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> So ISPs are desperate. Their costs are spiralling out of control Isn't the cost to deliver a gigabyte of traffic something less than five cents, and decreasi

> So ISPs are desperate. Their costs are spiralling out of control Isn't the cost to deliver a gigabyte of traffic something less than five cents, and decreasing?

bradtgmurray 13y ago
Which means the profit margin is shrinking. It's not all about whether you're in the red or in the black, it's about how much profit you're making.
- AnthonyMouse 13y ago
  > Which means the profit margin is shrinking. Not if you judge by the telcos' profitability. The cost of transferring each bit is exponentially decreasing as network equipment tracks Moore's law. Their costs are going down, not up. What this is really about is damaging competitors to their cable TV operations. Wail about Netflix using a lot of bandwidth, never mind that the cost of providing that bandwidth is falling as fast as the demand for it is rising, and you can put on a good show for the regulators as to why you need to destroy Netflix and push everybody back onto U-verse and cable TV.
- kbenson 13y ago
  That depends entirely on whether you see bandwidth costs as revenue or an expense. For many of these companies it's both, but generally they make most their money from consumers, and in that case it's an expense (to the degree it's got an ongoing price at all, given peering arrangements).
twoodfin 13y ago
That's at best the average cost. You can also deliver a few terabytes for something like $3 in postage if you ship a tape, but that average cost would be deceptively low if you were trying to use that bandwidth to watch Netflix. The real cost is building the infrastructure to handle higher and higher peak bandwidth. Suppose you're Comcast with 20 million subscribers, half of whom are trying to watch 5Mbit Super-HD Netflix during prime time. That's 5 terabit, and even if you could agree with Netflix's providers to divide it up geographically, it's still an outrageous amount of bits to figure out how to ship.
- jkrems 13y ago
  If you offer unlimited bandwidth and it's not working out financially, the solution is one of the two: 1. Increase the price for the subscription 2. Remove unlimited bandwidth for the subscription and go back to volume based models It's pretty simple, really. You offer a product where cost is higher than revenue? Change the product, change your process, or change the price.
  - twoodfin 13y ago
    I don't understand: If under total load, with every customer pulling the maximum possible bandwidth simultaneously, Comcast could give you 250Kbps, you want them to sell a product that only gives you 250Kbps all the time just so their advertising will be accurate? Like everything else, there's fine print: 20Mbps or whatever is described as a maximum speed, and many people actually see burst speeds that high. But as it would be unreasonable to be upset you can't get 20Mbps to Nigeria, it's also somewhat unreasonable to be completely upset at Comcast that you can't get 20Mbps to Netflix if Netflix is paying for cheap ISPs that won't fairly peer. I'm not sufficiently informed to take sides in that dispute, but I can easily imagine that Cogent (for example) is dumping way more traffic into Comcast than Comcast is dumping into it, and trying to get away without paying for that disparity.
    - dublinben 13y ago
      It is practically and theoretically impossible for Comcast (a residential ISP with asymmetrical connection speeds) to have a balanced traffic relationship with any Tier 1 ISP. Every typical internet behavior of a Comcast subscriber follows the pattern of sending a small request, and receiving a large amount of data (webpages, music, video, etc.) in return.
      - ericd 13y ago
        Unless they'd like to start allowing their customers to have servers :-)
    - __david__ 13y ago
aroch 13y ago
That's not how traffic costs work, but it's much less than one cent per GB just to move the data

> So ISPs are desperate. Their costs are spiralling out of control Isn't the cost to deliver a gigabyte of traffic something less than five cents, and decreasing?

bradtgmurray 13y ago

Which means the profit margin is shrinking. It's not all about whether you're in the red or in the black, it's about how much profit you're making.

AnthonyMouse 13y ago
> Which means the profit margin is shrinking. Not if you judge by the telcos' profitability. The cost of transferring each bit is exponentially decreasing as network equipment tracks Moore's law. Their costs are going down, not up. What this is really about is damaging competitors to their cable TV operations. Wail about Netflix using a lot of bandwidth, never mind that the cost of providing that bandwidth is falling as fast as the demand for it is rising, and you can put on a good show for the regulators as to why you need to destroy Netflix and push everybody back onto U-verse and cable TV.
kbenson 13y ago
That depends entirely on whether you see bandwidth costs as revenue or an expense. For many of these companies it's both, but generally they make most their money from consumers, and in that case it's an expense (to the degree it's got an ongoing price at all, given peering arrangements).

twoodfin 13y ago

That's at best the average cost. You can also deliver a few terabytes for something like $3 in postage if you ship a tape, but that average cost would be deceptively low if you were trying to use that bandwidth to watch Netflix. The real cost is building the infrastructure to handle higher and higher peak bandwidth. Suppose you're Comcast with 20 million subscribers, half of whom are trying to watch 5Mbit Super-HD Netflix during prime time. That's 5 terabit, and even if you could agree with Netflix's providers to divide it up geographically, it's still an outrageous amount of bits to figure out how to ship.

jkrems 13y ago
If you offer unlimited bandwidth and it's not working out financially, the solution is one of the two: 1. Increase the price for the subscription 2. Remove unlimited bandwidth for the subscription and go back to volume based models It's pretty simple, really. You offer a product where cost is higher than revenue? Change the product, change your process, or change the price.
- twoodfin 13y ago
  I don't understand: If under total load, with every customer pulling the maximum possible bandwidth simultaneously, Comcast could give you 250Kbps, you want them to sell a product that only gives you 250Kbps all the time just so their advertising will be accurate? Like everything else, there's fine print: 20Mbps or whatever is described as a maximum speed, and many people actually see burst speeds that high. But as it would be unreasonable to be upset you can't get 20Mbps to Nigeria, it's also somewhat unreasonable to be completely upset at Comcast that you can't get 20Mbps to Netflix if Netflix is paying for cheap ISPs that won't fairly peer. I'm not sufficiently informed to take sides in that dispute, but I can easily imagine that Cogent (for example) is dumping way more traffic into Comcast than Comcast is dumping into it, and trying to get away without paying for that disparity.
  - dublinben 13y ago
    It is practically and theoretically impossible for Comcast (a residential ISP with asymmetrical connection speeds) to have a balanced traffic relationship with any Tier 1 ISP. Every typical internet behavior of a Comcast subscriber follows the pattern of sending a small request, and receiving a large amount of data (webpages, music, video, etc.) in return.
    - ericd 13y ago
      Unless they'd like to start allowing their customers to have servers :-)
  - __david__ 13y ago

aroch 13y ago

That's not how traffic costs work, but it's much less than one cent per GB just to move the data