6 ms·

Stop pretending that you're not a dumb pipe and bill by usage. The sooner information is treated like the basic utility it is, like fuel, water or electricity,

by drcube 15y ago

Stop pretending that you're not a dumb pipe and bill by usage. The sooner information is treated like the basic utility it is, like fuel, water or electricity, the better off we'll all be. It's painful to watch every last data provider dance around the subject like this. You're not fooling anybody. All right, you're fooling a lot of people, but not me, and not anybody else for very long.

dpark 15y ago
People don't want to pay by usage, though. They want unlimited bandwidth and transfer for $30/month, and they aren't going to be happy with settling for $15/GB.
- mikeash 15y ago
  Customers always want better products for free. The problem is that ISPs are responding to the desire for unlimited bandwidth by providing "unlimited" with tons of caveats. Everybody would be better off if they would just cut to the chase and charge by usage. Advertising "unlimited" should qualify as false advertising if it's not truly unlimited, which would push everybody towards more sane behavior.
  - NathanKP 15y ago
    Everybody would be better off except for the ISP's who would now be exposing the ridiculously high dollar per gigabyte rate they are charging.
  - dpark 15y ago
    I agree that they should not (and should not be able to) call a limited plan "unlimited". However, I don't think that going to a true pay-for-usage plan is realistic. Most people don't use much bandwidth. Those people are effectively subsidizing the high-usage clients. Let's assume that the average data usage is 1GB (the actual amount doesn't matter). Right now, everyone pays $30 whether they use 1kB or 1TB. Imagine if instead we go to a pay per MB plan. A MB currently costs $0.03 (on average, and assuming 1000MB to the GB). We know that the top 5% are using 12x as much data as the average user, so the top users are around 12GB, while the average user is around 420MB. So if we keep the usage price the same, the average non-top-5% user will be paying only $12.60. The top users are paying $360.00. Of course, the top users aren't going to continue this kind of payment. They'll leave for another provider or else drastically cut their usage. So now AT&T is serving less data (yay), but they're also bringing in about 42% as much revenue. And bear in mind that this same calculation could be done for the next 5% and the next. The person using 1MB today paying for the 999MB they don't use so that someone else can use it. After the new plan, their fee goes down to $0.03, and someone else's goes up by $29.97. A lot of people would simply stop using any significant bandwidth and force AT&T to raise the price per MB drastically. I think tiered plans make more sense, where instead of a true pay-for-usage, you basically have pay-for-max-usage. I think this might be where we end up. And the reality is that what we'll probably see will be $30 for "average" or slightly-above-average usage (1GB in my example), and other tiers for "exceptional" usage. Maybe $45 for 2GB and $60 for 4GB. AT&T isn't going to take a big pay cut on average users, because exceptional users by and large will not make up the difference. They'll just stop being exceptional users.
    - illumin8 15y ago
      I think you numbers are way off. The average user is using less than 100MB a month. If your assumption is correct that the top users are using 12x as much data (don't know where you got this info) - it seems like they'll be throttling anyone that uses more than 1.2GB of data a month...
      - dpark 15y ago
        It doesn't matter if the number for average usage is way off. The math stays the same. Light users are bearing the cost for heavy users. In fact light users are by and large carrying the cost for even average users. The 12x number came from the article.
    - bartl 15y ago
      The thing that I think is wrong in your calculation is your thoughts that data transfer forms the highest cost for these providers. I sincerely doubt that. Anyway, a total fee of $0.03 is ridiculous, as it doesn't include fixed costs for the connection.
    - mikeash 15y ago
      Directly converting current fees into dollars per megabyte isn't going to work. A person who does nothing but check e-mail will be paying pennies per month, which is not going to pay for the ISP's costs. Instead, I would expect there to be a monthly fee just to have service at all, and then usage charges on top of that. I'd expect that roughly 50% of the current typical monthly charge would be to have service, and then the rest would be captured by usage charges. There's also nothing preventing ISPs from providing volume discounts. Indeed, they should, as their own cost per byte per customer should go down as the customer uses more. I'm not sure why you see it as a good thing that average users subsidize top users. Surely top users should pay in proportion to their additional use? After all, I don't pay the same amount for my electricity as somebody who cools his house to 60 degrees and leaves his lights on 24/7. Structure usage so that the average cost per month stays the same (and thus total revenue stays the same) but heavy users get charged more. It's more fair and is the model used in virtually every other service and industry in existence.
- sahaj 15y ago
  If it was $15/GB, I would be happy. AT&T charges $15/200MB.

by drcube 15y ago

dpark 15y ago

People don't want to pay by usage, though. They want unlimited bandwidth and transfer for $30/month, and they aren't going to be happy with settling for $15/GB.

mikeash 15y ago
Customers always want better products for free. The problem is that ISPs are responding to the desire for unlimited bandwidth by providing "unlimited" with tons of caveats. Everybody would be better off if they would just cut to the chase and charge by usage. Advertising "unlimited" should qualify as false advertising if it's not truly unlimited, which would push everybody towards more sane behavior.
- NathanKP 15y ago
  Everybody would be better off except for the ISP's who would now be exposing the ridiculously high dollar per gigabyte rate they are charging.
- dpark 15y ago
  I agree that they should not (and should not be able to) call a limited plan "unlimited". However, I don't think that going to a true pay-for-usage plan is realistic. Most people don't use much bandwidth. Those people are effectively subsidizing the high-usage clients. Let's assume that the average data usage is 1GB (the actual amount doesn't matter). Right now, everyone pays $30 whether they use 1kB or 1TB. Imagine if instead we go to a pay per MB plan. A MB currently costs $0.03 (on average, and assuming 1000MB to the GB). We know that the top 5% are using 12x as much data as the average user, so the top users are around 12GB, while the average user is around 420MB. So if we keep the usage price the same, the average non-top-5% user will be paying only $12.60. The top users are paying $360.00. Of course, the top users aren't going to continue this kind of payment. They'll leave for another provider or else drastically cut their usage. So now AT&T is serving less data (yay), but they're also bringing in about 42% as much revenue. And bear in mind that this same calculation could be done for the next 5% and the next. The person using 1MB today paying for the 999MB they don't use so that someone else can use it. After the new plan, their fee goes down to $0.03, and someone else's goes up by $29.97. A lot of people would simply stop using any significant bandwidth and force AT&T to raise the price per MB drastically. I think tiered plans make more sense, where instead of a true pay-for-usage, you basically have pay-for-max-usage. I think this might be where we end up. And the reality is that what we'll probably see will be $30 for "average" or slightly-above-average usage (1GB in my example), and other tiers for "exceptional" usage. Maybe $45 for 2GB and $60 for 4GB. AT&T isn't going to take a big pay cut on average users, because exceptional users by and large will not make up the difference. They'll just stop being exceptional users.
  - illumin8 15y ago
    I think you numbers are way off. The average user is using less than 100MB a month. If your assumption is correct that the top users are using 12x as much data (don't know where you got this info) - it seems like they'll be throttling anyone that uses more than 1.2GB of data a month...
    - dpark 15y ago
      It doesn't matter if the number for average usage is way off. The math stays the same. Light users are bearing the cost for heavy users. In fact light users are by and large carrying the cost for even average users. The 12x number came from the article.
  - bartl 15y ago
    The thing that I think is wrong in your calculation is your thoughts that data transfer forms the highest cost for these providers. I sincerely doubt that. Anyway, a total fee of $0.03 is ridiculous, as it doesn't include fixed costs for the connection.
  - mikeash 15y ago
    Directly converting current fees into dollars per megabyte isn't going to work. A person who does nothing but check e-mail will be paying pennies per month, which is not going to pay for the ISP's costs. Instead, I would expect there to be a monthly fee just to have service at all, and then usage charges on top of that. I'd expect that roughly 50% of the current typical monthly charge would be to have service, and then the rest would be captured by usage charges. There's also nothing preventing ISPs from providing volume discounts. Indeed, they should, as their own cost per byte per customer should go down as the customer uses more. I'm not sure why you see it as a good thing that average users subsidize top users. Surely top users should pay in proportion to their additional use? After all, I don't pay the same amount for my electricity as somebody who cools his house to 60 degrees and leaves his lights on 24/7. Structure usage so that the average cost per month stays the same (and thus total revenue stays the same) but heavy users get charged more. It's more fair and is the model used in virtually every other service and industry in existence.
sahaj 15y ago
If it was $15/GB, I would be happy. AT&T charges $15/200MB.