of their customers use less than 5 GB a month while their largest users use around 100 GB a month. They argue that the switch to measured internet will appropriately place the cost on their heaviest users. With the landmark Net Neutrality ruling this week will larger providers try to move to similar price models?"
if there were competitors, and not just vendors screaming free market when they adjust prices but then hold up monopoly contracts with the city/state when a community tries to come together and go their own way.
Well as much as I don't agree with this yes it does. More data use by the end user means the ISP has to pay for bigger connections and redundant connections often at that. Yes cost goes up for everyone. However the price of the inter connections have gone down a lot since 2009 so not sure how they have seen a 900% increase other then by adding that many more customers.
As a customer, I do mind metered internet because it's bullshit.
This isn't electricity (minimal and always on anyway so the difference is negligible, at least for these middle men) or anything, this is about forcing limited supply when there isn't any.
Would you like metered television too? No longer broadcast to you 24/7, now you get to watch 90 minutes a day, and after that you have to pay? Would that make sense to you?
Bandwidth is already rationed by setting speed levels. I already pay quite a bit more a month for the highest speed level residential and businesses even more so.
People rationing bandwidth at night by not using any isn't going to save anyone anything. It's just dark fiber.
More so, I would argue that mindsets like yours is setting us back. The need for speed is what brings us advances, getting us forward, allowing surgeries and other amazing stuff over the net. Metering is just a setback there.
All metered internet will do is make the Cable ISP slobber as they grab netflix and hulu by the balls and cut off their customers through draconian price increases. By some reports, they already lost some 25 million customers. You don't think they want to stem and reverse the flow? They are hurting, and they are hurting because they didn't change with the times (NO, I don't want the sports channels and every other overpriced bundle just to see the 3 channels I watch, fuck off.)
Score: -1 Factually incorrect.
It absolutely costs more to install a bigger pipe for the ISP. The fact that the ISP has to over provision, and hence a small increase in bandwidth can be absorbed without instantly needing to upgrade the pipe does not mean that that extra bandwidth is free.
Switches, cables and admin systems all cost money, and these costs all increase with the amount of bandwidth running through the system.
I actually applaud them for moving to a metered bandwidth model – it makes sense. What I don't applaud is the blatant gouging. The prices should be roughly 100 times lower than the ones they are offering.
From TFA (heresy, I know):
He goes on to explain that EBTC has 1,057 customers as of Dec. 31, 2013, and serves a 165- mile area. That means customer density is roughly seven customers per square mile. (...) Since 2009, he says, the FCC has decreased access charges by $285,004 and Universal Funding by $282,228, for a total of $566,232 or $531.68 per customer.
These are people in rural areas, where it's not very profitable to deliver service in the first place. Public funding is going down, actual bandwidth going up, a little fiber laid down in the dotcom days is growing old and they're in a short squeeze. These prices smell more of desperation than gouging, it can't be easy to break even with those numbers. I doubt any competitors will move in to take over this gold nugget.
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The free market already fixed this problem, if you don't like your provider, you're free to chose another. That's what makes capitalism and America great.
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I don't know the details in this ares, but I doubt they would e setting up this kind of metered service tiers if they had and competition. Its a telephone coop, which suggests small town rural.
Too often, the situation is that there is no viable competition, as the market is too small or too remote to attract competition, or it has been legislated away by cities granting right of way to exclusive contracts.
Sig Battery depleted. Reverting to safe mode.
Trunk bandwidth is the cheapest part of being an ISP as long as you're not out in the middle of no-where. At $0.45/mbit for dedicated backbone connection. Bandwidth is charged by 95th percentile. That means the customer must average about 2 hours of transfer per day all month long. In order to consume 100GB, that means an average of 7mb/s for 2 hours every day, or about 2 Netflix streams. That would cost the ISP about $3.5, but they turn around and re-sell it for $300. Sounds like easy money. You just need to get your foot in the door. Once you're "that" ISP, you just print cash.
Sure it is. You can saturate a network switch.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
This stuff gets obsolete in 5 years or less
Which is where things get interesting.
When you are building a completely new network or first introducing broadband onto a phone network unlimited traffic makes a lot of sense. Most of your costs at that point are per subscriber not per unit of data and when building a completely new backbone it makes sense to make sure it has plenty of spare capacity.
Then years down the line your network starts creaking at the seams. What you thought was plenty of capacity when you built the network no longer is. You start thinking about a major upgrade to your obsolete (but still fuctional) gear but then you look at why you need that upgrade and discover that it's a relatively small proportion of users who are using most of the traffic. Do you make everyone pay for the upgrade or do you try and place it on the heavy users only?
Having said that this case seems to have swung the balance between "charging for connections" and "charging for data" too far in the opposite direction. Having data prices high enough that people have to balance the cost of installing security updates against the risk of not installing them is almost certainly not a good thing.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register