7 ms·

You're confusing the last mile transmission capability with the cost of transferring the data in and out of the network. Let's say you and I go in to business

You're confusing the last mile transmission capability with the cost of transferring the data in and out of the network. Let's say you and I go in to business together and build a microwave wireless internet service. There is commodity equipment available that can push 100 mbps pretty easily. We buy a microwave transmission tower and central office from a company that is going out of business at a rate that cannot be beat. We price out our customer premises equipment so that we make half our money back on the setup fee, so setup costs are minimal. We're now ready for business. We can provide 100 mbps internet service to customers with minimal equipment cost. Sweet! Here's the rub. Unless our customers are content to transfer data only between themselves, we're going to need some outside connectivity. We need to peer with all the major networks. So we try to set up peering agreements with ATT, Level 3, and UUNet. The problem is, they have no need to transmit data over our networks, so we have a huge imbalance. We have to pay for every single bit our customers transmit. It's time to rethink our 100 mbps bandwidth policy, is it not? Just because we can transmit at 100 mbps to the customer, doesn't mean we can afford for them to use all that bandwidth all the time. There is a cost associated with transferring data over partner networks, and someone has to pay that cost. Comcast's residential pricing model does so in a way that is dead simple for consumers. If you don't fit that model, you should purchase business service.

nitrogen 15y ago
We have to pay for every single bit our customers transmit. What about all the bits your customers receive? You sound like you're at least somewhat familiar with peering agreements, so I'd like to know how that part works. If your customers are mostly receiving instead of sending, wouldn't those bits be paid for by the ones sending the bits? For that matter, why can I get 200GB/mo at 50mbit/s plus a server for $20 from a VPS provider, and $.15/GB beyond that ($.10 if purchased in advance in the case of Linode)? Why do consumer ISPs need to charge so much more? Based on your arguments in this and other posts, they have caps because they have to pay for the outgoing bandwidth. Why not just charge $.15/GB over the cap? Last mile infrastructure doesn't account for the difference, since it has a mostly fixed cost of construction and operation. Interfering with other oversubscribed customers can't explain it either, since everyone gets a fair and equal share of the pipe when the pipe is overloaded.
- jsz0 15y ago
  For that matter, why can I get 200GB/mo at 50mbit/s plus a server for $20 from a VPS provider, and $.15/GB beyond that ($.10 if purchased in advance in the case of Linode)? Why do consumer ISPs need to charge so much more? The ISP has to maintain and upgrade thousands of miles of physical plant to deliver data to customer's homes in the geographic regions they cover. For a typical cable ISP for instance there's about 3-5 miles of copper between your modem and the the fiber node and typically dozens of miles between the fiber node and the provider's headend/datacenter where they uplink to the Internet -- which incidentally for smaller rural ISPs may itself be hundreds of miles away from competitive rates on data. Going back to the cost of maintaing/upgrading the infrastructure a small plant of only ~1000 miles typically requires at least a dozen full time employees simply to maintain it day to day and that's not including things like management, network engineers, customer service, technical support, equipment, contracted labour, customer installation, etc. On top of that you've got the cost of leasing access to the poles/underground conduits and the cost of powering the 3-5 miles of plant plus whatever operational costs you have to put gas into your fleet of vehicles, the cost of the vehicles themselves, insurance, etc. When you put this all together you're looking at some pretty huge overhead on the consumer side of Internet access plus whatever profit the company wants to make to justify all of the above. It's not a charity after all.
  - nitrogen 15y ago
    That still doesn't justify the 250GB cap. Once the line is installed and maintained, using it more or less doesn't change the cost of installing and maintaining it. At that point we're talking about bulk bandwidth, which if you live in a metropolitan area, cannot cost significantly more than what Linode is charging.
    - jsz0 15y ago
      In the case of cable Internet you're dealing with a shared medium. Your ISP may have a 10Gbit uplink in their headend but that does not extend to your home. In reality with 4 channel DOCSIS 3 bonding the speed available "on-the-wire" is about ~150Mbit/sec and it's shared between about 200 customers at minimum. (in reality it's usually a lot closer to 300-500 customers) So if 15 customers out of the 200 want to use 10Mbit/sec 24x7 there is no bandwidth left over for the other 190 customers. Just to be clear this part is not strictly an infrastructure challenge as the physical cable plant is not inherently limited to ~150Mbit/sec. It simply depends how many DOCSIS channels are being sent out and how many customers share them. They originate from a CMTS in the provider's headend. A fully loaded CMTS sets you back about $500-$750k. So cable ISPs figured out capping data can save them quite a lot of money. The alternative is a) they make less money b) they charge the customer more. We know A certainly isn't going to happen in a non-competitive market and B is something most customers would not like so we get c) capping. Telco or FTTH are a completely different beast though. Much harder to justify capping there. For telco it's usually because there is a limited uplink to the DSLAM. As of a few years ago it was not uncommon to have a few T1s feeding a DSLAM. FTTH is rarely capped because the fiber that goes to your home is capable of pushing 10Gbit/sec with the right optics. WISPS have the same issue as cable -- in fact WiMAX is very similar to DOCSIS and some WISPs actually do use DOCSIS over wireless at 10Ghz.

nitrogen 15y ago

We have to pay for every single bit our customers transmit. What about all the bits your customers receive? You sound like you're at least somewhat familiar with peering agreements, so I'd like to know how that part works. If your customers are mostly receiving instead of sending, wouldn't those bits be paid for by the ones sending the bits? For that matter, why can I get 200GB/mo at 50mbit/s plus a server for $20 from a VPS provider, and $.15/GB beyond that ($.10 if purchased in advance in the case of Linode)? Why do consumer ISPs need to charge so much more? Based on your arguments in this and other posts, they have caps because they have to pay for the outgoing bandwidth. Why not just charge $.15/GB over the cap? Last mile infrastructure doesn't account for the difference, since it has a mostly fixed cost of construction and operation. Interfering with other oversubscribed customers can't explain it either, since everyone gets a fair and equal share of the pipe when the pipe is overloaded.

jsz0 15y ago
For that matter, why can I get 200GB/mo at 50mbit/s plus a server for $20 from a VPS provider, and $.15/GB beyond that ($.10 if purchased in advance in the case of Linode)? Why do consumer ISPs need to charge so much more? The ISP has to maintain and upgrade thousands of miles of physical plant to deliver data to customer's homes in the geographic regions they cover. For a typical cable ISP for instance there's about 3-5 miles of copper between your modem and the the fiber node and typically dozens of miles between the fiber node and the provider's headend/datacenter where they uplink to the Internet -- which incidentally for smaller rural ISPs may itself be hundreds of miles away from competitive rates on data. Going back to the cost of maintaing/upgrading the infrastructure a small plant of only ~1000 miles typically requires at least a dozen full time employees simply to maintain it day to day and that's not including things like management, network engineers, customer service, technical support, equipment, contracted labour, customer installation, etc. On top of that you've got the cost of leasing access to the poles/underground conduits and the cost of powering the 3-5 miles of plant plus whatever operational costs you have to put gas into your fleet of vehicles, the cost of the vehicles themselves, insurance, etc. When you put this all together you're looking at some pretty huge overhead on the consumer side of Internet access plus whatever profit the company wants to make to justify all of the above. It's not a charity after all.
- nitrogen 15y ago
  That still doesn't justify the 250GB cap. Once the line is installed and maintained, using it more or less doesn't change the cost of installing and maintaining it. At that point we're talking about bulk bandwidth, which if you live in a metropolitan area, cannot cost significantly more than what Linode is charging.
  - jsz0 15y ago
    In the case of cable Internet you're dealing with a shared medium. Your ISP may have a 10Gbit uplink in their headend but that does not extend to your home. In reality with 4 channel DOCSIS 3 bonding the speed available "on-the-wire" is about ~150Mbit/sec and it's shared between about 200 customers at minimum. (in reality it's usually a lot closer to 300-500 customers) So if 15 customers out of the 200 want to use 10Mbit/sec 24x7 there is no bandwidth left over for the other 190 customers. Just to be clear this part is not strictly an infrastructure challenge as the physical cable plant is not inherently limited to ~150Mbit/sec. It simply depends how many DOCSIS channels are being sent out and how many customers share them. They originate from a CMTS in the provider's headend. A fully loaded CMTS sets you back about $500-$750k. So cable ISPs figured out capping data can save them quite a lot of money. The alternative is a) they make less money b) they charge the customer more. We know A certainly isn't going to happen in a non-competitive market and B is something most customers would not like so we get c) capping. Telco or FTTH are a completely different beast though. Much harder to justify capping there. For telco it's usually because there is a limited uplink to the DSLAM. As of a few years ago it was not uncommon to have a few T1s feeding a DSLAM. FTTH is rarely capped because the fiber that goes to your home is capable of pushing 10Gbit/sec with the right optics. WISPS have the same issue as cable -- in fact WiMAX is very similar to DOCSIS and some WISPs actually do use DOCSIS over wireless at 10Ghz.