With Fixed Costs And Fat Margins, Comcast's Broadband Cap Justifications Are Total Bullshit
from the pay-more-for-less dept
For a while Comcast tried to pretend that its slowly-expanding usage cap “trials” were about managing network congestion. At least until leaked Comcast documents, the company’s top engineer, and the cable industry’s top lobbyist all confirmed that justification was bullshit (caps don’t really help manage congestion anyway). Since then, Comcast has veered away from any hard technical explanation for the glorified price hike, instead focusing on the ambiguous claim that these new “flexible” pricing models bring “fairness” to the broadband industry.
To sell this evolved line of horse excrement, Comcast CEO Brian Roberts recently proclaimed the company was simply trying to create a more “balanced relationship” with its customers. After all, Roberts told attendees of a recent conference, broadband is just like electricity and gasoline:
“We don?t want anybody to ever not want to stay connected on our network, but just as with every other thing in your life, if you drive 100,000 miles or 1,000 miles, you buy more gasoline. If you turn on the air conditioning to 60 vs. 72, you consume more electricity. The same is true for usage, so I think the same for a wireless device. The more bits you use, the more you pay.”
The problem with that narrative? Broadband is absolutely nothing like gasoline or electricity, because for major ISPs’ like Comcast — the price it pays for bandwidth remains relatively fixed despite usage, so whether an individual user consumes 300 GB or 400 GB doesn’t impact Comcast’s bottom line in the slightest. Meanwhile, with Comcast customers paying some of the highest prices in any developed nation, any Comcast earnings report will show you that Comcast’s broadband margins remain plump; more than capable of paying for necessary infrastructure upgrades several times over.
That there’s no financial or technical justifications for fixed-line usage caps is a point made time and time again, and really can’t be repeated often enough. As the CCG Consulting POTs and PANs blog recently noted, Comcast really faces two primary costs when it comes to providing you bandwidth: transit and raw bandwidth. And in both instances, these costs are not only immensely manageable thanks to Comcast’s huge size, but by and large remain static:
At Comcast?s size they either have a direct physical presence at each major Internet POP or they have an arrangement with some carrier who does. Due to their sheer size, I have to imagine that Comcast?s cost for transport on a per-megabit basis is lower than anybody else in the industry other than maybe AT&T, who is one of the owners of the Internet structure.
Transport can be a major cost for an ISP that operates a long distance from a major POP. I have small ISP clients that spend between $10,000 and $20,000 per month on transport, which is a lot if you only have a few thousand customers. But for Comcast this cost has to be minuscule on a per customer basis. And the cost is fixed. Once you buy transport to a market it doesn?t matter how much bandwidth you shove through the pipe. So this cost doesn?t increase due to customer usage.
The analysis goes on to note that Comcast’s other major cost, raw bandwidth, is probably around $2 per subscriber, and also remains largely fixed:
“An ISP?s total cost for an Internet port is based upon the average of the busiest times of the month. For instance, a small ISP might use 500 raw megabits of aggregate usage on most evenings, but if their customers have a few nights per month where they use 700 megabits, then the ISP pays for that larger amount for the whole month.
The interesting thing about this pricing structure is that the ISP pays the same every day of the month whether the customers are using the data or not. The cost to Comcast wouldn?t change if any one customer, or even all of the customers in a city, were to use more data, as long as that usage doesn?t create a new fastest day of the month.
Admittedly, Comcast’s costs get more complicated given it sells transit and gets paid by companies like Netflix for direct interconnection. But the point remains that, by and large, its bandwidth costs largely remain fixed, and despite significant growth, companies of Comcast’s size are paying less today for raw bandwidth than they were ten years ago. And they’re pulling in more money than ever. Despite claims of an exaflood, the revenues Comcast makes on broadband far, far exceed the money Comcast needs to spend on network infrastructure.
The bottom line is there’s simply no financial or technical justification for what Comcast is doing. The only reason Comcast is imposing usage caps is to impose glorified price hikes on noncompetitive broadband markets, to unfairly skew the playing field in favor of its own services, and to protect legacy TV revenues from Internet video. Every other excuse the company bandies around is utter and complete drivel, designed to pander to a public that believes bandwidth pours from a magical, elven spigot buried deep in the Earth.
Filed Under: brian roberts, broadband, broadband caps, data caps, fairness
Companies: comcast
Comments on “With Fixed Costs And Fat Margins, Comcast's Broadband Cap Justifications Are Total Bullshit”
Caps are most likely a hedge bet against 4K streaming. Video distribution is a huge market and they aren’t going to go down without a fight.
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That’s exactly my thoughts. They continue to raise end user bitrates (Comcast in Philadelphia is now offering DOCSIS 3.1 at 2Gbps download rates) so it’s basically just a ploy to force people into overage charges or to force them to non-overage services like Comcast’s own cable TV. The
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…I think Comcast cut your data short.
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These 4k things are frightening, even 4k text can go over the caps it seems!
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While 4K requires a lot of data transfer I think that the caps are at a level that if cord cutters start exclusively using Netflix/Hulu/etc. at even regular High Def it will exceed the cap and trigger the add-on data block cost.
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Here in Wisconsin, AT&T is at 300gbytes/mo for data caps (it’s right in the contract in black and white at least), which is going to be torn through in 5.6 days of Netflix assuming you do absolutely nothing else on the internet in HD at their standard 5mb total bitrate.
If you are a cord-cutter and have your TV on for 4 and a half hours a day, you are going to run out of data.
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They are only doing this because they are losing cable subscribers like crazy and looking to fill the gap somewhere else. But on that note they dont charge people for how long their cable TV is running.. and many people use internet to steam content so they are basically saying just that.. to watch TV it will cost you X/per hour (aka per gig downloaded) which is laughable..
Re: Caps are most likely a hedge bet against 4K streaming.
4k is new-tech. Caps have been around much longer.
Data Caps are merely a fictional solution to a non-existent problem that they can use to magically create a “thing” called “Overages” to justify fleecing you for more money.
Take away the fiction and concepts like “Overage” and “Data Hogs” mysteriously disappear. poof
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Food for thought: standard def is no longer “standard”. You can’t buy an SD tv anywhere anymore. HD is now the standard (but you still have to pay extra to Comcast to get an HD receiver from them). Just like SD, 4k will replace HD and that means streaming 4k video will make most households use more data in the future. Eventually, Comcast’s stance of “most households don’t use 1024 Gigs a month and its a very small percentage that use more” (I’m paraphrasing, not a direct quote) will no longer be the case. When that happns they’re either going to have to come clean (because their network won’t explode in a huge public specticle of mass 4k streaming) or fire up another line of bullshit, like “most households routinely use 3 Terabytes of data per month but we couldn’t care less and intend on making sure the internet party’s like it’s 2010 forever… or you can get your 4k content from us”. But really, when MOST homes use more than 1024 Gigs a month what do they say? Right now, I can’t stream Sling in 3 rooms for 30 days without going over 1 Terabyte in a month but for an extra 50 bucks a month i could just get TV from comcast so I don’t have that problem. Or, I could just pay an extra $50 a month and not have that problem either. Obviously, Comcast is simply using their monopoly to compensate for lost TV revenue – rather than discounting their prices to compete. I want to say the data caps are a brilliant strategy but the way they justify them is certified bullshit. Hopefully 5g will make them feel more like trying and less like placating.
“as long as that usage doesn’t create a new fastest day of the month.”
Consider that someone took a bean counter seriously about having to avoid that number going up, so they picked a number out of a hat and then pass onto the consumer a portion of the fee they have to pay for a higher use day. This way they can project their costs out, rather than just buy more capacity they buy the bare minimum and then collect a fee to scare customers to not push the numbers up.
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Except if they were concerned about peak bandwidth usage exceeding alotted capacity, data caps are a poor way to manage that. Data caps attempt to manage congestion through secondary effects, and they do so very inefficiently. The best way would be to simply implement basic network QoS, and throttle down users when a node is about to exceed allocated capacity, preventing balooning costs from rare usage spikes. You can even do this “fairly” by first throttling users with a heavier usage profile; those who contributed most to the average network burden would be those who feel the effects.
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The best way to reduce the primetime congestion would be to differentiate the price of data used: Primetime, the cost is high and at slow hours the cost is low.
These datacaps are targeted at something that is rather irrelevant to their cost. It is a way for a company to create an artificial price-differentiation to look more “fair” and making the pricing look like a more dynamic parameter.
Throttling is bad generally and can easily get into problems with net neutrality.
From the article:
“The bottom line is there’s simply no financial or technical justification for what Comcast is doing.”
Of course there is,
Higher Profits !!!
If it were like electricity and about fairness, where are the lower bills for grandma who uses the internet to check her emails once a week?
Brian Roberts’ laughable comparison to how consumers purchase gasoline only serves as a painful reminder as to why everything Comcast says is shit.
Within 10 miles of my house, I have the option of 50 different gas stations. Every single one of them competes against the other ones, based on price. One of them can’t jack up the price 500% and say, “oh well, deal with it, we are a monopoly, you cannot buy gas anywhere else except us”.
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Sadly, his other utility comparisons are exactly what they are hoping for.
Do you get a choice who you get water/sewer (unless rural and have wells/septic) or electricity through? Private owned monopolies also, at least regulated to not charge insane amounts.
Comcast would love internet to be thought of the same as electricity.
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*edit- they would love internet to be thought of as electricity by consumers anyway, not regulators.
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But, of course, they do not want to be regulated.
something something – cake and eat it too
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Why yes I do. At least at supplier (distribution no but that’d be a bit harder to have many options)
Re: Gas station competition
(Sort of OT, but still interesting.) I once worked for a local businessman in a small town (only 5 gas stations) who had recently acquired a gas & service station of his own. He would always price his gasoline at 5-10 cents below the other stations in town. After a week competitor calledcalled him and threatening told him that he had better match their price, “or else.” Naturally, he did not comply with their requests.
Takeaway from the story: even non-monopolies can band together to create a monopoly.
Well, the fact that they can outright lie and get away with it (no punishment from the FCC and the likes) says much about how the Government cares.
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The biggest problem to me (aside from the fact this is an obvious and aggressive cash grab) remains how nobody in government gives two shits that companies like AT&T and Comcast, with an indisputable history of fraud, are metering usage with no objective third party confirming whether the meters are accurate.
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…no objective third party confirming whether the meters are accurate…
Which makes his comparison to gas stations dangerous since fuel pumps are subject to no-notice testing by Weights & Measures (at least in my area).
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Well, the banks that screwed up the economy in 2008 actually got bailout money as a reward for fraud. Military contractors keep getting contracts to build substandard equipment that the military itself says it doesn’t want. Hell, those contractors are still pulling versions of the $700 hammer scam, getting caught, and paying fines with money from their next damn no-bid government contract. I think a history of fraud is a plus, guaranteeing that shits are not given by Persons of Quality.
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http://www.alternet.org/news-amp-politics/noam-chomsky-electing-president-empire
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The biggest problem to me (aside from the fact this is an obvious and aggressive cash grab) remains how nobody in government gives two shits that companies like AT&T and Comcast, with an indisputable history of fraud, are metering usage with no objective third party confirming whether the meters are accurate.
Can’t possibly imagine why, I mean it’s not like politicians might have any reason to look the other way when the cable companies are screwing the public over…
Wait. I haven’t had enough coffee yet, and I’m misreading something. It sounds to me like he just compared broadband to: a) a regulated utility; and b) a competitive market where prices are so low that vendors fight over fractions of a cent. That would be an incredibly silly thing for him to say. Yeah, need more coffee.
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No, you simply need less Comcast in the morning. It’s a bona-fide stress reliever.
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Good point. I’ll save them to use exclusively for my afternoon Two Minutes Hate.
Comcast’s wealth is directly proportionate to their greed and inversely proportionate to their moral bankruptcy.
Comcast can do no good. Anything that could be confused for good is merely a coincidence for them being greedy scum. The world would be better off without Comcast and nobody would miss them when they were gone.
there are only two ways to get anything changed and they are to change provider or/and get the rules changed by Congress. unfortunately, because of the way Congress has acted to ensure there is no competition in just about everything in the USA, there is little chance of that happening. add in that because of what Congress has done, there are very few companies to change to and then the risk is run that, again because of what Congress has done, customers could actually be changing to a company that is even worse (if that is possible)!!
Why have 300% profits when you can have 1000% profits. Long as they keep buying politicians they can screw over the average person until it all falls apart. But these are the sort of people that care only for short term profits even if it means a long term loss to the company.
Sign of the times: every one is an expert on everything!
I am pretty sure the author has never run a network of any kind in his life, not to mention one of the largest networks in the country (or maybe the world) that is the Comcast network. That does not stop him to make a ridiculous claim that “bandwidth costs for comcast or any ISP are fixed”. This implies that a) users on this network pretty much consume the same amount of bandwidth year over year b) the cost of that bandwidth for a company like Comcast is fixed. Both claims are false and it does not take a genius to see that: demand for bandwidth is skyrocketing for a very simple reason: streaming video. Internet was never designed or intended to used as a platform to support video streaming. And bandwidth costs are never fixed. Go an ask Amazon a simple question: Why have you cut your prices on AWS 44 times and you have cut your bandwidth costs only once or twice? They will tell you that bandwidth is the most expensive resource they offer on their AWS platform. Last time i checked, AWS charges $.09/gig of outbound traffic. You do the math.
Comcast and any private company in America has a RIGHT to make money! A company like Comcast invests ~$8B in network upgrades and network infrastructure every year. That is 8% of its gross revenue of $64B in 2014. And every company that invests this much at the scale that Comcast operates, has a right to recover that investment and turn a profit for its shareholders.
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Point out that right in the constitution, because the only place I can find it is in the entitled assholes handbook.
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Hey it’s not fair to blame Comcast, he’s just suffering from afluenza.
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Bottom line, yes all companies are there to make money that is not disputed and they should make money. What is a problem is how the company makes their money.
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This is not a new thing. The demands for bandwidth have increased every single year since it became public. What Comcast as well as the other major ISPs have failed to do is invest in upgrades and expansion, which I might add they have been paid to do already by both cities and the government. Those expansions would have taken care of this.
Comcast may be a private company but there is a reason why it is one of the most hated of companies. To have better customer service you must invest money as well as guidance into doing it. This along with the upgrade/expansion have not been done. This lack of reputable customer service as well as failing to follow through on the agreements they made in the past for mergers is what sunk the TWC deal.
The FCC has upped the requirements to be called broadband as they did some years ago. It seems to be the only way to force these corporations to upgrade. It is also why people are jumping ship for Google when it comes to town to get a fair shake for what they are paying for.
I look forward to the FCC’s actions that free up cities to install their own ISPs at cheaper pricing with better speeds as a result of this log jam caused by monopolies. It’s only then that you see the major ISPs get reasonable about their pricing and throwing away the caps just to keep customers.
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Sherman Antitrust Act
I suggest you become familiar with it.
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As soon as you play the “right to make money”-card, you have lost any discussion on anything but maybe economy. Right to make money is no more viable than the right to lose money!
A company investing 8% of gross doesn’t mean that much, particularly when you lump it in a box with investment in new markets and a part of maintenance in your number.
I don’t get their costs on bandwidth or transit in comparison which would be the relevant numbers for the point you are trying to make?
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Everything especially economy, I’d say. The closest thing that’s ever existed to a “right to make money” is a strict state-controlled monopoly, and I doubt that’s what that person had in mind.
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You most assuredly DO NOT have a right to make money. The only thing you are guaranteed is the OPPORTUNITY, and the minute you abuse that opportunity by denying everyone else an equal opportunity even that right is invalid as far as I am concerned.
Re: Network costs - a reality check
I run a network for a multinational company. Our internet bandwidth costs are fixed. We pay $x for Y mbps line per month. We have multi-year contracts with multiple ISPs.
I think you are attempting to be a troll, and if so, I am sorry I am feeding you. AWS is a bad example as they are not a straight up ISP.
Talk to Level 3, Cogent, or any other big player and you’ll hear the same thing. You buy bandwidth at megabits per second or gigabits per second. You can run a 500 meg line at 499.9 megs per second all day every day for the entire length of your contract and not pay any extra.
The biggest problem with data caps is they are bait and switch. I am paying for a 50 meg line from Comcast, but if I try to use 50 megs all day every day, I get an overage charge? And those overage charges would cost more than a 500 meg enterprise grade fiber to my router line.
“Despite claims of an exaflood, the revenues Comcast makes on broadband far, far exceed the money Comcast needs to spend on network infrastructure.”
Seems like the exaflood was real after all. It’s just that it’s a flood of money, not data.
Difference between Gas and internet Data….
1) If I buy a gallon or forty, I only have to pay for what I use. I do not pay a flat rate for the month and pay extra for “overages”!
2) Show me a gas station where you can give fuel back to them to offer elsewhere?
3) Gas is finite, every gallon in the station, is a gallon out – data is copy-able, if you have a really good cache, certain website (Windows update, popular Netflix movies, and such – cost you no extra bandwidth)
4) You cannot cover yourself in Internet and set yourself on fire in protest to stupid company comparisons, trying to justify gouging customers while doing diddly to upgrade service significantly!!
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You left out competition.
5) I can go to any gas station I like, whether it is due to price, convenience or other criteria – it is up to me as it is a competitive market … well sort of anyway. Much more so than the ISP marketplace which in the US is a monopoly or duopoly that is, in some places, enforced by the local municipality.
How ISPs pay for bandwidth
I work for a small ISP, our bandwidth cost is based on the 95th percentile of all 5 min periods in a month.
While it’s true that no single individual is going to have any real effect on Comcast’s bandwith usage if they pay the same way, it’s also almost certainly true they are paying more than they used as bandwidth usage keeps increase.
However, they could just charge a fair amount for bandwidth. Even just having customer buy 250GB blocks of data for say $5/month would be honestly a huge boon to them, but wouldn’t feel too unfair to consumers.
(for the record we’re planning on introducing daily caps* of 10GB for $30/month, 20GB for $40/month and 40GB for $60/month, and we offer a 1Gbps service)
*you actually get 3 “free” days per month and if you hit your cap on a 4th day we negotiate a solution with the customer (pay more or get throttled).
Re: How ISPs pay for bandwidth
“I work for a small ISP, our bandwidth cost is based on the 95th percentile of all 5 min periods in a month.”
I’m assuming that you have no private peers to lower costs? Sure there is added costs of colocation, cross-connects, and gear but I’m sure that Comcast has a presense in a lot of IXPs which would greatly reduce any 95th agreements. Check out OpenIX for some locations: http://www.open-ix.org/certification/directory/ In fact from previous outages, I doubt that Comcast takes a full BGP routing table from many peers at all and most are highly filtered per agreements. IE I’ve seen black holed routes on specific upstream connections from AS7922, but other upstream link looking glasses show the routes fine.
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We’re small enough for that not to be worth it. It’s certainly something we’ll look at the future though.
Regardless, at some point even a network as big as Comcast has to go outside to another network and their bandwidth is probably charged in a similar way.
You are right that they should be able to control their costs to a large degree.
Let’s put it this way. Anyone who is a Comcast customer for Cable TV has the IQ of a turnip and gets what they deserve.
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Victim blaming is such a fun game to play isn’t it?
Comcast's Gasoline comparison
If Comcast insists on the Gasoline comparison.
Then tell how much is used WHEN it is used and not at the
end-of-day or end-of-billing-period.
When a person pumps gasoline they immediately know how much was dispensed.
Re: Comcast's Gasoline comparison
Interesting. I’m in Australia where almost all usage is capped. At any time I can go into my IPS’s dashboard and see what my daily usage has been and also drill down into hourly usage. That way, if I start getting close to the cap, I can adjust my data habits accordingly (not that that is likely since I get on average a 4Mb connection with a 1000 GB cap).
Don't see why content providers can't charge comcast among others
So, the content provider provide the content to users. That goes out on the wire and through multiple hops finally hitting Comcast’s network. Comcast charges customers the use of that network for the bits that move through their network.
Wouldn’t it be appropriate for the owner’s of those hops, before it gets to Comcast, to charge Comcast for the use of their bandwidth?
Comcast certainly pays for their access to the backbone(s), but they don’t pay for the servers that the data passes through, and the owner’s of those servers (according to Comcast’s logic) should be compensated.
Yes, I know this is bad, and so is Comcast’s actions here, however to be fair to everyone Comcast should be required to pay for the bits that travel over the other networks before it hits Comcast since technically it is Comcast that’s requesting it.
elvin teat
I wanna suck off the elvin spigot teat.
Price hikes
If we as customers don,t get help from our elected officials to curb the thievery that Comcast is calling some kind of bs on wireless connections and usage it’s just going to keep getting worse and the consumer needs help from our politicians the service they provide is mediocre at beat we pay for the Internet to watch commercial free tv and other things and we still get commercials so Comcast also gets paid for that bs than I can,t even get movies I’ve paid for unless I pay again for them especially in hd it’s a disgrace and the consumer needs help we are paying more than enough for a sub performing Internet and television what goes on here is more than robbery it’s plain greed to the max I can sit here all day and complain but unless we get help from the lawmakers we will never stop this disgrace I won’t take anymore of your time but please write your lawmakers and see if they will help because it will not get better just worse thanks for your time
Re: Price hikes
No, there’s another option we riot like January 6th!
Broadband is like electricity. . .
Comcast doesn’t sell electricity they just rent me the wire!!
You got closer than most at explaining what a pile of crap bandwidth caps are, but I think you still missed the target by a little bit.
The thing about network connections is this: they cost a lot to build, and have some fixed overhead per month, but usage of a connection costs basically nothing. Once a pipe is built, the monthly cost is the same whether it’s fully used or not used at all. (There might be a tiny power delta for heavy use, but it’s so small that it disappears in the noise.)
So all Internet pricing, at the core, works around that fact, that building pipes (and paying for the loans to build them) costs a lot, but usage is unimportant once it’s built. If you’re a big central ISP, you lay in big pipes, probably taking on loan payments, and then sell pieces of those pipes to downstream customers. You chop it up and resell it, and you don’t care how they use it. Fully used, not used, it doesn’t matter, if you’re properly provisioned to deliver what you’ve committed to.
What Comcast is doing, by imposing bandwidth caps, is charging for a product that costs them nothing. Usage never directly costs them anything. This is important to internalize. If their network is at 100% saturation, their costs are the same as if it’s at 0% saturation. So charging per byte is absolute, utter mendacity.
This is what does matter: peak usage. For three or four hours a day, usually in the evenings for a residential ISP, the network approaches maximum load. It’s that usage, and only that usage, that can cost them money. Why? Because if they get oversaturated, and start dropping packets, customers will be unhappy. So they have to add more pipes, and the associated monthly overhead, to deal with peak load. That can cost a lot of money.
But once they’ve built a connection, and taken on the monthly bill to run it, usage of that connection doesn’t change what they pay.
What it all boils down to is this: Comcast doesn’t want to spend the money required to provision properly for peak usage. They’re not delivering what they promised, and they’re trying to monetize offpeak usage, which costs them zero dollars, by imposing bandwidth caps. The only reason they can get away with this is because people can’t switch to other providers. They have physical monopolies, thousands of small ones in communities all over the country, and they’re using those monopolies to extract rent.
At core, that’s what is fundamentally going on here. This is a monopoly, and it’s abusing its privileged position. It is charging for a service that costs nothing to provide, simply because it can.
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“The thing about network connections is this: they cost a lot to build, and have some fixed overhead per month, but usage of a connection costs basically nothing. Once a pipe is built, the monthly cost is the same whether it’s fully used or not used at all. (There might be a tiny power delta for heavy use, but it’s so small that it disappears in the noise.)”
This is absolutely false. It seems like it would be true on the surface, but reality kicks in pretty quick and you start to realize it’s not just true.
There are two problems: All pipes physically have two ends, and it costs to be in both of those locations. Even if the telco or ISP owns the spaces, there are costs related to being in that space. Even for a single rack space received in a decent data center, you are looking at possibly thousands by the time the rack is obtained and the space used – not to count any rental / space used for the cabling in and out of the building.
You have to power it. You have to cool it. You have to maintain it (and yes, things do break, they don’t live forever). So you have minute by minute costs (power, cooling) monthly cost (rent) and maintainance (say average very 5 years to replace equipment). So you have to have all of those things and calculate out the costs per second, figure out the bandwidth, and you determine the basic cost of moving data from A to B.
Second is that the pipe has to connect to others to make it work out. You can’t just have a blank pipe with nothing connected at each end. Datacenters generally have interconnect fees, so even if you are doing a free peering, you are still paying for them to allow you to route a fiber and connect.
Each additional connection, each additional pipe has costs. There is no free bandwidth lunch.
So if a residential ISP sells connectivity at 100 to 1 (100 1 meg connections per 1 meg of outside connectivity) and suddenly every starts using 100% bandwidth, they are obliged to buy more connectivity – much more.
Peak provisioning is pretty much way too expensive to pull off. It costs anywhere from $5 to $10 (in the US and Europe anyway) for transit. So for your 25 meg home connection, it would cost (real price) $125 to $250 a month for a full, 100% connection. In order to keep your prices more in line, and because normal web surfing / mail / facebook / whatever generally doesn’t use all your connection, they oversell. Good ISPs probably oversell 10 to 1, the bad ones 100 or more. In a 10 to 1 situation, your 25 meg connection costs $12.5 to $25 a month just for transit – that is money from your ISP to their providers direct.
The real rent collectors at the interconnects and transit companies. It is why ISPs spend so much time, effort, and money to build out their own networks and connections where possible, because it’s much cheaper than buying transit.
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Sure, okay, there’s a fixed overhead to having a link up. But that overhead does not change with usage. If a circuit costs $X to maintain, it doesn’t cost 0.5X when it’s lightly loaded and 2X when it’s saturated. It’s just X. Usage doesn’t impose any additional costs. (there’s a tiny power delta, but it’s so small it would be quite difficult to even measure.)
Whatever your overhead is with a pipe, it doesn’t increase based on usage. You build your circuit, buy your router(s), and potentially buy a commit from a transit Internet provider, and then your overhead stays the same whether it’s at 100% or 0%.
You can buy flex transit bandwidth, where it actually does cost you, but, again… the only time you will actually pay for it is during peak hours.
Only peak demand matters. Offpeak usage does not, and bandwidth caps are completely unrelated.
It’s like trying to reduce rush-hour traffic by imposing mileage limits on cars. If people are only allowed to drive 300 miles a month, when are they going to drive? During rush hour, the only time, barring accidents, when traffic matters.
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“Sure, okay, there’s a fixed overhead to having a link up. But that overhead does not change with usage. If a circuit costs $X to maintain, it doesn’t cost 0.5X when it’s lightly loaded and 2X when it’s saturated. It’s just X. Usage doesn’t impose any additional costs. (there’s a tiny power delta, but it’s so small it would be quite difficult to even measure.) “
The problem is the pipe is actually quite limited, when you consider. Typically you are looking at 1 or 10 gig connections, not faster. Doesn’t seem like much, but if you have each customer with 25 meg, you get 40 to a gig. So do the math, you have to spread the cost of each connection over a certain number of customers. Like it or not, there is a limit to connectivity.
“Whatever your overhead is with a pipe, it doesn’t increase based on usage. You build your circuit, buy your router(s), and potentially buy a commit from a transit Internet provider, and then your overhead stays the same whether it’s at 100% or 0%. “
yes, and at 101%, you are buying a new setup. At much over 85 to 90%, you are facing slowdowns for your clients.
“Only peak demand matters. Offpeak usage does not, and bandwidth caps are completely unrelated. “
Part of the issue faced is that just like highways, the internet also faces it’s own rush hour, typically starting about then the kiddies get home from school and on through the night until about 11 or midnight local. You know. the time everyone wants to watch netflix, they want to download new torrents, and they want to do full HD video chats with that lovely stranger they met the other day. However they use it, they do use it.
Now, in the same manner that you cannot build highways to accept all of the rushhour traffic not matter what, it’s not realistic to assume that an ISP will buy bandwidth and connectivity to a level that supports the potential 100% use of all of their clients at any peak moment. That would be an incredibly expensive proposition. It would also require that their own internal network, end to end, was entirely 100% able to deliver max bandwidth to all customers at all times. That would mean few clients per node, more nodes, more node costs… you know how it goes! So they work in multiples, based on the concept that not all users need max bandwidth at the same time. The problems only really occur during peak usage times, also extends longer these days with people running torrent clients all day and such, which can use up a fair bit of bandwidth.
In the end, a cap isn’t really a speed limit, as much as it’s something that explains a difference between the size of the “series of tubes” and how long you can hold that tube open for each month.
Perhaps the better idea would be to have rates for internet connections quoted as bandwidth first, connection speed second. People mostly focus on the high speed and then somehow magically think that their 25 meg connection entitles them to move 10 gig of data an hour, every hour of every day. What it does it allows you to move UP to that amount (depending on where and what you connect to) until you have moved your cap amount of data.
Caps are not positive things, don’t get me wrong. They are however an integral part of keeping the costs related to the internet in the realm of what consumers are willing to pay. If your ISP uses 10 as it’s ratio (overselling 10 times their connectivity), would you be willing to pay 10 times the price for the full connection? Twice the price?
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Now, in the same manner that you cannot build highways to accept all of the rushhour traffic not matter what, it’s not realistic to assume that an ISP will buy bandwidth and connectivity to a level that supports the potential 100% use of all of their clients at any peak moment. That would be an incredibly expensive proposition.
Change the analogy to electricity. The system MUST be able to supply full peak load. There’s no escape. What do they do? Charge extra for the energy used during peak times exactly to help maintaining infra structure for those times. But then again electricity is an utility and charged per kWh and fractions.
If congestion was a real problem the ISPs could sell tiers where the connection is limited to a fraction of the speed during peak times. Usage caps do not solve said problem. Extra dollars to maintain your full speed at peak times are acceptable, caps are not. And as malor said, we are not talking about utilities here. It costs more to deliver more electricity because there’s more fuel being used (considering a thermal setup). That does not happen on the net, the ISPs pay for the pipe. It’s incredibly dishonest to state otherwise. Remember how the ISPs fixed those peering problems with netflix/level 3 asap when there was a little pressure? Yeah, it cost about 20.000 dollars to the ISPs and that cost does not incur twice.
In the end, a cap isn’t really a speed limit, as much as it’s something that explains a difference between the size of the “series of tubes” and how long you can hold that tube open for each month.
No. It is not like that. Caps are a limit on the volume of data. It does not matter if you use it evenly over the month or everything in a day. The size of the pipe has little to do with the caps. Now a speed limit is effectively reserving a portion of the tube for a determined person. Considering the cost of what’s passing through the tube is virtually non existent the costs will be the same if they put 1, 10 or 100 people there regardless of their usage. What matters is that the tube does support 100% load if all those people decide to use all they can.
Perhaps the better idea would be to have rates for internet connections quoted as bandwidth first, connection speed second.
They are the same.
People mostly focus on the high speed and then somehow magically think that their 25 meg connection entitles them to move 10 gig of data an hour, every hour of every day.
It does entitle them. I’ve downloaded over 200Gb a day for a week doing some works and my ISP never complained. You are paying for a goddamn pipe size, not what goes through. And the extra cost for using it at 100% load, 100% of the time is virtually nonexistent at best and negligible at worst. Either you are being trollish dishonest or you are incredibly ignorant. I’d go for the first one.
They are however an integral part of keeping the costs related to the internet in the realm of what consumers are willing to pay. If your ISP uses 10 as it’s ratio (overselling 10 times their connectivity), would you be willing to pay 10 times the price for the full connection? Twice the price?
Interesting, we don’t have caps here, my speed multiplied by more than 500 in the last 20 years and yet I pay less today than 20 years ago. Care to explain how is it possible in your IPS apocalypse world? You can’t. But I”ll wait for more gibberish.
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“Perhaps the better idea would be to have rates for internet connections quoted as bandwidth first, connection speed second.
They are the same.”
No, they are not. You are making the common mistake of assuming that the speed of your connection entitles you to every possible byte you could jam through there. Reality says otherwise.
Thus, the speed of your connection is like the size of the pipe. Bandwidth is like water. You are limited to 300 gallons of water each month, you can run the tap slowly all month you can run it top speed 5 minutes a day, or save it up and run it full speed for a single day each month. This size of your pipe does not dictate hom much water you get, it only defines the maximum amount of water you can get at any one time.
“Interesting, we don’t have caps here, my speed multiplied by more than 500 in the last 20 years and yet I pay less today than 20 years ago. Care to explain how is it possible in your IPS apocalypse world? You can’t. But I”ll wait for more gibberish.”
First, thanks for the low quality personal attack. Keeping it classy, as always.
My speed multiplied in 35 years by… well, damn, how do you calculate 45.45 baudot to 1 gig? Many, many times over, and it costs less. How is it possible? It’s called advancing technology. We get better and better at things over time (except perhaps your insults), and as a result we can do more things. Communication technology has always been limited by what we would do with a wire (twisted pair or cable), and as we have made advancements, speed has grown. Our abilities to make microchips and to assemble modems and other things more cheaply contributes we all.
All of that also means that operating a pipe is cheaper than it was. The equipment is cheaper, moves more data, and lasts longer. The cost of fiber has dropped, and the quality of connections made on less than perfect fiber installations (last mile residential) has made it possible to get gigabit speeds set up by the “cable guy” type installers that do most internet setups.
Parts got cheaper, they got better, and so you get a better, cheaper internet connection.
However, my point was more this: If you really want 100% connectivity with 100% end to end dedicated networking and infrastructure to the low traffic peering point, then you need to know it will cost you. That would remove any sharing / overselling and would require a major upgrade from the ISPs to handle this amount of traffic properly and correctly.
” You are paying for a goddamn pipe size, not what goes through. And the extra cost for using it at 100% load, 100% of the time is virtually nonexistent at best and negligible at worst. Either you are being trollish dishonest or you are incredibly ignorant. I’d go for the first one.”
Not true. You are paying for (a) a connection speed, and (b) an amout of data you can move at any speed from nothing to the size of the pipe. If you have an unlimited connection, then you are limited by other parts of the network and every hop and jump between you and your destination.
For your example, if all of your neighbors on the same ISP tried to download 200 gig at the same time as you, you would likely see a slow down. It’s incredibly unlikely that your isp has provisioned upstrream connections to suppoer that much totally connectivity to your areas. You very likely do get throttled, but not enough for it to show as anything more than network congestion.
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If the main reason for capping speeds is congestion from overselling and the main reason for capping usage is to reduce congestion, then what are consumers buying? I mean: The speed is misleading since it will be affected by both congestion and throttling to avoid having to raise allotment of caps for each user. For the user, the cap is
Since speeds are notoriously unstable and underperforming compared to the advertised, the cap is the only guaranteed service you pay for! The problem with caps are that as soon as you start to focus on the cap as the main parameter, you can screw the users that much more on speed… But aren’t the technologies and hardware used for the end-to-end transfer widely different in terms of how much speed and caps cost?
Sure, absolutely. But when they promise their customers 40 megs a second, don’t you think they have an inherent responsibility to actually provide 40 megs a second?
You’ve internalized overprovisioning as okay, instead of being something that’s only allowable up until it impacts customer commitments. You think it’s okay to lie to customers about what they’re buying, and then not actually provide that service when they ask for it.
They paid for 40 megabits. That’s what it says on the tin. They have the right to expect that much bandwidth. Comcast has a responsbility to deliver that 40 megabits whenever the customer wants it, because that’s what they said was on offer.
If they can’t do that, they are lying about what they are selling.
Okay, that right there, is the center of your argument, and it is bullshit. It’s not ordinary level bullshit either, it is epic bullshit.
Comcast sells bandwidth. That is what they do. If they can’t provide what they are selling, then they are lying.
And you are arguing, here, that it is okay for them to lie. Further, that it’s just *expected* that they lie. Marketing trumps reality; customers won’t pay for accurately-labeled packages, so it’s okay to lie to them so they’ll buy something they can’t actually get.
The sheer absolute *gall* of that argument is just… fuck me, it is wrong wrong wrong wrong. It is ethically bankrupt and technically wrong.
Comcast absolutely can meet its commitments. It absolutely, 100% can. All it has to do is stop lying. It’s really that simple. It can either be honest about what it’s actually providing, or it can just suck up the cost of providing what they’ve already promised.
What’s happening now is that they lie about what’s for sale, and then punish customers that actually use what they think they bought.
Again, absolute bullshit. The only thing that matters, the ONLY thing, is peak demand. Bandwidth caps are not related to peak demand. Offpeak usage costs literally zero dollars, but you’re saying that it’s okay to charge for something with zero cost.
Here’s how to actually fix the problem for real: make Comcast be honest. Make them sell bandwidth the way it actually works. “Okay, John Smith, we promise to give you 5 megabits anytime, and up to 40 megabits if network conditions allow.” In other words: commit and burst, the way that all networks fundamentally work.
This would actually fix the problem. For real. Permanently.
Your solution is about piling lies on top of more lies.
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Your solution is about piling lies on top of more lies.
Oh, he does that with distinction.
Intenet Costs
I love these ads Comcast runs bragging how they are closing the ‘Digital Divide’. A divide they created themselves with their pricing model.
the price it pays for bandwidth remains relatively fixed despite usage
I’d have to disagree.
Switches and fiber cost money. While network provisioning is divorced from capacity management by time, they are ultimately interdependent. Over the long term, higher usage does require more investment for the carrier. While there is some elasticity in these numbers due to the MTTR on the equipment, capacity demand generally drives upgrades before MTTR becomes a factor.
IOW: they will upgrade the equipment periodically anyway, but not as frequently as when driven by increases in demand from consumer usage.
I’m not saying that Comcast isn’t doing the old douche bag double down. But there ARE reasons for this move. It isn’t just a matter of pricing structure. This is what happens when a tech company gets too big. Their strategic decisions are antithetical to good systems engineering practices. They don’t have to be. But they are.
And Comcast has pretty much admitted it at the executive level. Here’s a hint: “We grew too fast” is a corporate euphemism for “I fucked up, but I’m still the boss bitches.”.
My expectation is that the decision to go with caps, is that their network is so hosed they can’t do anything else. Except perhaps revealing actual end user capacity figures, which are distinct, and likely not remotely close to advertised figures.
Why? Because well engineered networks lend themselves to measurement and diagnostics. So coming clean is pretty much a prerequisite for building a solid network, and the lie is probably too big to tolerate that at this point.
For commercial customers this solved in the SLA. But consumers don’t get SLA, they get a compulsory service contract in a monopoly market. (which, being compulsory, isn’t subject to consideration, and therefore not legally binding.)
The correct way to address this is to separate the carriers from the content providers. These guys build shitty networks so they can constrain trade in media markets. If they weren’t able to to the latter, the former would likely correct on its own.
Allowing telecom execs to make decisions that effect content markets is like setting a child loose in a telephone closet with a pair of tin snips. They constrain trade, and constitutionally protected civil liberties. The fact that 95% of people don’t know HOW they do it, doesn’t mean that isn’t what is going on.
Sell pipe, or sell data. But stop letting people who sell pipe, sell data.
We’re not making a mistake. Providers are lying.
If Comcast sells you a 40 megabit connection, you have every right to expect 40 megabits per second, 24/7/365. If they can’t provide that to you, then they lied.
Here’s what they’re *really* selling: maybe 1 megabit guaranteed, burstable to 40. This is a huge difference, but that’s not how they sell it.
If we keep them from lying in this way, most of the other problems disappear. Force them to sell a commit rate, and then force them to live up to the commit. Burst rates are useful, but they’re not a measure of network quality, and people would figure that out very quickly in a market where ISPs were forced to sell commit rates.
You absolutely have the right to expect to get what you bought. Comcast absolutely has the responsibility to provide it.
Truth in advertising isn’t exactly a contentious issue. That basic requirement is imposed on every other industry in the United States, and presumably in Europe. Why wouldn’t it apply to sellers of bandwidth?
No, bandwidth is not like water. I’m really starting to wonder where your paychecks come from, because you sound an awful like someone with a paid opinion.
Water is a limited resource. There’s only so much of it. The limit on water isn’t essentially never the size of your pipes, it’s the amount of water that gets put into the system to begin with.
Bandwidth is exactly backward to that. Bandwidth itself is free (or so close that it’s hard to distinguish from free); the only limit is the size of the pipe. The limitation on bandwidth is immediate demand. It’s not like water or power, which have to be created and pushed into the network, at great cost.
When you use power and water, you’re costing your provider significant money. Their margins are pretty low, typically about 10% most places. (If you use ten cents’ worth of power, you probably cost your power company about nine cents to deliver it to you.)
When you use bandwidth, you cost your provider zero dollars. The only impact your usage has is on immediate demand, which may force the provider to build new pipes to satisfy that demand. The only time your usage matters is during peak hours; during offpeak, it has literally zero impact on their bottom line. With utilities, when you get charged ten cents, you cost them nine cents. But with Comcast, they want to charge you ten cents for something that cost them zero cents.
So, what’s the solution? Truth in advertising. Just the truth. It’s amazing how useful truth can be.
If your neighborhood has a 10 gigabit pipe, and it’s split 2000 ways, then the provider has about 5 megabits per customer. The commit rates that get sold had better not exceed 5 megabits each by all that much. Most providers, even big ones, oversell, but real ISPs know that those sales commitments were promises that they need to keep, and if they blew it by overselling, then they have to suck it up, and build the infrastructure to make it right.
They’re the freaking experts, not the end users. It’s their responsibility to get it correct in the first place, and fix it if it’s wrong.
So, in other words, ISPs would have to stop lying about what they’re selling?
I could live with that.
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“If Comcast sells you a 40 megabit connection, you have every right to expect 40 megabits per second, 24/7/365. If they can’t provide that to you, then they lied.
“
Your electrical wires to your house can usually support about 200amps (US / Canadian standards). Having that capacity does not mean that you can run endlessly at exactly 200amps. You get a certain amount, and then you are billed for overage (or you pay for every dropped used).
Size of the pipe != amount you can have.
With electrical service, you pay per watt because each watt has a hard cost.
With a network, you’re buying bandwidth, not bytes.
You’re buying an amount per second, not some fixed amount of data.
Whether you use your amount per second or not, the cost is the same to any reputable Internet provider, because they will have the backhaul provisioned for your use. Like you, they pay for the size of the pipe, not the bytes transferred.
In other words: with electrical and water service, the delivery method is pretty much irrelevant. You buy some number of watts or some number of gallons, and you pay for those watts or those gallons, and it’s up to the provider to build enough infrastructure to deliver what you want to buy.
With an ISP, you buying the infrastructure, not the product. You’re buying the pipe, not the bytes. The product comes from other entities entirely.