Also shows how screwed it is to live in Canada. Innovative in Health Care and screwed everywhere else.

How long until the ISPs start offering an add-on service to help manage your home network?

“To help avoid $50 in overage fees, please sign up for eHomeWatch for $9.99/mo.”

Now that most carriers are imposing caps, it’s only a matter of time until they all start offering tv, music, and other content services that won’t count against your cap. This is what net neutrality was supposed to protect against. How can companies like Netflix and Pandora compete for a customer who is on a capped data plan, but can get a similar service directly from their ISP without having to worry about overages? What good is an unlimited streaming video service if I can only watch a couple movies before my ISP bends me over and starts putting it up my… well, you get the idea.

Hopefully Google will save us all with their upcoming high speed fiber network.

100% agree. Everyone is smart enough to be able to be a home LAN administrator and monitor every network process on all computers. And I mean, we should all know how to find software exploits and know if our computer is part of a botnet that might eat traffic. Also, everyone sure as heck should understand the security implications of having wifi and the method of encryption they use to ensure only friendly people join their network. I mean if Grandma Josephine wants to see her new grandchild on Skype she better know how well her video stream is being compressed and what 300kpbs means. I mean, if you drive a car you are expected to be aware of how much fuel is being injected per stroke right?

/s

so he was getting an average of .6 MB(4.8 mb) a sec for two days.

((2^30)*(100))/(60*60*48)=621378 bytes/s

that means you can blow through your entire “share” in approx 24 HD on demand movies(with avoiding the rest of the internet like the plague).

Course if this is 100 gigabits then his real limit is closer to 12.5 GB in a month, which I could get to by dl WOW once in a month.

Seems the natural thing is to call up your ISP and cancel your account, and tell them it’s directly caused by their caps.

Then Wait a few months, and reinstate.

The join/disconnection costs are what costs ISPs the most. They require the most labor, the most human interaction, and they cost the ISP the most.

‘already used up your monthly allocation’
Hmm.. last time I heard that phrase was from a cellular service that kept turning my phone off and claiming I was almost $400 dollars behind on my bill.
The bill nobody could explain.
Finally sat down and went through mine with a friend. Turns out the phone company had over billed me from the beginning. Month after month. Assessing over use charges on calls that should have been free/nights/weekends/cellular2cellular.
When the dust settled I had a seven month credit.
Caps, limits, plans.. call it what you want but over billing is usually what you’ll get.

We have caps in Australia too (although recently caps have started exceeding 1TB, and unlimited plans are appearing) and as much as I’d prefer no limit (I share a lot of files) this is the one solitary thing that the old data delivery companies like that I really think is fair.

The connection to your area only has finite bandwidth, and if everyone is using as much as possible all the time (because they have no cap) performance is going to suck for everyone else. Caps aleviate this problem, and perhaps shift more reposinsibility onto the ISPs to actually provide enough bandwidth to match what they sell.

And in the end it’s all moot anyway: competition will see caps increase, all the way to infinity – exactly what’s happened in Australia.

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Skip to end to get summary.

Utilities, whether it be power, water, or telecommunications, have huge barriers to entry, such as network externalities, start-up costs, and competition is cut-throat. Let’s look at the example of England’s privately owned water utilities during the Industrial Revolution. There were many companies, and profit margins were razor-thin. Wherever the coverage overlapped, opportunity costs soared, as the competition would leave the pipelines underutilized. As a result, in the UK modern water utilities are still private, but with tightly regulated areas of operation and exclusivity periods. The telecommunications industry is favorable for what has been termed a “natural monopoly.” Start-up costs are huge, and the only way to really increase profit margins (after all, businesses aim to make money) is to increase in size. But how are they related to utilities? It’s all about barriers to entry.

This is not a recent development; let us go back in time, wayyyy back relative to the age of the US, all the way back to 1877 with the founding of the American Bell Telephone System. If start-up costs were so great, how did this small company survive, you may ask. The answer is, it had the great advantage of being the first telephone company. However, when competitors appeared after Alexander Bell’s patent for the telephone expired in 1894, the company changed direction. It thrived in the early years, but once competitors arrived, the company, now AT&T,, was forced to change directions. Having the advantage of the early years, it had an extensive network all across America, and while competitors focused on building their local networks, AT&T was forcing competitors to cave by witholding access to their long-distance network. The concepts of peering, net-neutrality, and common carrier should come to mind.

The Bell system quickly grew, and after Kingsbury Commitment formalized the monoply (after all, it is much simpler to have everyone connected to a single, vast network rather than to many fragmented local networks) AT&T was able to simply buy market share in local phone companies and thus gain access to the customers of that area. More importantly, AT&T was not forced to interconnect its local networks of its subsidaries (which were connected to the rest of the US by AT&T’s long distance network), and it did not have to interconnect with long distance competitors. I hope you see a trend here; competitors without nearly as much resources as AT&T were forced out because of the network effect: they had less customers than the Bell system, and since they could not interconnect in any way, they lost their competitive edge. The larger company wins. Whether this is bad or good is not for me to judge, but I do know that in return for quality of service and access to all of America, you would get one choice of phone and monthly equipment charges.

As you may know, the infrastructure for the Internet is heavily based on that of the telephone system. Why? The physical nature of the systems are the same: fluctuations in electromagnetic fields over transmission cables (first copper, now wireless, fiber, and beyond). It is much more efficient to use current infrastructure and build upon it than to build a new system from scratch. AT&T and other telecommunications companies did not have to buy expensive rights of way again (just like for railroads, a similarly monopolistic industry), and did not have to break ground again to lay new lines (most of the time). The costs of doing these things would have been enormous, just like it would be to lay power lines or water mains. Early on it was very simple; most Americans used dial-up, so existing infrastructure was mostly sufficient (of course other networking equipment such as routers, switches, amplifiers, etc. still had to be implemented, but was not nearly as expensive as laying new line). Remember that before AT&T broke up, many broadcasting companies depended on AT&T’s infrastructure to deliver content to local stations . Technologies such as satellite relay enabled other companies to begin to compete. Finally, with the government having had enough of the dirty dealings AT&T did to preserve its huge monopoly, the Bell system broke up into many regional groups.

The regional groups became many of the phone and internet service providers for most of the country, and long distance competitors such as Sprint grew greatly. However, the biggest boost came from the telecommunications act of 1996, which most importantly forced interconnection of all networks, and allowed new entrants to the telecommunications industry to use infrastructure of the old Bell system as long as they needed to build up a network with good service.

At this point my knowledge begins fading; the telecommunications companies sell access to re-distributors, which sell access to ISPs, which sell access to each other and to their customers. By interconnecting, ISPs allow their customers to communicate with each other, and by cascading up to an ISP that is interconnected, either directly or indirectly to all other ISPs, that original ISP can form connections to virtually any computer as long as it is connected to that giant tree of interconnections we call the Internet. This is all built on top of the telecommunications industry, which is forced to carry this data. So you can consider ISPs provide access to the Layer 1&2 of the Internet or whatever you want to call this tangled mess, and the Layer 0 (there is no layer 0, but you could say it is the actual physical wire, signal, etc.) is formed by all the interconnections of the physical infrastructure of the telecommunications companies. Also, since telecommunications companies are highly likely to be selling internet access, or access to the infrastructure to resellers who sells physical access to ISPs (an example is Sprint, a huge telecommunications company that is also a Tier 1 ISP), the distinction between the owner of the lines and equipment and an ISP which simply provides access to a network built upon the lines is blurred.

This is an industry constantly in flux, but one that I have observed is that all of the regional telecommunications companies and ISPs behave in a rational manner: milk areas with little competition so as to subsidize more competitive rates in heavily contested areas. Ironically, the biggest threat facing these companies are municipal ISPs; because of the Telecommunications Act of 1996, all ISPs have the ability to use existing infrastructure to be able to connect their local networks to the rest of the world. Thus ISPs run in a similar manner to those of public utilities are still able to provide good service at competitive rates. For example, one municipality, using private-sector loans, funded the laying of fiber-optic lines, and now residents pay $35/month for 10mbits/s where it would normally be 57. Because the rates are not subsidizing operations elsewhere, and because the ISP is allowed to use the outgoing lines that lead to the rest of the infrastructure in the US, after two-years the ISP is already profitable and paying back its loans. This made the area extremely competitive, forcing Time Warner to release more precious bandwidth to the area at lower prices (remember, ISPs still must pay for the transit of the data their customers send over the infrastructure for any company). Time Warner and other ISPs are countering with lawsuits and lobbying for legislation that would ban such ventures. (Here is the link to the story: http://www.dailytech.com/UPDATED+NC+Republicans+Fight+to+Ban+Municipal+Internet+Services/article21161.htm)

tl;dr: The telecommunications industry is like any other utility; it has high start-up costs and big barriers to entry. It favors large monopolies, which has happened since the day American Bell was founded. ISPs and other telecommunications companies subsidize low rates in competitive areas with high rates in less competitive areas, and also funds the ever increasing cost of building infrastructure. The biggest threats are municipality-supported ISPs, which can provide better service for cheaper, and thus cause competitors to lower rates. These ISPs are very similar in nature to municipally-owned public water, sewage, and power utilities.

The confused organization of this response reflects my understanding of the nature of this industry, which I am still struggling to put together for a high school paper. Please forgive me; I wrote this to help collect my thoughts on the subject. If it helps one person understand our current situation, all of this work was worth it.