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This is why it would be better to pay by bit consumed, like most do for electricity. This would encourage carriers to build more infrastructure. It would also c

This is why it would be better to pay by bit consumed, like most do for electricity. This would encourage carriers to build more infrastructure. It would also create an economic incentive for the ever increasing number of Internet connected devices to be more conscientious of data usage. Of course, we can't have that in the oligopoly situation in the United States.

charleslmunger 8y ago
I'm not sure that makes sense - bit consumed neither reflects the value of the service to the customer, nor the unit economics of the provider. You want a service level guarantee (99.9% available, with some extra wiggle room for peak hours and degradation. With electricity, you're paying for energy generation, plus grid maintenance. With internet, you're only paying for grid maintenance.
- em3rgent0rdr 8y ago
  How about bid on a variable price per bit? Just like is done with bitcoin transactions. If you are sending an important file, in an important conference call, or are receiving an important download that you don't want to wait long for, then you choose to pay more to get faster and more reliable service, but if you are streaming a youtube or doing something in the background, then you select a lower price for moderate speed & reliability.
  - RickSullivan 8y ago
    You're describing the exact thing net neutrality seeks to prevent--pricing based on the type of data being sent. I think it's dangerous to let those with deep pockets prioritize their traffic over mine.
    - em3rgent0rdr 8y ago
      > "it's dangerous to let those with deep pockets prioritize their traffic over mine" If only a finite amount of bandwidth is available to the world, then yes, the rich will be able to spend more to take bandwidth from us. However more cable can always be added, so what would actually happen is that the pie would grow.
      - paranoidrobot 8y ago
        > However more cable can always be added, so what would actually happen is that the pie would grow. This assumption is the same one behind energy grids, and assumes an ideal world with no bad actors. Instead, what happens is that incumbent players with the deepest pockets buy up all the (relevant) competition and then corner the market on capacity.
  - na85 8y ago
    That sounds like a user-hostile, free market dystopia.
- mcculley 8y ago
  It reflects value to me. I want my connection to be as fast as possible. If I pay a fixed monthly fee, the incentive to the ISP is to throttle my connection at some point. If they have no unit economics, why do some ISPs throttle and cap after hitting a maximum?
  - charleslmunger 8y ago
    A wired ISP's costs are primarily determined by capital improvements to their network, and increasing the reach of their network. The marginal cost of providing service to someone in a neighborhood that already has cables built is effectively zero - unless that households additional usage at peak hours causes congestion at the trunk. The econ 101 solution to this is variable pricing based on hours of the day, to shift consumption to off peak hours. However, that's not attractive to ISPs for a few reasons: 1. Customers don't have a good understanding of how much data various activities use. 2. Just like airline tickets, you may be paying substantially more or less than your neighbor for the same service. ISPs do not want to add additional pricing transparency or control - they would much rather adjust the rate as high as they can regardless of usage, then lower it for individuals newly signing up for service or when existing customers threaten to cancel. 3. Many large ISPs also own media and cable TV businesses that are in direct competition with high bandwidth services like Netflix. Putting caps on that apply regardless of time of day directs users to their own offerings, which do not count towards the cap. It's also a hedge to gain revenue as cable dies, and extract rents from it's replacement. 4. If you run a gym, your best customers are the ones who show up least often - the same is true for the current ISP model. A cap is a good way to shed heavy users and provides a chilling effect on existing users who don't have a good grasp of computer networking.
  - learc83 8y ago
    The OP didn't say they have no unit economics--just that bits consumed doesn't reflect their unit economics.
kadenshep 8y ago
No it wouldn't.
- mcculley 8y ago
  Please elaborate.
  - kadenshep 8y ago
    OP would need to elaborate on why it would in the first place. Bald assertions need only be met with bald assertions, especially when those assertions have real world examples negating them.
  - andrewmcwatters 8y ago
    We currently have this issue with mobile data and it doesn't do a damn thing. Engineers don't optimize for mobile data consumption beyond "download for offline usage," and ISPs don't build additional infra based on consumption: it doesn't affect the industry on any level whatsoever.
Rjevski 8y ago
Technically this means limited-data mobile connections should be the best in the world, because the carrier has an incentive to build good infrastructure? Let me check. IPv6? Nope. Public IPv4? Nope. HTTP interception proxy? Check! Peak bandwidth? Only a handful of mbps over LTE. And this is in markets like the UK and France where there is supposedly “competition”. This model doesn’t work, the carriers will still do the bare minimum that they can get away with.
- mcculley 8y ago
  No, it just means that carriers who charge by consumption would have aligned incentives. If there is no effective competition, the market will still fail.

charleslmunger 8y ago

I'm not sure that makes sense - bit consumed neither reflects the value of the service to the customer, nor the unit economics of the provider. You want a service level guarantee (99.9% available, with some extra wiggle room for peak hours and degradation. With electricity, you're paying for energy generation, plus grid maintenance. With internet, you're only paying for grid maintenance.

em3rgent0rdr 8y ago
How about bid on a variable price per bit? Just like is done with bitcoin transactions. If you are sending an important file, in an important conference call, or are receiving an important download that you don't want to wait long for, then you choose to pay more to get faster and more reliable service, but if you are streaming a youtube or doing something in the background, then you select a lower price for moderate speed & reliability.
- RickSullivan 8y ago
  You're describing the exact thing net neutrality seeks to prevent--pricing based on the type of data being sent. I think it's dangerous to let those with deep pockets prioritize their traffic over mine.
  - em3rgent0rdr 8y ago
    > "it's dangerous to let those with deep pockets prioritize their traffic over mine" If only a finite amount of bandwidth is available to the world, then yes, the rich will be able to spend more to take bandwidth from us. However more cable can always be added, so what would actually happen is that the pie would grow.
    - paranoidrobot 8y ago
      > However more cable can always be added, so what would actually happen is that the pie would grow. This assumption is the same one behind energy grids, and assumes an ideal world with no bad actors. Instead, what happens is that incumbent players with the deepest pockets buy up all the (relevant) competition and then corner the market on capacity.
- na85 8y ago
  That sounds like a user-hostile, free market dystopia.
mcculley 8y ago
It reflects value to me. I want my connection to be as fast as possible. If I pay a fixed monthly fee, the incentive to the ISP is to throttle my connection at some point. If they have no unit economics, why do some ISPs throttle and cap after hitting a maximum?
- charleslmunger 8y ago
  A wired ISP's costs are primarily determined by capital improvements to their network, and increasing the reach of their network. The marginal cost of providing service to someone in a neighborhood that already has cables built is effectively zero - unless that households additional usage at peak hours causes congestion at the trunk. The econ 101 solution to this is variable pricing based on hours of the day, to shift consumption to off peak hours. However, that's not attractive to ISPs for a few reasons: 1. Customers don't have a good understanding of how much data various activities use. 2. Just like airline tickets, you may be paying substantially more or less than your neighbor for the same service. ISPs do not want to add additional pricing transparency or control - they would much rather adjust the rate as high as they can regardless of usage, then lower it for individuals newly signing up for service or when existing customers threaten to cancel. 3. Many large ISPs also own media and cable TV businesses that are in direct competition with high bandwidth services like Netflix. Putting caps on that apply regardless of time of day directs users to their own offerings, which do not count towards the cap. It's also a hedge to gain revenue as cable dies, and extract rents from it's replacement. 4. If you run a gym, your best customers are the ones who show up least often - the same is true for the current ISP model. A cap is a good way to shed heavy users and provides a chilling effect on existing users who don't have a good grasp of computer networking.
- learc83 8y ago
  The OP didn't say they have no unit economics--just that bits consumed doesn't reflect their unit economics.

kadenshep 8y ago

No it wouldn't.

mcculley 8y ago
Please elaborate.
- kadenshep 8y ago
  OP would need to elaborate on why it would in the first place. Bald assertions need only be met with bald assertions, especially when those assertions have real world examples negating them.
- andrewmcwatters 8y ago
  We currently have this issue with mobile data and it doesn't do a damn thing. Engineers don't optimize for mobile data consumption beyond "download for offline usage," and ISPs don't build additional infra based on consumption: it doesn't affect the industry on any level whatsoever.

Rjevski 8y ago

Technically this means limited-data mobile connections should be the best in the world, because the carrier has an incentive to build good infrastructure? Let me check. IPv6? Nope. Public IPv4? Nope. HTTP interception proxy? Check! Peak bandwidth? Only a handful of mbps over LTE. And this is in markets like the UK and France where there is supposedly “competition”. This model doesn’t work, the carriers will still do the bare minimum that they can get away with.

mcculley 8y ago
No, it just means that carriers who charge by consumption would have aligned incentives. If there is no effective competition, the market will still fail.