8 ms·

Now it all makes sense. This HN crowd views the world as paying $20/mth for Xgb of data. But, the companies fighting against becoming dumb pipes much prefer to

by josho 12y ago

Now it all makes sense. This HN crowd views the world as paying $20/mth for Xgb of data. But, the companies fighting against becoming dumb pipes much prefer to charge $5/mth for a base data plan, plus the $12 unlimited social package, plus the $10 for 40 hours of music package, etc. From a business perspective it's brilliant: selling benefits, as opposed to a commodity (bandwidth). Ie. The price charged for the good sold no longer has relation to the cost of the good. Now just imagine if we bought other commodities the same way. Would you buy gas by distance, e.g. 'enough gas to drive from LA to NY for $50†' -- a great deal if you drive a Hummer, but pretty bad for a Prius. †The actual cost would be much more, but you get the point.

mikeash 12y ago
If you took a Prius C and drove really conservatively, I think you're only off by a factor of 2 or so. I think a better analogy might be something like water or electricity. Imagine separate line items on your electric bill for the refrigerator, the TV, the lights, etc. You bought a game console, that's $50/month extra for the game console electrical package.
- josho 12y ago
  I like your example better, because the energy utilities are quite similar to communications with active monopolies in some regions, a regulated environment, and huge infrastructure investments. With energy the infrastructure is regulated, with regulated rates. While the provider of the actual electricity is competitive without duplicating the infrastructure. This makes so much sense, it should be clear to treat telecommunications the same way.
  - mikeash 12y ago
    Another example I thought was effective was to compare it to the postal service, and to get political about the picking and choosing. Imagine, for example, if the postal service delivered the Washington Post normally, but charged extra for National Review. (Reverse or substitute them for people with different political leanings.) I used this when talking to my father recently, who leans fairly right and has been posting some links using the party line "free market" and "less regulation" arguments against net neutrality, and it seemed to make an impression.
    - Zancarius 12y ago
      > arguments against net neutrality, and it seemed to make an impression. I'm politically right of center and would like to point out that a non-trivial number of my philosophical peers used to assume "net neutrality" had more to do with a reincarnation of the fairness doctrine than data transit (I'm not even kidding). I'd like to believe that's changing, slowly, but it would take some convincing for me to accept that most of those who argue in favor of free market solutions have any understanding that this is a data ownership--rather than political--issue. Besides, the issues have become so complex thanks to lobbying efforts by these monopolies that I think your analogy is probably the best approach to help educate the public at large as to the dangers that might arise if this sort of nonsense takes hold further (and sadly, I fear it will--I was afraid of this the day the cable companies were allowed to become ISPs).
    - jedunnigan 12y ago
      I think the postal service isn't the best analogy. Take the case where ISP's want to put high bandwidth content providers (e.g.) in the slow lane. I see this as the USPS equivalent of charging you by the size and weight of the package (which they do, unless you are using a flat rate envelope). The flat rate envelope being the equivalent of some "package" internet deal a la the OP.
      - mikeash 12y ago
        It's more like wanting to charge Amazon more money per package because they generate so much delivery work for USPS.
        jedunnigan 12y ago
        Ah yes, makes sense.
        mikeash 12y ago
        I think it's a sure sign of dysfunction any time a company is trying to discourage use of their product. A healthy company in a healthy market loves additional demand. Imagine if there's some new kind of fruit that everyone wants to buy. The local supermarkets are flooded. Are they going to say, "this fruit is too popular and causing too much strain on our infrastructure, so we demand additional compensation from the fruit growers"? Hell no. They're going to say, "This is awesome! We're making so much cash! Hire more workers! Build out the stores! Buy more magic fruit!" Many ISPs have managed to set up their product offerings such that they don't want additional use of their product. That's a major screwup on their part, and one they should fix. It's interesting to look at cellular carriers, which started out this way but have mostly overcome it. For example, AT&T started out offering "unlimited" plans to iPhone users, and inevitably iPhone users used "too much" and this caused trouble. Now they only offer metered plans, and the attitude is different. Oh, you want to stream video constantly and use dozens of GB per month? Come right this way, we have a plan just for you, and you'll get a nice bulk discount. Contrast with Clear, who I used for a little bit as a home connection. They advertise "unlimited" and say it's suitable for replacing a home broadband connection, but if you actually try to use it that way, they throttle you into the ground and tell you to stop being abusive. Techies as a whole seem to be really resistant to metered pricing for internet connections, but I think standardizing on that approach would solve a whole bunch of problems.
  - joelhaus 12y ago
    This was actually discussed in yesterdays Washington Post. Electricity providers/generators weren't always competitive: http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/29/how-the-history-of-electricity-explains-municipal-broadband/ http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/29...
- russell 12y ago
  Except that electricity is fungible. Electricity encoded with data is not.
  - JetSpiegel 12y ago
    If the provider has a monopoly, that doesn't really matter.
  - mikeash 12y ago
    Broadband data connections to the internet are more or less fungible. That's essentially what the whole net neutrality debate is about. Should internet connections be fungible, or should it be possible for connections to be qualitatively different, not merely faster, slower, cheaper, more expensive?
grecy 12y ago
> * But, the companies fighting against becoming dumb pipes much prefer to charge $5/mth for a base data plan, plus the $12 unlimited social package, plus the $10 for 40 hours of music package, etc.* I work at an ISP. You hit the nail very squarely on the head, these conversations are happening every day. I believe we're soon going to introduce a "NetFlix" package where all netflix data will not count towards your usage cap. (Of course, the entire Netflix catalog is already locally cached inside our network anyway)
- DennisP 12y ago
  So this raises two questions I hadn't thought of before. (1) Doesn't this totally wreck the ISP argument for charging Netflix extra? (2) What's to prevent me from setting up the same sort of caching in my house and effectively breaking the Netflix DRM?
  - colinsidoti 12y ago
    This came up on HN not too long ago - I imagine it's how they do the caching: https://www.netflix.com/openconnect/hardware https://www.netflix.com/openconnect/hardware To answer 1, I would guess this kills the argument for a wired connection, but not necessarily wireless since there are greater bandwidth restrictions. That's just a guess though, since my perception of how far wireless tech has come might be off.
  - grecy 12y ago
    2) as colinsidoti says, our ISP has the hardware from Netflix (& others). We plug it in, tell them the public IP address and forget about it from there. 1) Remember their argument is not logical. And it's a secret that we have local caches in our network, so nobody is allowed to know that anyway.
- 3pt14159 12y ago
  Do they understand that if they do this it is just as easy for a company like Youtube to cut off complete access to them? Try to put my site in a package = no access for any of your customers.
opendais 12y ago
From a MBA logic point of view, I'm sure its brilliant but to me its pure evil. I'd literally move if I had to find an ISP that didn't do this.
rayiner 12y ago
At the end of the day, the companies that invest the money to build the very expensive infrastructure that all those little bits run around on aren't going to be content to being "dumb pipes." Ownership of the platform gives you tremendous leverage (ask Apple or Facebook or Microsoft), and the ISP's own the platform. Without them, the internet is just a bunch of software not talking to each other.
- opendais 12y ago
  No. That is what ISPs are without networks like Level3. The internet, on a B2B level, would work fine without these ISPs. The problem is these ISPs + natural monopolies on spectrum + governments + barriers to entry create national networks are abusing that power in the B2C space. Please don't claim "The Internet" is purely a B2C entity. EDIT: I'm amused by the downvote. Given I know this is true [e.g. My day job B2B work purely transits non-B2C ISPs like Sprint or Verizon]. ;)
  - rayiner 12y ago
    Building the consumer facing networks is a lot harder and more expensive than building the core network. Level 3's capex is a fraction of that of companies like VZN or ATT.
    - opendais 12y ago
      1) That is what you said originally. You can change the argument if you like, that's cool. 2) Smaller companies are able to provider better service in rural areas or towns than VZN/ATT. It is the effects of capex on their stock price, not the fundamental economics. http://arstechnica.com/information-technology/2013/07/a-city-with-two-gigabit-internet-isps-and-neither-one-is-google-fiber/ http://arstechnica.com/information-technology/2013/07/a-city... Ya, they may not run it to single residential homes. That doesn't change the fact they can do it to something like an apartment complex or buisness park cheaper than VZN or ATT just fine. And it isn't just them, there are dozens of these companies that are profitable and do this. You are fundamentally wrong.
- 12y ago

by josho 12y ago

mikeash 12y ago

If you took a Prius C and drove really conservatively, I think you're only off by a factor of 2 or so. I think a better analogy might be something like water or electricity. Imagine separate line items on your electric bill for the refrigerator, the TV, the lights, etc. You bought a game console, that's $50/month extra for the game console electrical package.

josho 12y ago
I like your example better, because the energy utilities are quite similar to communications with active monopolies in some regions, a regulated environment, and huge infrastructure investments. With energy the infrastructure is regulated, with regulated rates. While the provider of the actual electricity is competitive without duplicating the infrastructure. This makes so much sense, it should be clear to treat telecommunications the same way.
- mikeash 12y ago
  Another example I thought was effective was to compare it to the postal service, and to get political about the picking and choosing. Imagine, for example, if the postal service delivered the Washington Post normally, but charged extra for National Review. (Reverse or substitute them for people with different political leanings.) I used this when talking to my father recently, who leans fairly right and has been posting some links using the party line "free market" and "less regulation" arguments against net neutrality, and it seemed to make an impression.
  - Zancarius 12y ago
    > arguments against net neutrality, and it seemed to make an impression. I'm politically right of center and would like to point out that a non-trivial number of my philosophical peers used to assume "net neutrality" had more to do with a reincarnation of the fairness doctrine than data transit (I'm not even kidding). I'd like to believe that's changing, slowly, but it would take some convincing for me to accept that most of those who argue in favor of free market solutions have any understanding that this is a data ownership--rather than political--issue. Besides, the issues have become so complex thanks to lobbying efforts by these monopolies that I think your analogy is probably the best approach to help educate the public at large as to the dangers that might arise if this sort of nonsense takes hold further (and sadly, I fear it will--I was afraid of this the day the cable companies were allowed to become ISPs).
  - jedunnigan 12y ago
    I think the postal service isn't the best analogy. Take the case where ISP's want to put high bandwidth content providers (e.g.) in the slow lane. I see this as the USPS equivalent of charging you by the size and weight of the package (which they do, unless you are using a flat rate envelope). The flat rate envelope being the equivalent of some "package" internet deal a la the OP.
    - mikeash 12y ago
      It's more like wanting to charge Amazon more money per package because they generate so much delivery work for USPS.
      - jedunnigan 12y ago
        Ah yes, makes sense.
        mikeash 12y ago
        I think it's a sure sign of dysfunction any time a company is trying to discourage use of their product. A healthy company in a healthy market loves additional demand. Imagine if there's some new kind of fruit that everyone wants to buy. The local supermarkets are flooded. Are they going to say, "this fruit is too popular and causing too much strain on our infrastructure, so we demand additional compensation from the fruit growers"? Hell no. They're going to say, "This is awesome! We're making so much cash! Hire more workers! Build out the stores! Buy more magic fruit!" Many ISPs have managed to set up their product offerings such that they don't want additional use of their product. That's a major screwup on their part, and one they should fix. It's interesting to look at cellular carriers, which started out this way but have mostly overcome it. For example, AT&T started out offering "unlimited" plans to iPhone users, and inevitably iPhone users used "too much" and this caused trouble. Now they only offer metered plans, and the attitude is different. Oh, you want to stream video constantly and use dozens of GB per month? Come right this way, we have a plan just for you, and you'll get a nice bulk discount. Contrast with Clear, who I used for a little bit as a home connection. They advertise "unlimited" and say it's suitable for replacing a home broadband connection, but if you actually try to use it that way, they throttle you into the ground and tell you to stop being abusive. Techies as a whole seem to be really resistant to metered pricing for internet connections, but I think standardizing on that approach would solve a whole bunch of problems.
- joelhaus 12y ago
  This was actually discussed in yesterdays Washington Post. Electricity providers/generators weren't always competitive: http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/29/how-the-history-of-electricity-explains-municipal-broadband/ http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/29...
russell 12y ago
Except that electricity is fungible. Electricity encoded with data is not.
- JetSpiegel 12y ago
  If the provider has a monopoly, that doesn't really matter.
- mikeash 12y ago
  Broadband data connections to the internet are more or less fungible. That's essentially what the whole net neutrality debate is about. Should internet connections be fungible, or should it be possible for connections to be qualitatively different, not merely faster, slower, cheaper, more expensive?

grecy 12y ago

> * But, the companies fighting against becoming dumb pipes much prefer to charge $5/mth for a base data plan, plus the $12 unlimited social package, plus the $10 for 40 hours of music package, etc.* I work at an ISP. You hit the nail very squarely on the head, these conversations are happening every day. I believe we're soon going to introduce a "NetFlix" package where all netflix data will not count towards your usage cap. (Of course, the entire Netflix catalog is already locally cached inside our network anyway)

DennisP 12y ago
So this raises two questions I hadn't thought of before. (1) Doesn't this totally wreck the ISP argument for charging Netflix extra? (2) What's to prevent me from setting up the same sort of caching in my house and effectively breaking the Netflix DRM?
- colinsidoti 12y ago
  This came up on HN not too long ago - I imagine it's how they do the caching: https://www.netflix.com/openconnect/hardware https://www.netflix.com/openconnect/hardware To answer 1, I would guess this kills the argument for a wired connection, but not necessarily wireless since there are greater bandwidth restrictions. That's just a guess though, since my perception of how far wireless tech has come might be off.
- grecy 12y ago
  2) as colinsidoti says, our ISP has the hardware from Netflix (& others). We plug it in, tell them the public IP address and forget about it from there. 1) Remember their argument is not logical. And it's a secret that we have local caches in our network, so nobody is allowed to know that anyway.
3pt14159 12y ago
Do they understand that if they do this it is just as easy for a company like Youtube to cut off complete access to them? Try to put my site in a package = no access for any of your customers.

opendais 12y ago

From a MBA logic point of view, I'm sure its brilliant but to me its pure evil. I'd literally move if I had to find an ISP that didn't do this.

rayiner 12y ago

At the end of the day, the companies that invest the money to build the very expensive infrastructure that all those little bits run around on aren't going to be content to being "dumb pipes." Ownership of the platform gives you tremendous leverage (ask Apple or Facebook or Microsoft), and the ISP's own the platform. Without them, the internet is just a bunch of software not talking to each other.

opendais 12y ago
No. That is what ISPs are without networks like Level3. The internet, on a B2B level, would work fine without these ISPs. The problem is these ISPs + natural monopolies on spectrum + governments + barriers to entry create national networks are abusing that power in the B2C space. Please don't claim "The Internet" is purely a B2C entity. EDIT: I'm amused by the downvote. Given I know this is true [e.g. My day job B2B work purely transits non-B2C ISPs like Sprint or Verizon]. ;)
- rayiner 12y ago
  Building the consumer facing networks is a lot harder and more expensive than building the core network. Level 3's capex is a fraction of that of companies like VZN or ATT.
  - opendais 12y ago
    1) That is what you said originally. You can change the argument if you like, that's cool. 2) Smaller companies are able to provider better service in rural areas or towns than VZN/ATT. It is the effects of capex on their stock price, not the fundamental economics. http://arstechnica.com/information-technology/2013/07/a-city-with-two-gigabit-internet-isps-and-neither-one-is-google-fiber/ http://arstechnica.com/information-technology/2013/07/a-city... Ya, they may not run it to single residential homes. That doesn't change the fact they can do it to something like an apartment complex or buisness park cheaper than VZN or ATT just fine. And it isn't just them, there are dozens of these companies that are profitable and do this. You are fundamentally wrong.
12y ago