ISP Data Caps Just a 'Cash Cow' 353
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.'"
Re:Duh (Score:3, Interesting)
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 "free". It costs real money to distribute...
Now, my above statements are not meant to imply that the premise of bandwidth caps are not financially sourced... they are. But to extrapolate that backbone peering is cheaper now than previously and that therefore end users are being overcharged, is a complete farce. The entire premise of the article is flawed by a complete misunderstanding of the costs an ISP experiences.
As an ISP, we get offers of dirt cheap peering bandwidth all the time, on the order of a couple dollars per Mb per month for 1GB+ circuits.... But when you question their quoted price in depth the result is always the same... this isn;t bandwidth delivered to your door, to our POP, this is bandwidth delivered on a switch port at the datacenter the peering provider is already located in. I.e. selling me access to the river assuming I already have my feet in the muddy bank. Actually getting that river out of the banks and to my office door costs far far more than the river itself.
So yes, bandwidth is a commodity exactly like water....
Do people really care? (Score:4, Interesting)
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.
Debit cards (Score:5, Interesting)
This is why the major credit card companies keep trying to make it really hard to make major purchases without using one of their cards.
Using a card doesn't always involve carrying a balance. I use two credit cards regularly, one Chase Freedom Visa (1.1% cash back) and one Target REDcard (5% cash back), and I have both set to pay the entire statement balance in full each month. So I treat the credit cards as if they were debit cards: if I don't have the money in the checking account, I don't swipe the card.
Re:Obvious article is obvious? (Score:4, Interesting)
Re:This is Market failure in action... (Score:4, Interesting)
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?