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ISP Data Caps Just a 'Cash Cow' 353

Posted by Soulskill
from the i-am-totally-shocked-said-no-one-ever dept.
An anonymous reader writes "Ars summarizes a new report into the common practice of ISPs implementing data caps, ostensibly to keep their network traffic under control. The report found a much simpler reason: money. Quoting: 'The truly curious thing about the entire debate has been the way in which caps have mostly remained steady for years, even as the price of delivering data has plunged. For example, paying for transit capacity at a New York Internet exchange costs 50 percent less now than it did just one year ago, and many major ISPs aren't paying at all to exchange data thanks to peering. So why don't prices seem to fall? ... The authors of the new paper contend that all explanations are more or less hand-waving designed to disguise the fact that Internet providers are now raking in huge—in some cases, record—profit margins, without even the expense of building new networks. ...While Internet users have to endure a ceaseless litany of complaints about a "spectrum crunch" and an "exaflood" of data from which ISPs are suffering, most wireline ISPs are actually investing less money in their network as a percentage of revenue, and wireless operators like AT&T and Verizon are seeing huge growth in their average revenue per user numbers after phasing out unlimited data plans—which means money out of your pocket. In the view of the New America authors, this revenue growth is precisely the point of data caps.'"
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ISP Data Caps Just a 'Cash Cow'

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  • by Anonymous Coward on Tuesday December 18, 2012 @03:09PM (#42329423)

    ... it must be faced for the US to whom the free market is as much a religion as anything.

    • by colin_faber (1083673) on Tuesday December 18, 2012 @03:19PM (#42329565)
      I disagree, the reasons the ISP's can continue to charge outrageous rates is because they have a government sanctioned monopoly on last mile delivery. Even if I wanted to setup a cable ISP I couldn't as I have no access. I could setup a telco based one using DSL, but I would be limited to the transit charges the owner (Centurylink in my case) wants to charge my customers.
      • by Anonymous Coward on Tuesday December 18, 2012 @03:32PM (#42329749)

        You can't let someone dig up the roads because a person on the street has decided to change ISP.

        You can't let someone use the radio bands willy nilly because there's a new customer for wireless internet.

        It's rather the intent of every single Randian faithiest to INSIST that any failure in the Free Market is due to government interference.

        Given that you INSIST they should do some things such as enforce contracts and prosecute theft, murder, et al, that there is ALWAYS going to be government interference.

        One thing that always shows up the idiot libertarian is that they blame government interference without ever considering evidence for the stance. Just "Government exists? Well, they did it".

        If government got out of it and stopped enforcing contracts, then the ISP customers would be able to not pay for the connection and that would fix the failure, wouldn't it? But that's not allowed, government MUST interfere then!

        • by jythie (914043) on Tuesday December 18, 2012 @03:37PM (#42329835)
          Well, for phone companies (and in the past, DSL) there was a rule saying they have to make their lines available to other companies.. which is why, say, in the days of dial up you could buy your phone service from one company and then dial in to any ISP you liked. DSL used to work the same way, you bought your line and then could use any ISP you wanted. Cable modems never had this, and when DSL providers complained it was unfair, rather then extending the policy to cable they dropped it for DSL, resulting in pretty much the eradication of competition over night.

          Putting that bit of regulation back in place would probably spawn all sorts of consumer choice without having to deal with the barrier to entry that is laying physical lines.
          • by eth1 (94901) on Tuesday December 18, 2012 @04:17PM (#42330317)

            No, they need to go a step further than that, really. Regulation that states that no one entity can do any two or more of create content (media companies), deliver content (ISPs), or provide physical connectivity (last-mile line installation/maint.). That would pretty much solve the problem overnight, especially if the last bit was handled by municipalities or co-ops.

            • by steelfood (895457)

              Several factors are at play, and they all contribute to the problem.

              Without going into too many specifics (it is late), the summation of all the failures comes down to the deregulation and the failure to prevent monopolies of the communications and media industry over the past 20 years. In fact, certain attempts to "deregulate" result in stronger regulation elsewhere that ultimately promotes and enforces monopolies in these industries.

              From allowing certain companies to hold onto multiple media distribution

          • by Anonymous Coward

            BT charge by the byte to all customers, this includes BT's provider arm, but that's no different to Starbucks paying huge amounts of money to their Swiss arm for ground coffee beans: it's fake difference, the money goes in the same pot.

            And BT have a requirement to sell to others.

            Except

            a) they can delay and fuck things up and not be dinged for it
            b) charge huge amounts for data

            And therefore you have ABSOLUTELY NO CHANGE.

            The holder of the wires MUST be a non-profit governmental institute.

      • by Concern (819622) on Tuesday December 18, 2012 @03:35PM (#42329803) Journal

        The free market fairy simply cannot wave her magic wand over everything. The government cannot avoid playing a role in i.e. wireless communications if you want them at all. Someone has to decide who can use what spectrum. Someone has to enforce the rules. There is a finite supply - meaningful competition is not possible even when this is done efficiently. These are not like newspapers, where anyone can buy a printing press for relatively cheap. This is a multi-billion dollar cost of entry to put up thousands of towers on whatever spectrum you can license.

        No amount of ideology can give you a laissez faire market in wireless broadband. Arguing otherwise just makes you sound like one of those old-line Soviet Communists trying to explain how the shortage of bread must be a Capitalist Conspiracy. You can deny reality as much as you want, but it won't fill your stomach, or give you a "free market" cellular internet connection.

        Since we inevitably have to have a quasi-governmental broadband industry, I'm all for regulating it better. Fixing this is not rocket science. We did it for generations after our great grandparents got sick of enduring these scams. Set up a commission, give them unlimited fact-finding authority over the ISPs. They examine network load, operating costs, and approve new budgets and prices. Charter them to permit a steady, single-digit profit margin, while ensuring adequate ongoing investment and modernization. You know, how we used to run electric utilities for generations, before we privatized those and the rates jumped and the lights started going out all the time.

        Doing anything else is bad for business. Letting ISPs price gouge is the same as letting congress pass a (largely regressive) tax increase. It's just one where the tax money doesn't even have the courtesy to visit the US Treasury on its way to some insider's pocket.

        • by dywolf (2673597)

          not a free market.

        • by pclminion (145572)

          The free market fairy simply cannot wave her magic wand over everything. The government cannot avoid playing a role in i.e. wireless communications if you want them at all. Someone has to decide who can use what spectrum. Someone has to enforce the rules. There is a finite supply - meaningful competition is not possible even when this is done efficiently.

          Right now there is a finite supply of spectrum, because all of our technologies are broadcast technologies. If we can find a way to shift from broadcast

          • by sqrt(2) (786011) on Tuesday December 18, 2012 @05:21PM (#42331053) Journal

            Then you're head and shoulders above most Libertarians who think that the laws of markets overrule the laws of physics. It may be possible to come up with a technological solution to the limited amount of spectrum, but we don't have access to that technology yet.

            I'm tired of people claiming that the free market would fix the ISP problem. If we just made the RF spectrum a free for all you'd have the wealthiest companies erecting radio towers everywhere and blasting out as many megawatts of power as they could to drown out their competitors. Everyone would suffer. Everyone would have lower quality of service. Same with physical infrastructure. I really don't want 10 different copper/fiber lines strung from the telephone pole to my house or my street being dug up every year to install new lines for a new company. We need ONE common infrastructure owned by the people collectively which is leased out to businesses who compete with each other. That's the only sane model.

      • by AK Marc (707885)
        That's simply not true. The monopoly has nothing to do with it. The monopoly has maximum rates for the lines. The non-phone company ISPs rent the lines and get the data back to a central point. The cost of the line isn't that much. The line you rent doesn't cost you more if more bits are moved over it, so the monopoly is irrelevant to the issue.
      • by DragonTHC (208439)

        That monopoly was removed back in the late '90s with the telecom act. I remember in 2000 when there were about 30 different DSL companies to choose from.

        Now, there's 2. AT&T, and Comcast.

        Those are the choices with no regulation.

      • Re: (Score:2, Informative)

        by TemporalBeing (803363)

        I disagree, the reasons the ISP's can continue to charge outrageous rates is because they have a government sanctioned monopoly on last mile delivery. Even if I wanted to setup a cable ISP I couldn't as I have no access. I could setup a telco based one using DSL, but I would be limited to the transit charges the owner (Centurylink in my case) wants to charge my customers.

        Exactly. Instead of allowing competion, they fight it. DSL is required to allow competition because of the old regulations on the telephone lines that carry it. But Verizon and AT&T are changing the game by going to fiber instead, and letting DSL languish. Meanwhile, the Cable companies get contracts from the counties/municpalities to be the sole providers for the region so there is no competition in the same technology, and they're not required to share like the telcos are.

        Even then, when communitie

      • And yet municipal internet is widely known to have the best quality, speeds, etc, for the price.....

        Funny how your extreme and another extreme are supposed to achieve at the same goal.... we know the municipalities are real.... then in the UK, the free market of ISPs is what drove the cost of HSI way way down... they made it so anyone can resell the last mile.

        Both work. Its this half-assed market/gov crap that doesn't.

    • by alen (225700)

      not really

      lots of ISP's like verizon have legacy money losing businesses like POTS lines, especially in flyover country where all the freedom lovers think everyone else should pay for their infrastructure

      the current high growth business like wireless subsidizes POTS, DSL and whatever else they have

      • by BitZtream (692029)

        POTS only loses money on paper because they write the paper in such a way that it appears to be losing money.

        Saying POTS services are 'losing money' is roughly the same as saying 'The LOTR trilogy was unprofitable for everyone involved.'

        Both are flat out lies.

    • If you're an invisible hand, sooner or later you'll start robbing people, if not worse. Invisibility and not having a body can fuck with your mind that way... reminds me of the song "I Wouldn't Pee On You Unless You Were A Invisible Hand Because Then People Could See You And Attach You To A Spare Body Which Would Make You Happy And Me Proud" by The Helpful.

    • Re: (Score:3, Insightful)

      by medcalf (68293)
      I don't think you know what a free market is. The bandwidth market in the US is heavily, heavily government regulated.
      • by TapeCutter (624760) on Tuesday December 18, 2012 @06:54PM (#42331937) Journal

        I don't think you know what a free market is. The bandwidth market in the US is heavily, heavily government regulated.

        If you think a free market it's something that is free from government regulation then I'm absolutely sure you don't know what it is. A market is a set or rules governing trade, a fundamental rule of all markets is property law, you are free to participate in a free market provided you play by the rules. A market without rules is an oxymoron, like much of the political debate in the US it's ideological nonsense.

        A trivial example of a non-free market is the plutonium market, it's is an existing market but it's not free because it is not open to all players (nor should it be). Public bandwidth auctions are by definition a free market, without top down regulation of the radio spectrum there would be no bandwidth market, it would be replaced by a bottom up arms race in transmitter power. Utilities operate a lot better when the distribution network is treated as a single entity like roads and sewers, wholesalers and retailers then compete with each other over who can most efficiently build/use the same universal infrastructure. Much like construction companies and trucking companies compete to build bridges and deliver goods. It's bad enough telco's get to put their ugly poles on the public property directly in front of my house, worse still is the fact that these poles cause up to a third of all bushfires in my country. We went through the idiocy of rolling out two cable TV networks being rolled out side by side in the 90's, I really don't want more poles and wires just because corporations want to control rather than share infrastructure.

        Forget all the "free market" babble, it's a mental cage that a lot of Americans have locked themselves in and thrown away the key. The questions should be more like what rules do we need to get the best outcome for all players in this particular market? What rules will lead to an expanding and innovative market? What about markets such as tobacco and alcohol, do we really want to expand those markets, should the rules be mindful of children or the fact that the products are unhealthy, should they be banned and therefore self-regulated by organized crime in so called "black markets"? Once these things are decided and implemented, does it work as advertised? They're the sort of questions that are asked and answered by genuine representatives of the people with the aid of a public service that is not afraid to speak truth to power.

        Problem is that in the modern world we are overwhelmed by such questions and the self interested propaganda that accompanies them. It's physically impossible to understand every major issue in any depth, let alone come up with a sensible response. It's much easier to just ignore the details and take solace in a soundbite, the monorail guy from the Simpsons is much more entertaining than a bunch of dry academics, anyone who can sing and dance like that must know what they are doing, right?

    • by BitZtream (692029)

      The market isn't free. Its government granted monopoly that makes it so the ISPs can pull this off.

      If they weren't granted the monopoly rights by legislation, they couldn't get by with ripping people off because they'd have competition.

      Again, the ISP world isn't 'Free Market' in America. Regulation created the problem as it exists.

  • well, of course (Score:5, Insightful)

    by Trepidity (597) <delirium-slashdot@@@hackish...org> on Tuesday December 18, 2012 @03:14PM (#42329499)

    Just about anything a mobile phone company does is aimed at maximizing revenue. The reason they would even pretend otherwise is that it can be easier to convince people to pay more for things, and avoid being as angry about it, if you can feed them some kind of cover story to mollify them.

    • Re:well, of course (Score:5, Insightful)

      by fredprado (2569351) on Tuesday December 18, 2012 @03:19PM (#42329577)
      Yes you are right, but the problem is their being allowed to maximize their profits at the cost of consumers by avoiding competition because they hold monopolies or oligopolies in most areas.
    • Re:well, of course (Score:5, Insightful)

      by Impy the Impiuos Imp (442658) on Tuesday December 18, 2012 @03:31PM (#42329729) Journal

      This, along with credit card companies raising your rate after you borrow a lot because you're "riskier", coincidentally trapping you and making it hard to pay off, and banks charging you overdraft fees, $35/incident, over and over to "protect you", are a nice trio of fine print fraud.

      In all cases, the surface argument has the lie put to it because their business model hopes you get into trouble, and the business doesn't fear it. It is the desired state.

      It is thus fraud and should be treated as such.

      • This, along with credit card companies raising your rate after you borrow a lot because you're "riskier"

        How does that affect people who follow Dave Ramsey's advice not to borrow? Or even people who follow Polonius from Hamlet?

  • Millions of cell phone subscribers are paying big money monthly in order to consume advertising, in a way TV viewers in the 60's and 70's were never stupid enough to fall for.
    • You aren't really familiar with how cable TV worked, are you?

      • Cable was not popular in most areas of the US until the early '80s. Used to be the 4-channel free TV programming game - NBC-ABC-CBS-PBS.
      • by mcgrew (92797) * on Tuesday December 18, 2012 @04:07PM (#42330205) Homepage Journal

        No, you're the clueless one. When cable first came out in the early eighties (it was around in a very limited form in very few places in the seventies) there was no advertising whatever. None. Not on the cable channels; the only time you saw a commercial was when you were tuned to an over the air channel. Uncut, uninterrupted, commercial-free TV. Then when everybody got hooked on cable, THAT is when they started introducing ads... between shows. Then they started breaking the shows for commercials like OTA TV. Then they got even greedier and started showing commercials at the bottom of the screen while the actual content is playing.

        No, son, YOU are the one unfamiliar with early cable, simply because you never saw early cable and assumed it was always fucked up like that.

        Guess what else? Empty-V used to play music videos instead of stupid "reality" shows. Discovery used to have science instead of "trick my truck." History used to have the history of the Roman Empire and the History of Beer instead of "ice road truckers."

        Guess what else? I shut my cable off. It's no longer worth the money. OTA, DVD, and web for me. Comcast can go fuck themselves, the greedy, shiftless bastards.

        • by tom17 (659054)

          I too would shut mine off if it were not for Bernie Ecclestone being such a greedy git and not selling F1 feeds online :(

  • by earlzdotnet (2788729) on Tuesday December 18, 2012 @03:15PM (#42329519)
    Am I the only person who has known this for years? No matter how much data goes through infrastructure, it's not going to change the cost of running the infrastructure (significantly). That's like keeping a huge lightbulb on in town square but making people pay for the priveledge of removing the curtains from their house to let the light in. Doesn't change the cost, just another way for ISPs to gouge consumers. However, there is an exception. Satellite internet it makes sense right now for their to be caps. It's a behavior adjuster. A single satellite can only transfer so much data at once, so they commonly have off-peak times where if you want to download a few gigs, you can do it in those times and it won't go towards your cap. This is required because satellites are a fairly precious resource. Where I use to live no one in a 50 mile radius could get satellite internet because the only satellite serving the region was already over utilized and they didn't want it to get even worse.
    • However, there is an exception. Satellite internet it makes sense right now for their to be caps. It's a behavior adjuster. A single satellite can only transfer so much data at once

      In theory, caps on cellular (3G and 4G) data are the same way because of limited spectrum and limited space to put up cell towers. Except for some reason, cellular doesn't have an off-peak discount like satellite does.

    • Am I the only person who has known this for years?

      Anyone that's cared over this past decade has known, the problem is not enough of us care.

    • by Quila (201335)

      I don't mind such a model. Bandwidth for wireless or landline is finite. At times when that finite resource becomes scarce due to high usage, a higher charge or a bandwidth cap makes sense. Or for cellular, pay more for a plan that isn't subject to the bandwidth caps, and the rest of us who don't care so much can live with the cap. Note bandwidth caps to adjust to traffic patterns, not a data amount cap. You normally have 4 Mbps, but it's rush hour on the networks so you only get 1 Mbps.

      But they won't do it

    • by AK Marc (707885)
      The capacity costs. So, if you can hold 10,000 light users on a link, then you can assign the cost to them evenly. But if a heavy user uses 1/10th the link and the light users use 1/10,000th the link, how do you assign costs? It's free to move bits, but not free to move the first bit. Much like roads, where there's a large cost to build, and much lower cost once built.

      Average use is the best metric for how much of the resource is being used, and bandwidth caps are a convenient proxy for that. They rel
  • Surprising? (Score:4, Informative)

    by Cinder6 (894572) on Tuesday December 18, 2012 @03:18PM (#42329559)

    I doubt anyone here is really surprised by this. On the one hand, the arguments made by the ISPs make some sense: as more and more people go online and download more and more multimedia and apps alongside simple web browsing (which also uses more data than it used to), then of course bandwidth usage is also going to go up. However, that argument ignores the other side of the coin--namely that the technology the ISPs use continues to improve, becoming more and more capable of meeting (or exceeding) that demand. The caps also ignore usage patterns, peak hours, etc.

    If the ISPs cut you off entirely when you exceed your cap, then their argument might have some weight. But they don't do that. They let you keep going, at the same speed you were before. Only they charge you extra money.

    What borders on criminal is that they're so bad about informing you of when you approach the cap. Though she claims never to use the Internet on her phone, my mother always goes over cap. She has only twice received a notification from AT&T that she was approaching the cap--both of which came two days(!) after she had already gone over her allotted amount.

    I'm still on a grandfathered unlimited AT&T account. I come nowhere near 3GB of usage each month (I'm almost always on WiFi), but I have no intention of dropping down to a cheaper account. It's maddening that I can't get tethering (officially...) without going to one of their crap capped plans.

    • I'm still on a grandfathered unlimited AT&T account. I come nowhere near 3GB of usage each month (I'm almost always on WiFi), but I have no intention of dropping down to a cheaper account. It's maddening that I can't get tethering (officially...) without going to one of their crap capped plans.

      Exactly the reason I'm still on Verizon's unlimited. Although I try to use the mobile data as much as possible, and with 3rd party tethering apps. Hopefully something changes before my next contract so I don't have to shell out full price for a phone though...

    • For my kid I automatically get texts for (IIRC) 50%, 75%, 90% and limit hit (she can't go over).

    • by tilante (2547392) on Tuesday December 18, 2012 @05:00PM (#42330839)

      Not that AT&T aren't thieves... but your mother probably just isn't paying attention. I have AT&T, and they send me a text when I pass 50% of my cap. They send another when I pass 90%. I've gotten the 50% one several times. I've only gotten the 90% one twice, since I don't usually use anywhere near my cap, but each time I got it, I hadn't passed the cap yet. (Actually, the warnings got kind of annoying for a while, when I was using just over 50% of my cap each month.)

      One of the times, I was only a day from the end of the billing cycle, so I didn't have to do anything about it. The second time, I was on vacation and using Internet on the phone a lot, so I logged into AT&T's site and switched to the next higher plan, and noted when the billing cycle would reset my usage. The day after my usage reset, I logged into AT&T and switched back to my normal plan. Bumping up the plan a tier was less than the overage charge would have been... and for extra fun, AT&T pro-rates, so I only got charged for about five days at the higher rate... which bumped my bill up maybe $2.

  • Of course they are. Just like the telco's and long distance charges. The lines where long paid for but they just keep say that to many people are making LD calls so to help increase the number we need more money. All the while they don't actually increase capacity and just pocket the money.

    How we solve this I don't know. The only thing I can think of is to move to the ISP's that aren't gouging as much as the next guy. I know that's hard. I also live in a small town and have very limited choices of ISP

  • Nothing new here (Score:5, Insightful)

    by xtal (49134) on Tuesday December 18, 2012 @03:22PM (#42329613)

    This is the exact behaviour you'd expect from a largely-monopoly or entrenched oligopoly market.

    Governments or municipalities should own the infrastructure. Everything should be fiber. Most of the costs in those rollouts are administrative, not technical in nature.

    There is a huge economic cost in not having gigabit FTTH infrastructure; it's big enough that companies like Google are stepping in.

    • by Mashiki (184564)

      Yep, I agree. But I don't like the idea of the government owning the infrastructure unless it's needed. I do live in Canada, so crown corporations(government run businesses that fill niches where private industry refuse to run--or are run because they screwed over the public so badly that their licenses have been revoked to operate in that area) are a way of life up here. The biggest problem I have with the government owning the infrastructure is I don't trust the government not to abuse it. Unless an i

  • is "Follow the money." Many things become clearer then, without even a white paper.
  • From TFA:

    "The best way to resolve chronic network congestion in the long term is to invest and expand capacity. Yet, a review of the publicly available financial document for some of the largest ISPs in the country shows a decline in capital expenditures—the costs associated with building, upgrading and maintaining a network, such as construction, repairs, and equipment purchases—for their wireline networks.Many ISPs are spending less money on capital expenditures now, both as a ratio to revenu

  • This may seem like a really stupid question but it has always bugged me: why do both me and the content provider pay for data?

    Back in the bad old days of Long Distance Calling, whomever initiated the phone call (assuming you're not calling collect or on a 800 number) paid for the call. It made sense: why pay for something that you didn't start?

    However, in data, both sides pay. Am I the only one confused by this? I understand that I should have to pay for a connection (like the phone company) but why do I

    • Because you will pay for it anyhow.

      If you don't, you will be teased at school/work for being wise with your money.

    • by swschrad (312009)

      because the ability to service the traffic is required on both sides, and since staff, fiber, electricity, and "call-a me Bob" in support are not free, you got to pay for it.

    • by Hatta (162192)

      Because you're not really paying for data, you're paying for network access. It's more like local calling, where both sender and receiver pay a flat charge to get access to the network. Since the local network is owned by the telco, they don't have to pay anyone for usage, so you get to use it as much as you want once you have access.

      With ISPs it's similar. They have to pay for what exits their network and goes to the internet, but that's pretty much a flat cost. That link should stay saturated. If yo

      • They have to pay for what exits their network and goes to the internet, but that's pretty much a flat cost. That link should stay saturated.

        Caps exist to keep a single customer from being a disproportionate cause of that saturation, which reduces other customers' quality of service.

  • Capitalism (Score:5, Insightful)

    by girlintraining (1395911) on Tuesday December 18, 2012 @03:24PM (#42329651)

    This is precisely why capitalism doesn't belong in some markets. Cue rabid "the free market is always right" retorts in 5...4...3... but the truth is when you have any infrastructure service; sewer, electricity, communications, roads, etc., that everyone needs access to (or at least a majority of people in the community use often), without regulation this kind of thing will happen. It creates a natural monopoly; And no, the government doesn't create the monopoly. It would happen whether the government even existed or not. This is the quintessential example of where and when government regulation is needed to rebalance things so that the service provided retains its usefulness to society without becoming parasitic. The government is the only thing besides an even larger monopoly power that can influence this kind of market dynamic.

    And yet here we are, getting put over a barrel and raped because of our idealized notion of how the market will "correct itself", and how government regulation "hurts businesses". You know what, fine: Let one company's profits suffer a little for the greater good, rather than letting everyone suffer a little so the company can be massively profitable at our expense. We need to put a stop to the nickle and dime death march that is killing our middle class off. We need regulation.

    • Re:Capitalism (Score:4, Informative)

      by ElectricTurtle (1171201) on Tuesday December 18, 2012 @03:50PM (#42329979)
      I challenge you to name one instance in history where a monopoly has existed where government wasn't playing either or both of two roles:

      1) Creating barriers to entry on behalf of corporate lobbyists that make competition illegal (as only government can do) except for the existing major players who coincidentally* are the only entities with the infrastructure to meet the arbitrary legal (government) requirements.

      2) Looking the other way while corporations bribe government agents to allow criminal acts including intimidation and violence to prevent competition in an extrajudicial way.

      Telecom is not a free market because even if I bought a ton of equipment and hired a bunch of people, I could not enter the market as an ISP, because the market is regulated. These regulations make competition illegal for any entity other than the players that "helped" draft the regulations in the first place.

      *Sarcasm
      • 1) Creating barriers to entry on behalf of corporate lobbyists that make competition illegal (as only government can do) except for the existing major players who coincidentally* are the only entities with the infrastructure to meet the arbitrary legal (government) requirements.

        Microsoft. There are no legal requirements about the creation of an Operating System.

        2) Looking the other way while corporations bribe government agents to allow criminal acts including intimidation and violence to prevent competition in an extrajudicial way.

        There's no evidence Microsoft has hired the mafia to break the knees of people who use Linux.

        That said, the example I just provided isn't a fair comparison to the natural monopolies regarding land use; specifically easements for access to private property (electricity, gas, sewer, communications, etc.) The government has to regulate access somehow. Unfortunately, our patchwork of municipal, county, state, and federal, plus

        • And MacOS, Linux, BSD, UNIX, BeOS, OS/2, FreeDOS etc. never existed? Dominating a market because your product is good is not the same as a monopoly. A monopoly *prevents* competition and maintains a lock on the market by means beyond being, you know, a good product (in the eyes of consumers relative to other options).

          MS did not have the power to prevent substantial competition, especially in less consumer-oriented markets. While never popular on the desktop, Linux has long been a major competitor for ser
    • You are kinda right. When a monopoly or other form of heavily restricted competition and/or there is a public good that goes beyond a strict consumer/supplier relationship, then you are right in that we should not be left to the mercy of the suppliers. Where I think you are wrong is that this does not spell out "capitalism doesn't belong". You even say so later in your post that "We need regulation". So, capitalism DOES belong, but it should be regulated to ensure it conforms with the broader public good.

    • If you're going to pick an example of the failure of free market capitalism and call for regulation, maybe you should choose an industry other than the one that has an entire agency of the federal government dedicated to regulating it.

      One of the FCC's main goals is to promote competition. Instead, look at the concentration of power of radio, television, telephony, and increasingly the web, in the hands of a few powerful corporations. If "deregulation" looks like a $350 Million dollar FCC budget with 2000 em

  • Duh (Score:5, Insightful)

    by Hatta (162192) on Tuesday December 18, 2012 @03:27PM (#42329671) Journal

    Bandwith is not a commodity like water. We don't save anything when we under utilize it. The cheapest per bit cost is when the network is maximally utilized. Incentives that encourage people to use less bandwith are economically unsound.

    • Re: (Score:3, Interesting)

      by choprboy (155926)

      No... As someone who works for a small ISP, and runs the backbone among other things, bandwidth is exactly a commodity like water. Bandwidth is extremely cheap at the source, but the source is not where the end users of that water are. The bandwidth must be distributed across a vast area to many, many endpoints. I can get water out of a river for (nearly) free. But as an ISP, if you want that "water" delivered to your doorstep and I have to pipe it uphill, 50miles from the source, the water is no longer "fr

      • by Hatta (162192)

        But as an ISP, if you want that "water" delivered to your doorstep and I have to pipe it uphill, 50miles from the source, the water is no longer "free". It costs real money to distribute...

        Not really. Sure, building and maintaing the *capacity* costs money. But that's a fixed cost regardless of how much of that capacity you actually use. That's very different from water.

        • Sure, building and maintaing the *capacity* costs money. But that's a fixed cost regardless of how much of that capacity you actually use.

          If subscribers use more capacity, the provider has to spend capital to add more capacity. Incentives to reduce use of capacity allow the provider to delay such an upgrade from one date to a later date. In opportunity cost terms, the provider earns interest on the cost of an upgrade between those dates by adding a cap.

          • by Hatta (162192)

            Incentives to reduce use of capacity allow the provider to delay such an upgrade from one date to a later date

            That's exactly the problem with caps. Everyone gets worse service because the ISP refuses to build out capacity when they can just get paid extra for overages instead.

    • Re:Duh (Score:4, Insightful)

      by vux984 (928602) on Tuesday December 18, 2012 @03:50PM (#42329973)

      Bandwith is not a commodity like water.

      Bandwidth is not like water, it is like water pipes.

      . The cheapest per bit cost is when the network is maximally utilized.

      Q: And what exactly happens if it is maximally utilized and you want to send 1 more packet?

      A: It doesn't go through.

      Incentives that encourage people to use less bandwith are economically unsound.

      Nonsense. Another equivalent for bandwidth is the road network. Sure, perpetual gridlock maximizes the 'cars per unit of pavement' metric, and in some twisted logic divides the cost of the pavement between the most vehicles... hurrah!... but only a complete idiot would argue that encouraging people to drive less is economically unsound because it means the roads aren't getting "maximally utilized".

      Saturated networks are not optimal.

      • by Hatta (162192)

        Q: And what exactly happens if it is maximally utilized and you want to send 1 more packet?

        A: It doesn't go through.

        Or rather, it doesn't go through with an equal probability that other packets won't go through. We all get our fair share of the network, regardless of oversubscription.

        Sure, perpetual gridlock maximizes the 'cars per unit of pavement' metric, and in some twisted logic divides the cost of the pavement between the most vehicles... hurrah!... but only a complete idiot

        Only a complete idiot would

        • by vux984 (928602)

          Or rather, it doesn't go through with an equal probability that other packets won't go through. We all get our fair share of the network, regardless of oversubscription.

          Semantics. If the network is full, trying to cram more packets into it doesn't work. It doesn't really matter for the argument ~which~ packets don't get through.

          Only a complete idiot would compare IP networks to the roads. Packets don't slow down when there's not enough room. The cost of fuel per packet is negligible, not so with cars. It's

        • Or rather, it doesn't go through with an equal probability that other packets won't go through.

          Caps allow the provider to discourage one subscriber from reducing the probability that other subscribers' packets don't go through.

          We all get our fair share of the network, regardless of oversubscription.

          Caps allow the provider to discourage one subscriber from reducing other subscribers' fair shares below an acceptable share.

    • by CastrTroy (595695)
      I understand what you are referring to, but has anybody actually measured something like the amount of power consumed by a switch under 0 and maximum load? I imagine there is a slight difference in cost between running a switch at full load and running it at zero load.

      Also, the big problem is that most home users want high speed, but don't want to pay for a dedicated line that guarantees that speed. I want to be able to download at 25 mbps, because my pages load faster, and I don't have to wait long for
      • by Hatta (162192)

        People want high speeds, but you don't want them going at full speed for the entire month, or they will over-utilize your network. Can you propose a better billing solution then billing them by throughput?

        There's no such thing as "over-utilization". There's maximum utilization, and under-utilization. TCP/IP has mechanisms to handle the case where too many people want to use a link. If 10 people each want to saturate your outbound connection, they'll each get 1/10th of the available bandwidth. That soun

        • TCP/IP has mechanisms to handle the case where too many people want to use a link. If 10 people each want to saturate your outbound connection, they'll each get 1/10th of the available bandwidth. That sounds fair to me.

          Caps exist to discourage a subscriber from bringing other subscribers' effective data rates below the last-mile burst rate that the provider advertises. If the provider advertises a burst rate of 6 Mbps down and 1.5 Mbps up, subscribers are going to get frustrated if they can't send at 1.5 Mbps because so many other subscribers are sending at 0.5 Mbps that the network has become maximally utilized. In this way, maximal utilization leads to embarrassing speed test results on dslreports for the provider.

  • over on the ISP and backbone side of life, data traffic is growing 50-60 percent per year, and it's a wild race to try and keep ahead. an expensive race. at this point, at least one company I'm familiar with is asking do they raise the backbones to 400 gig or to one terabit inside the centers.

    that ain't the flower fund they have to raid for it.

    argue caps all you want, NostrilDrippus Predicts! (tm) that tiers of usage or per-gig usage charges are your next fightin' words in mere years of time.

    • by AK Marc (707885)
      The options are either use charges or high oversubscription rates, both of which Slashdotters hate. Why can't I have it all for free? And with the best technology and 99 9s of reliability.
  • So this is something that big brother is there to help us out with, there's a real simple solution imho: the government owns the backbone and leases it to the ISPs, fuck level 3, fuck comcast, give it to uncle sam. Comcast can lease from sam, so can Syn, Syn doesn't like comcast, I lease the backbone all the way to a public gateway and comcast needs to be competitive or Syn will charge less (A LOT less in current market state) and take all it's customers.

    Now the problem with this is that ISP's install
  • As another point: I live out in the middle of nowhere, and according the the major telco/cable companies it's "not profitable" to provide any decent service to me. Yet, not 1 but *3* local ISP's have started up here--the newest one is close to 2 years old, the others have been around for substantially longer than that and are still in service, therefore presumably making money.

    Qwest or Comcast could easily have owned the entire market here and left no room at all for these upstarts, but they just did not c

  • by Anonymous Coward on Tuesday December 18, 2012 @03:50PM (#42329981)

    I live in Toronto, Canada and there's two options for cable and cell phone: 1) get gouged. 2) don't get gouged but deal with a smaller player.

    I have friends who complain about their overage bills using the internet with Rogers and Bell. I tell them that they can get unlimited usage (or 300 gb / month limits if you want to save a few more dollars/month) for half of than what they're paying via Teksavvy and they don't want to switch.

    I have friends who complain about paying $70 / month for a cell phone that only gives them 1 gig of data use and tell them about the unlimited data/calling/texting/voicemail plans Wind offers for $40 / month and am met with "wow, that's a good deal, I should switch," but no one ever actually switches.

    I understand that some friends say this just to be polite so I'll leave them alone, but there is something to be said for momentum that people have with a company even if it's ripping them off.

  • remains sound asleep.
  • Data caps are a cash cow for ISPs but ISPs in general are obscenely profitable, they make energy companies look like chumps.

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