Average American Consumes 34 Gigs Of Data Per Day; Good Thing ISPs Want To Limit You To 5 Gigs/Month

from the unworkable dept

There's a new study that's making the rounds, noting that the average American consumes about 34 gigs worth of data/information each day. That number has been increasing at a pretty fast pace as well. This is, obviously, not just internet data. It includes TV, radio, mobile phones, newspapers, video games, etc. However, what struck me is that more and more of that is moving to the internet, and that seems like a trend that will continue. And, yet, we still hear stories of ISPs looking to put in place broadband caps that are as low as 5 gigs per month. Clearly, something has to give. Even Comcast's relatively generous cap of 250 gigs per month could run into trouble at some point as well.

And, indeed, this is part of what concerns me most about efforts to put in place broadband caps. As we consume more data and a growing amount of that data consumption moves to the internet, more and more people may find themselves butting up against those caps. Even though plenty of studies (and many comments from the technology -- not policy or marketing -- people at ISPs) show that ISPs can easily invest in infrastructure upgrades to keep pace with the traffic, the move to put in place broadband caps may create serious unintended consequences for broadband. They add a mental transaction cost to any kind of internet usage (you have to think if it's worth it) and limit the interest and/or ability to build newer, more powerful internet applications and services that can serve what we need.
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Filed Under: broadband, broadband caps, data usage

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  1. identicon
    John Miller, 18 Dec 2010 @ 7:18pm

    Rather misleading post, don't you think?

    I have not researched consumer’s data consumption. I have researched consumer’s monthly Internet data consumption. Median monthly Internet data usage is approximately 2 - 5 GB and average monthly Internet data usage is approximately 6 - 20 GB. This data is based on information gathered from two large cable companies, two smaller companies and three fixed wireless providers. Usage varies with technology, speeds and location.

    Here are some real-world statistics from a fixed wireless network that I am using to model my fair use policies for my startup WISP. This network has just over 1000 customers. Average data usage per customer is 8.9 GB and median data usage per customer is 2.9 GB. There are about 260 customers (26%) that use less than 1 GB per month. About 790 customers (79%) use less than the 8.9 GB average. The top 20 customers (2%) use almost 28% of the monthly bandwidth. The top 40 customers (4%), the ones that will exceed my Fair Use Policy Threshold, use about 40% of the bandwidth.

    Now why would I, or any other ISP, want to spend huge sums of money to design and run a network for an elite few who have no control over their usage? I can save 40% of my bandwidth costs by controlling 4% of my customers. Even without the bandwidth cost, controlling the few who abuse the network at the expense of many will relieve network congestion and make the majority (96%) of the network customers much happier. Now I know you will talk about how cheap bandwidth is. At my location, it is about 180 – 300 miles to any one of five level one providers. This means I pay 3 - 5 times what I would pay for bandwidth in a large city. Transportation is 60% – 70% of bandwidth cost. I pay $441.00 per month for 3 Mbps of wholesale bandwidth. That is $147.00 per month per Mbps. When I reach a demand of 100 Mbps my cost will be 30% - 50% of that. Then I must get it to my network and transport it out to the access points, now we have two or three microwave links and four to six towers at a cost of $150,000.00 - $300,000. That is about $4,000.00 per mile for equipment without recurring costs. Few understand the cost of Internet products. The cost from least to most expensive is content, bandwidth and transportation.

    This is why ISPs are finding it necessary to put in place CAPS, FAPS, Fair Use Policies and such. Consumers seem to think that ISPs can provide unlimited usage for the same price. They could before content out-paced infrastructure. How do consumers expect that ISPs will cope with streaming content that will increase their bandwidth needs 10 times during peak usage hours? A fixed wireless network does not even have the technology or spectrum available to handle this. This is why cell providers (mobile wireless provider) have smaller CAPS. The contention-based business model that has allowed consumers to have affordable Internet connections for many years is in grave danger with the increasing amount of streaming content available today. We will not be able to expect dedicated service for the contention-based prices that we have enjoyed for years. Remember I pay at least $45.00 per month per Mbps. Even if a more fortunate ISP pays $10.00 per month per Mbps, how will he sell you a 10/2 connection for $50.00 per month? Contention-based service is how it has always been done.

    With streaming content, every customer can saturate his or her connection during prime time leaving the network crippled. A smart provider plans his network’s bandwidth requirements around peak usage. This means to accommodate streaming content during prime time, the ISP will be paying for about 10 times as much bandwidth as he needs the other twenty hours of the day. And this is only if his network can handle that prime time load. I do not believe any business can take a 10 times increase in the item that makes up the majority of their variable operating expenses and not pass it on to their customers. Let’s take a quick look at these numbers. Suppose I have a network that can handle streaming video and I am using 100 Mbps per month. I now need 1 Gbps per month to accommodate most of my customers downloading streaming content during peak usage hours. For me that means, assuming a substantial cost reduction for a higher quantity purchase, my bandwidth cost goes from $4,500.00 per month to $33,000.00. With 750 customers that is $38.00 per customer for streaming content. What if some households have multiple streams? I believe the idea that we will all drop our $80.00 a month cable/satellite bill and use IPTV is not a viable idea.

    Now shared network resources of different technologies have different capacities. That is why we see CAPS that range from 2 GB to 250 GB. Make no mistake with one content provider’s streaming content making up 20% of peak Internet traffic now and soon 50%, we will see some method of controlling use, enacted by every single provider in the future. The only thing that will differ is how high, how soon and how much it costs the consumer.

    I choose to enforce thresholds from 10 – 50 GB and allow upgrades to plans with higher thresholds or decrease your connection speed for the rest of the billing period and keep your present plan. More expensive business plans will offer thresholds of 150 – 300 GB and could serve as entertainment packages too, provided you are willing to pay for a dedicated symmetrical connection. If none of these meets with your approval, you can search for a provider whose resources are less limited and better meets your consumption demands. I do not plan to collect overage charges, as this limitation is not about generating additional revenue. This is about fair use of shared resources and paying your fair share for the use of those resources. It is about preserving the quality of the Internet experience for the majority of the customers who make my existence possible. If I can make 96% of my customers happy then I can stay in business. Granted I would rather it be 98% - 99% but once I put on those customers that consume that much it will have an adverse effect on a large percentage of the rest of the network.

    I know the Internet is changing and ISPs will have to change too. Without fiber or coax few will be able to meet the demands. I’m located in rural American where 35% of us are just getting wireless to replace our dial-up or satellite. We are on the wrong side of the digital divide and will most likely be there for a long time if, not forever. I don’t believe rural America can expect fiber for the next fifty years. At $30,000 per mile or more and 5 premises per mile, you don’t have to be a rocket scientist to figure out $6,000.00 per premise won’t attract a company looking for ROI. There is simply no way to make those numbers work.

    And yes, the rural/wireless situation is unique. However all that uniqueness does is make the real problem easier to understand. The Internet is not ready for full-blown streaming content. Another competitor will make things even worse and that is bound to happen. Wait and see.

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