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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.
http://www.dslreports.com/shownews/Canadians-May-Sue-NorthwestTel-Over-Broken-Usage-Meter-127342
One thing that's getting missed here is what cooperative means. My parents are part of another tele coop in another part of Iowa. Tele coops are relatively common in very rural areas and are owned by the subscribers and, at least in the case of my parent's coop and this coop, the subscribers receive dividends. (see http://www.eastbuchanan.com/about/dividends.htm )
If the subscribers don't like it, they should show up to the coop meetings and have their say in the company that they themselves own.
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.)
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.
Live today, because you never know what tomorrow brings
People already paid for what they used. It's called bandwidth, and they brought the tier level they needed. That it was on 24/7 just meant that they got 30 days of it. All the companies are doing is jacking up the price while giving you less time.
This isn't water or electricity. Bandwidth is not a limited resource in the same way. This is just a company trying to keep overselling what it has and not upgrade.
No, this is nothing like Australia. Those rates are obscene. Australia may have metered internet but the prices are far, far lower.
25 USD for 5 GB? (Australian ISPs would typically give you ~50 GB for $30 AUD, which is roughly equal in value)
99.95 USD for a paltry 25 GB? WTF? 100 bucks in Australia gets you unlimited plans the ISPs that offer unlimited (e.g. TPG) or very-high-quota plans with others (Internode, one of the more expensive ISPs, gives you 1.2 TERAbytes per month for $109 AUD).
This is only "Welcome to Australia" if the Australia you're talking about is the Australia of the year 2000.
EBTC's profit margins on internet service were above 40% in 2012. See the document below. They have also built out line of sight wireless internet service, so they will not need to maintain those rural DSL cabinets in the future. https://docs.google.com/file/d/0B1MxEnYSkSD_V2ZjdEdfeFNTMnM They could easily serve all of their existing customers using wireless if they chose too. Prairie iNet is a company that uses similar wireless technology. They can serve 250 customers per tower. EBTC currently has 3 wireless line of sight towers. Prairie iNet offers speeds of up to 20 Mbps with unlimited usage for $70 per month. They offer service in a smaller town 8 miles south of EBTC. http://www.prairieinet.net/residential/pricing-plans/
A rural co-op is owned by the subscribers - is it not? There is no corporate profit. Just the equipment and cost of wages and wiring and tech stuff.
1057 customers, and a build cost of about $3 million = $3000 per customer. This stuff gets obsolete in 5 years or less = buy more, scrap the old = $600 per customer per year = $50 per month each. Thed add electricity, maintenance, tech support, new installs.
They then get the FCC grants which have shrunk a bit (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. The decrease is expected to continue. During the same timeframe internet demand has grown by 1,000 percent.)
(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.)
This looks like the typical problem that Canada, Australia and a lot of rural America face = low density of subscribers.
Do they share all cost equally?, or do they try to charge proportionally?
They have the classic small town bind.
If you get a densely built area of apartment houses that can be fully fibered, costs per megabyte can be very low, but not here. If they want the high speed, they must make some overpay (those who use only 5 meg per month), or get some proportional pricing.
With a large corporation, they could over charge the dense cities and subsidize the country sides.
So you're telling me I can get a 100mbit upstream link with resale rights for $45/mo?
That's astounding, since as near as I can tell, getting any kind of dedicated circuit at all is over $400/mo, and any CIR is ontop of that.
I worked in the ISP industry a long time ago. We had a frac DS-3 to UUNet. Our bill was either 4 or 5 digits, per month.
It was provisioned over Metro SONET, iirc, so it's not like we were paying off some huge trench fee.
We were selling 56k Frame Relays for more than $45/mo. Think 10x that cost.
Speeds have certainly gone up since then -- a lot. But prices haven't come down. If you want a carrier grade connection, you pay.
As an aside, I recently moved to a rural location where there is no broadband provider. I called a nearby ISP that serves the closest town. They said $10-15k per mile to trench and bore for fiber, plus the costs of actually laying fiber.
There's no CATV here. There's no possibility of DSL here. HughesNet says its oversubscribed in my area and either sells only their slowest tier or nothing at all, depending on who you believe.
So I'm using a Verizon LTE box. Metered internet really sucks, and its very expensive. It changes your usage habits entirely. We cancelled our Netflix streaming and went back to discs. I never watch stupid youtube movies any more because they're not worth the bandwidth charges I'd rack up watching them.
I've been looking for tower space in a nearby town that I can lease, so I can put up some UBNT gear and do a point-to-point shot from their tower to a tower on my property, and backhaul unmetered internet from a place that has it to my farm.
I've spoken to a few neighbors; all of them who have internet service use cellular data. I think I could build out a pretty slick rural wifi and cover my costs with it -- but that's entirely dependent on being able get some kind of uplink out here.
Doing internet service in a rural area is hard and expensive.
My opinions are my own, and do not necessarily represent those of my employer.