6 ms·

TL;DR - internet traffic is paid for by users, but high-bandwidth use like video costs the ISPs more, and they'd like to double-dip by also charging sites like

TL;DR - internet traffic is paid for by users, but high-bandwidth use like video costs the ISPs more, and they'd like to double-dip by also charging sites like Netflix.

josh2600 14y ago
Yes. It's important to note just how much video content has grown compared to revenues though. If you click through to the link on the Deck, you'll see a bunch of stats about video utilization compared to revenue. The numbers are pretty mindblowing. Costs for consumers haven't really gone up, but utilization has increased considerably. Any idea about what the answer should look like? (Note: you can't say Google Fiber).
- nathan_long 14y ago
  >> Costs for consumers haven't really gone up Costs for consumers are whatever the ISPs decide they are. The answer should look like "if you cost us more, we charge you more," just like every other business on the planet. It doesn't have to be X bits = Y dollars. It could factor in load; the meter runs faster at high-demand times and slower at off-peak times. That solves the "bandwidth is a renewable resource" argument and the "some people use more than their share" argument. They'd just have to ensure that the meter is highly visible to consumers.
  - josh2600 14y ago
    Let's be frank, the only real cost for consumer internet is the last mile. Since Internet access for residential bandwidth was reclassified thanks to the memo from George W. Bush around 2004 we haven't had real competition because common carriage doesn't extend to your front door. Contrast this with Datacenter bandwidth where paying $.10 a megabit isn't unheard of. The cost structures are not related to the core infrastructure, but rather the edge. I think this problem is a lot more complex than you're making it out to be, but that's just my opinion. In a lot of cases the rates for ISPs aren't set randomly, they're anchored to standards set by regulatory bodies (particularly in the case of DSL). In short, pricing bandwidth is hard. The real cost is the last mile.
    - nathan_long 14y ago
      I think you understand this better than I do, so maybe I'm being simplistic. But isn't the gist of what you're saying "it's complicated because ISPs have gotten themselves a near-monopoly status and then, in reaction, we've regulated them?" If so, that doesn't make me sympathize with them at all. If they want freedom to charge more according to access, or to charge more according to the difficulty of running the last mile connection, I'd say "give up your monopoly protections and we'll remove your regulation." If they don't want that, I'd say "you start charging both the consumer and the content provider and we'll pass a regulation saying you can't." If a company wants the government to be their sugar daddy, they shouldn't complain when they get grounded. You want your own rules, you move out of the house and compete in the free market.
      - josh2600 14y ago
        In very old industries you often have players who have a monopolistic status. Markets either become price efficient or competition deficient over time. In the case of telecom there is stratified warfare. At the consumer level, competition is scarce. In the SMB Segment competition is fierce. In the Datacenters world competition is fierce, but at the core of everything you have to go through 721 Folsom street to get out of the left coast. This fight is particularly interesting because it's one of the first to cross the Commercial-Residential boundary. On the one hand, consumers pay for access, on the other, large ISPs peer networks. One is a contract, the other a handshake. In this particular case, ISPs argue that since usage increases so should rates, but in order to arrive at such a conclusion, the large ISPs would have to ignore their monopoly. Let's take this a step further though; there's a really big problem with everyone building their own network. That is, no one wants thousands of wires running to each residence, but that's what a competitive last mile would look like. The answer is municipally controlled networks with private operators. The infrastructure would be owned by the state, but operated by competitive virtual operators. Unfortunately, this vision is impossible in America, and that's why we can't tackle this problem straight-on and instead have to operate through layers of abstraction. TL;DR: public networks, private operators is ideal. Impossible in US.
        14y ago
- yxhuvud 14y ago
  If revenues are not rising, then they need to raise prices and/or alter their business models to fit usage. I kinda expect unlimited data plans to be a very short lived phenomena with the possible exception that it may end up free where the traffic can be offloaded to a wifi.
- SilasX 14y ago
  Others have mentioned that the answer should look like "charging more to those who use more". But I see it differently the relevant scarcity is over bandwidth: total data transfer at any moment in time. That is, downloading when everyone else is "hurts" the network a lot more than when you download when it's below capacity. So why not just throttle heavy users when at full capacity, and only then? I know a lot of people here don't like anything involving throttling, but it only seems fair that (if you don't want metered usage), then people who put less load on the network should get priority when there's only a scarce amount to go around. (It should be weighted, of course, by how much of your usage was on or close to peak hours so that you're punished less if you schedule your torrenting for off-peak.) What am I missing?
  - josh2600 14y ago
    It's not scarce. Power isn't scarce, copper isn't scarce. Access is scarce. This is not a scarcity problem, this is a distribution problem. Bandwidth inside of a Datacenter can be had for $.10 per mbit, but because access to your home is prohibitively expensive, you pay more. Does that help? The key point is that it's a distribution problem, not scarcity.
    - SilasX 14y ago
      I think there's a confusion of terms here: Whatever is a "problem", therein lies the scarcity; you just need to identify it. If there were no scarcity, everyone could have what they wanted. So what is it that the ISP cannot provide, specifically? I'm guessing it's the sum of all data passing to/from its customers per unit time. Hence why I called bandwidth the relevant scarcity, and suggested apportioning it based on how much users are using the network. Can you operationalize the term "distribution problem" so that it's clear what specifically the problem is? "It's a distribution problem" is easy to fall back on, but hard to make precise. They say the same of food shortages, for example, but people have different ideas of what it means.
      - josh2600 14y ago
        I don't think it's the Sum total of all data. I think the problem is that the last mile access is prohibitively expensive. Glass connections in a datacenter are $.10 per megabit, but AT&T DSL over copper to your house is $30 for 1.5 megabits. That copper could become glass, but no one will pay for that upgrade. The distribution problem is that in order to compete with at&t at the residential level, you have to build a parallel connection and the cost of doing so is prohibitively large. Therefore, everyone is forced to rent access from AT&T, BUT since common carriage doesn't apply to residential access lines, AT&T doesn't have to share. If sonic.net could build glass to your house, they would, and they wouldn't ever complain of congestion, but because of artificial barriers to entry no new competitors can enter the market. Does that make sense? I'm not trying to be evasive, it's just a complicated problem. Carriers don't have a problem dealing with aggregate capacity, they have a problem dealing with edge access capacity. Core carrier routers like the CRS-3 from Cisco can move 322tbps+, and they do, but you can't put a CRS-3 in every DSLAM.
- npsimons 14y ago
  Do the "costs for consumers" take into account the $300 billion in public money that was supposed to be put towards improving broadband in US? http://www.newnetworks.com/broadbandscandals.htm http://www.newnetworks.com/broadbandscandals.htm
nathan_long 14y ago
Now my own opinion: double-dipping like this is a stupid, stupid concept. If an ISP were to charge Netflix for consuming its bandwidth, it would be like a taxi service slapping fees on an airport for generating so many rides. "DARN those selfish airports, they're driving my taxi business under with their huge demand for rides!" If ISPs can't figure out how to make more money from providing more service, they should hand in their business licenses.
- josh2600 14y ago
  Yes it is dumb, but another way to look at your analogy would be if there were only one road to the airport and that road was controlled by AT&T or Comcast. Imagine that for a second and consider what impact that might have on your ability to hail a taxi :D. All kidding aside, you make a fair point, but I don't think the playing field is quite as level as you're making it out to be. You can't just start an ISP that can peer at the same level of AT&T, you know?
- bigdubs 14y ago
  The taxi/airport analogy is almost there but needs one extra tweak for correctness. In that analogy the ISPs would be the state / local government that built the roads. They would be trying to extract additional money out of the increased traffic, because one the roads are built it's harder to set up toll booths because of stringent regulation. The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business. In the real world, tolls on highways are run typically by the local governments, or in the case of around where I live (nyc) 'public benefit corporations'. Publicly traded corporations, obviously, don't want to be turned into government run utilities, even though this would probably be in everyone's best interest eventually.
  - npsimons 14y ago
    The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business. Well then the answer is clear, the market has spoken: they are utilities. That's how they were setup, that's the bargain they made with We the People, and quite frankly, they don't offer content anyone wants (they aren't Netflix). "Ooh, I want pay per view and Mediacom/Cox/Comcast digital movies", said no one ever. If they want to provide content, they should not be allowed to anti-competitively discriminate against other content providers. This is exactly what Network Neutrality is about.
JoshTriplett 14y ago
Which would actually double-charge sites like Netflix, since those sites already have to pay for bandwidth/peering on their end.
astrodust 14y ago
This article is misleading. The "originator" refers to the sender of any traffic in any direction. Google and Netflix already pay an enormous amount of money to push their traffic to users. They don't freeload on the backs of local providers as those lobbying would have you believe. They're just upset that as local providers they don't get money directly from Google. Instead they get a lot of money from their user base because their user base wants to get to Google.
- bryanlarsen 14y ago
  To be accurate, Google doesn't pay directly for most of their own bandwidth. They have lots of their own fiber and peering agreements with most providers. Because of that, providers don't have to pay a backbone to send bits to Google, and Google doens't have to pay a backbone to send bits to the providers. Of course, Google pays indirectly -- they have to buy, build & maintain those backbones.
  - astrodust 14y ago
    This much is true, but the only reason a provider would to that is to reduce costs in the first place. It's their call to provide peering.

TL;DR - internet traffic is paid for by users, but high-bandwidth use like video costs the ISPs more, and they'd like to double-dip by also charging sites like Netflix.

josh2600 14y ago

Yes. It's important to note just how much video content has grown compared to revenues though. If you click through to the link on the Deck, you'll see a bunch of stats about video utilization compared to revenue. The numbers are pretty mindblowing. Costs for consumers haven't really gone up, but utilization has increased considerably. Any idea about what the answer should look like? (Note: you can't say Google Fiber).

nathan_long 14y ago
>> Costs for consumers haven't really gone up Costs for consumers are whatever the ISPs decide they are. The answer should look like "if you cost us more, we charge you more," just like every other business on the planet. It doesn't have to be X bits = Y dollars. It could factor in load; the meter runs faster at high-demand times and slower at off-peak times. That solves the "bandwidth is a renewable resource" argument and the "some people use more than their share" argument. They'd just have to ensure that the meter is highly visible to consumers.
- josh2600 14y ago
  Let's be frank, the only real cost for consumer internet is the last mile. Since Internet access for residential bandwidth was reclassified thanks to the memo from George W. Bush around 2004 we haven't had real competition because common carriage doesn't extend to your front door. Contrast this with Datacenter bandwidth where paying $.10 a megabit isn't unheard of. The cost structures are not related to the core infrastructure, but rather the edge. I think this problem is a lot more complex than you're making it out to be, but that's just my opinion. In a lot of cases the rates for ISPs aren't set randomly, they're anchored to standards set by regulatory bodies (particularly in the case of DSL). In short, pricing bandwidth is hard. The real cost is the last mile.
  - nathan_long 14y ago
    I think you understand this better than I do, so maybe I'm being simplistic. But isn't the gist of what you're saying "it's complicated because ISPs have gotten themselves a near-monopoly status and then, in reaction, we've regulated them?" If so, that doesn't make me sympathize with them at all. If they want freedom to charge more according to access, or to charge more according to the difficulty of running the last mile connection, I'd say "give up your monopoly protections and we'll remove your regulation." If they don't want that, I'd say "you start charging both the consumer and the content provider and we'll pass a regulation saying you can't." If a company wants the government to be their sugar daddy, they shouldn't complain when they get grounded. You want your own rules, you move out of the house and compete in the free market.
    - josh2600 14y ago
      In very old industries you often have players who have a monopolistic status. Markets either become price efficient or competition deficient over time. In the case of telecom there is stratified warfare. At the consumer level, competition is scarce. In the SMB Segment competition is fierce. In the Datacenters world competition is fierce, but at the core of everything you have to go through 721 Folsom street to get out of the left coast. This fight is particularly interesting because it's one of the first to cross the Commercial-Residential boundary. On the one hand, consumers pay for access, on the other, large ISPs peer networks. One is a contract, the other a handshake. In this particular case, ISPs argue that since usage increases so should rates, but in order to arrive at such a conclusion, the large ISPs would have to ignore their monopoly. Let's take this a step further though; there's a really big problem with everyone building their own network. That is, no one wants thousands of wires running to each residence, but that's what a competitive last mile would look like. The answer is municipally controlled networks with private operators. The infrastructure would be owned by the state, but operated by competitive virtual operators. Unfortunately, this vision is impossible in America, and that's why we can't tackle this problem straight-on and instead have to operate through layers of abstraction. TL;DR: public networks, private operators is ideal. Impossible in US.
      - 14y ago
yxhuvud 14y ago
If revenues are not rising, then they need to raise prices and/or alter their business models to fit usage. I kinda expect unlimited data plans to be a very short lived phenomena with the possible exception that it may end up free where the traffic can be offloaded to a wifi.
SilasX 14y ago
Others have mentioned that the answer should look like "charging more to those who use more". But I see it differently the relevant scarcity is over bandwidth: total data transfer at any moment in time. That is, downloading when everyone else is "hurts" the network a lot more than when you download when it's below capacity. So why not just throttle heavy users when at full capacity, and only then? I know a lot of people here don't like anything involving throttling, but it only seems fair that (if you don't want metered usage), then people who put less load on the network should get priority when there's only a scarce amount to go around. (It should be weighted, of course, by how much of your usage was on or close to peak hours so that you're punished less if you schedule your torrenting for off-peak.) What am I missing?
- josh2600 14y ago
  It's not scarce. Power isn't scarce, copper isn't scarce. Access is scarce. This is not a scarcity problem, this is a distribution problem. Bandwidth inside of a Datacenter can be had for $.10 per mbit, but because access to your home is prohibitively expensive, you pay more. Does that help? The key point is that it's a distribution problem, not scarcity.
  - SilasX 14y ago
    I think there's a confusion of terms here: Whatever is a "problem", therein lies the scarcity; you just need to identify it. If there were no scarcity, everyone could have what they wanted. So what is it that the ISP cannot provide, specifically? I'm guessing it's the sum of all data passing to/from its customers per unit time. Hence why I called bandwidth the relevant scarcity, and suggested apportioning it based on how much users are using the network. Can you operationalize the term "distribution problem" so that it's clear what specifically the problem is? "It's a distribution problem" is easy to fall back on, but hard to make precise. They say the same of food shortages, for example, but people have different ideas of what it means.
    - josh2600 14y ago
      I don't think it's the Sum total of all data. I think the problem is that the last mile access is prohibitively expensive. Glass connections in a datacenter are $.10 per megabit, but AT&T DSL over copper to your house is $30 for 1.5 megabits. That copper could become glass, but no one will pay for that upgrade. The distribution problem is that in order to compete with at&t at the residential level, you have to build a parallel connection and the cost of doing so is prohibitively large. Therefore, everyone is forced to rent access from AT&T, BUT since common carriage doesn't apply to residential access lines, AT&T doesn't have to share. If sonic.net could build glass to your house, they would, and they wouldn't ever complain of congestion, but because of artificial barriers to entry no new competitors can enter the market. Does that make sense? I'm not trying to be evasive, it's just a complicated problem. Carriers don't have a problem dealing with aggregate capacity, they have a problem dealing with edge access capacity. Core carrier routers like the CRS-3 from Cisco can move 322tbps+, and they do, but you can't put a CRS-3 in every DSLAM.
npsimons 14y ago
Do the "costs for consumers" take into account the $300 billion in public money that was supposed to be put towards improving broadband in US? http://www.newnetworks.com/broadbandscandals.htm http://www.newnetworks.com/broadbandscandals.htm

nathan_long 14y ago

Now my own opinion: double-dipping like this is a stupid, stupid concept. If an ISP were to charge Netflix for consuming its bandwidth, it would be like a taxi service slapping fees on an airport for generating so many rides. "DARN those selfish airports, they're driving my taxi business under with their huge demand for rides!" If ISPs can't figure out how to make more money from providing more service, they should hand in their business licenses.

josh2600 14y ago
Yes it is dumb, but another way to look at your analogy would be if there were only one road to the airport and that road was controlled by AT&T or Comcast. Imagine that for a second and consider what impact that might have on your ability to hail a taxi :D. All kidding aside, you make a fair point, but I don't think the playing field is quite as level as you're making it out to be. You can't just start an ISP that can peer at the same level of AT&T, you know?
bigdubs 14y ago
The taxi/airport analogy is almost there but needs one extra tweak for correctness. In that analogy the ISPs would be the state / local government that built the roads. They would be trying to extract additional money out of the increased traffic, because one the roads are built it's harder to set up toll booths because of stringent regulation. The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business. In the real world, tolls on highways are run typically by the local governments, or in the case of around where I live (nyc) 'public benefit corporations'. Publicly traded corporations, obviously, don't want to be turned into government run utilities, even though this would probably be in everyone's best interest eventually.
- npsimons 14y ago
  The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business. Well then the answer is clear, the market has spoken: they are utilities. That's how they were setup, that's the bargain they made with We the People, and quite frankly, they don't offer content anyone wants (they aren't Netflix). "Ooh, I want pay per view and Mediacom/Cox/Comcast digital movies", said no one ever. If they want to provide content, they should not be allowed to anti-competitively discriminate against other content providers. This is exactly what Network Neutrality is about.

JoshTriplett 14y ago

Which would actually double-charge sites like Netflix, since those sites already have to pay for bandwidth/peering on their end.

astrodust 14y ago

This article is misleading. The "originator" refers to the sender of any traffic in any direction. Google and Netflix already pay an enormous amount of money to push their traffic to users. They don't freeload on the backs of local providers as those lobbying would have you believe. They're just upset that as local providers they don't get money directly from Google. Instead they get a lot of money from their user base because their user base wants to get to Google.

bryanlarsen 14y ago
To be accurate, Google doesn't pay directly for most of their own bandwidth. They have lots of their own fiber and peering agreements with most providers. Because of that, providers don't have to pay a backbone to send bits to Google, and Google doens't have to pay a backbone to send bits to the providers. Of course, Google pays indirectly -- they have to buy, build & maintain those backbones.
- astrodust 14y ago
  This much is true, but the only reason a provider would to that is to reduce costs in the first place. It's their call to provide peering.