ISPs 'Exaggerate the Cost of Data' 173
Barence writes "ISPs are wildly exaggerating the cost of increased internet traffic, according to a new report. Fixed and mobile broadband providers have claimed their costs are 'ballooning' because of the expense of delivering high-bandwidth services such as video-on-demand. However, a new report from Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB. The report labels claims of ballooning costs a 'myth.'"
Yea. (Score:2, Insightful)
No fucking shit.
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I believe that many of the ISPs have been spoiled: all these years, and in particular after the aDSL boom, they were used into money pouring in with no real expenses in place-- especially since most of them did not even have to bother with digging the actual streets for more cables, since that was supposed to be a phone provider's domain (a Someone Else's Problem situation)
What has changed now is that internet usage is catching up, things are really starting to look like they did some years back in the shin
Carefull (Score:4, Informative)
Note that this research was funded by the content providers (like skype) ISPs were asking to pay extra for the bandwidth their services use. I'm not pointing any fingers, but it's something to think about.
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... Option C: All sides are talking out of their asses and the truth is somewhere in the middle.
Re:Carefull (Score:5, Insightful)
Not really, In places where the b/w costs are competitive (server hosting) I don't pay much more than that. ISPs only get to charge more because there are fewer options, on the other hand, last time I was in a telco building pretty much everyone was using ATM switching equipment and that will drive the costs up.
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Re:Carefull (Score:5, Insightful)
That is exactly my point. The entire cost of running an ISP is the costs associated with the "last mile" and they are using that to overcharge. I would be much more understanding if the limitations I faced were due to the copper rather than artificial charges from the ISP side.
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The monthly rate more than covers that cost of installation and maintenance of those lines. The technology advance is quite honestly not expensive even at $60 per port on ADSL2+ equipment (slightly high) they can expect to make that money back long before the next technology rollout. And quite frankly, they haven't had to worry about changing the actual cable (and no, it shouldn't involve tearing out streets at this point because most of that is in conduit) until recently with the moves to fiber.
To be cle
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And that so called "last mile" would be better off in the hands of the local city council.
I find it very telling that Monticello tried that and got sued.
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You mean, the truth is ... Option B?! Wow! Now, what exactly was Option B?
Re:Carefull (Score:5, Informative)
Even for ISPs running their own network, such as BT, Davies [CTO of communications provider Timico and a member of the board at the Internet Service Providers' Association] claims the figures of â0.01-0.03 per GB are "rubbish". "It's an order of magnitude greater than that," he claimed.
One order of magnitude.
So.. â0.10-0.30 per GB?
The difference between â0.01 and â0.10 doesn't strike me as "somewhere in the middle."
Not when they're charging â10.00 for a gigabtye.
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Actually, they're charging £2.25/GB for overage ( http://www.timico.co.uk/soho/ip_connectivity/adsl [timico.co.uk] ), although Timico have the most insane pricing I've seen in an ISP. Two lines on their 50GB/month service (£22 each) are a cheaper option than their 100GB/month server (£50).
A much saner (business) pricing example can be found from Demon: http://www.demon.net/broadband/business-broadband [demon.net] - if you're in an exchange with LLU, £19/month gets you a 200GB allowance during peak hours and un
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Or someone uses the term "order of magnitude" without actually knowing what it really means, not that this ever really happens.
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My provider is a one-man band and he likes to talk about his business. He told me flat out that he asks customers to be reasonable about uploading because uploading costs him money, but downloading is free.
The cost? He told me it was about 5 cents per GB. (Bandwidth bought directly from AT&T.)
Re:Carefull (Score:5, Insightful)
The truth is never in the middle. Sometimes the truth isn't even on the same axis as the claims. The truth is what the truth is, and you can't find it by simply averaging the claims of interested parties.
The truth, in this case, is that the ISPs are balkanized monopolies. Except for a few places, you've only got one or two options in any given area. Since there's no real competition, they can basically charge what they want. The costs don't really come into it.
Re:Carefull (Score:4, Interesting)
The point of asking content providers is that they are a fixed quantity with deep pockets. ISPs know they can't go to the regulators because if the books on the situation got opened they'd get smack from legislatures.
The big problem is that "the Internet" is still very much a series of nonuniform networks with lots of people trying to make toll booths rather than a "fabric" across the country. For instance my Comcast connection to the Internet shows up 30 miles away in the next city when the route is traced. When I had AT&T I think it went over 100 miles before it was "on the Internet".
This is a problem because when you use Skype to call your friend across town with a different ISP the ISPs are holding Skype up for cross-state traffic that should just go across town. That's the problem that needs to be addressed.
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Re:Carefull (Score:4, Insightful)
Internet protocol is meant to be P2P, but routing tables aren't. They work best with a hierarchy.
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wait, what "their services" ? is skype now financing internet connections to households ? last i heard it was households/individuals getting an internet connection to use for data transfer... which would be like somebody buying a car and then getting told by the manufacturer "oh, you will transport pumpkins with it ? there's a 30km limit on it, after that it's 2.5 units per km !" (there's a car analogy; and i might be in favour of it as i don't like pumpkins)
Another Report by the Same Institution Concluded.. (Score:5, Funny)
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I just got a report from Webster, Webster and Cohen that their analysts find that bears are catholic and the pope shits in the woods.
Probably due to that new bear pope, Pope Maulington XXIII
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> that dinosaurs are in fact extinct
According to the current understanding, birds are a subfamily of dinosaurs.
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No, by "current understanding" s/he means current understanding [berkeley.edu].
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So something can't evolve out of a class even if its characteristics are different? So all life on Earth is bacteria?
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Of course not. They're still around, running the ISPs.
Misleading (Score:2)
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We used to have this thing called Ma Bell that had the same problem: they amortized costs over decades. It worked.
It doesn't bother me too much that service providers would prefer a shorter timeframe in which to recapture their invested funds, but the problem is that they then want to keep charging the higher prices even after they do, make only modest further improvements, and rake in profits at insane rates. Where I live, cable Internet prices have been basically flat for more than a decade, and perfor
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Amortising costs over decades works for a telephone system. They transitioned the exchanges from loop-disconect to DTMF, but aside from that the wires laid in the '20s still work today. They've had almost a century to make back the initial (taxpayer subsidised) investment. The demands of an analogue voice channel have remained constant for that entire time.
When it comes to Internet access, the demand changes much more rapidly. In 2001, I had a 1Mb/s Internet connection, and it was the fastest that my
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The vast majority of the cost of a fiber connection is in laying the fiber. Next is the cost of the fiber itself.Fortunately, technology improvements in the last 15 years have allowed the old fibers to carry several orders of magnitude more data today by upgrading the transceivers at either end.
These costs (all of them, including the cost of upstream) are based on the data rate, not the number of bytes transferred. A cable not actively transferring data is just wasted resources, it doesn't cost any less tha
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That figure is the amount that I pay for data from my colo, but that assumes that the infrastructure already exists. If you have a cable network with 100Mb/s of bandwidth, then you can sell 10Mb/s connections to 10 people. If you've sold them to 5 people, then the cost of adding another customer is basically zero. You can probably get away with selling 10Mb/s connections to 100 or even 200 people if they have typical modest usage patterns, because each one will still be able to get 10Mb/s for the short periods that they saturate the line. If they start all using the connection at the same time, then you have no choice but to increase your overall network capacity. This means laying more fibre. The cost may still be under three eurocents per gigabyte, but that's amortised over the entire life of the new cable, which may be a decade (or more): the ISP has to pay for it all up front. This is where the increase in costs comes from. They have to make significant capital investments, they don't have a significant change in their operating expenses.
Which is exactly what's happening. The ISPs are badly oversubscribed because customers in the past were barely using the bandwidth they bought. They just wanted a faster download on occasion. Now they're all demanding streaming netflix in the evening hours and the telcos are having to increase the infrastructure bandwidth to keep up. This is especially true for cell service. You might have 4G speeds to the tower, but that tower is heavily oversubscribed
This is really their own fault for advertising hig
Not just consumers ISP's (Score:2)
When you shop around for hosting, the price/GB can fluctuate wildly. Amazon's EC2 is almost at the top with $0.12/GB, but Cogent at $5/Mbit (~0.015/GB) is one of the cheapest for transit/paid traffic.
Even less? How about free, using peering agreements on internet exchanges? This way, providers like Hetzner can sell their bandwidth for even less, like 5-10TB included and â 6,90/TB after (â 0.0069/GB).
ISP's should just whine less and do their homework. I can understand small ISP's having trouble whe
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Cogent at $5/Mbit (~0.015/GB)
Remember service sold by the megabit per second is typically based on 95th percentile usage, NOT average usage. So what you say is only true if your usage is near constant. Most people/companies usage isn't.
Also IIRC cogent is known for getting into peering spats that cut them off from large parts of the rest of the internet. So afaict they should only be used as part of a multihoming strategy, not as a sole provider.
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Yes, it 's 95th percentile. However, as you aggregate users, the spikes tend to average out into a more constant usage. The 95th percentile billing actually helps that by shaving off the peaks. Add in that ISPs don't give committed rates at all these days and do not hesitate to throttle and you reach a very close approximation of constant usage.
Also keep in mind that a national ISP has a huge volume of traffic and so they can demand even lower prices.
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non-peering prices are like this (jointtransit prices) [jointtransit.nl]
peering costs are something like this (nlix) [nl-ix.net]
open ISPs (Score:1)
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Setting up a mesh network in heavily populated areas, like London, would be easy. It would simply require everyone use wireless routers with no password protection. The cost of connecting between heavily populated areas would be disgustingly cheap. The reason it isn't happening is there is liability attached to transferring content. Instead of a world free to communicate -- free of charge -- we have a morality laws and copyright laws and sensor-shit...
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It also wouldn't at all be the same as the Internet if it was London connected to London and New York connected to New York. A bunch of individuals sharing consumer-grade equipment are not going to connect London to New York, Tokyo, Houston, Sydney, Taipei, Paris, Frankfurt, Oslo, San Francisco, Tel Aviv, Cairo, Ottawa, or Warsaw. The Internet is global, after all. At some point any replacement either has to replicate the long links or use them.
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You missed this sentence in my post? The cost of connecting between heavily populated areas would be disgustingly cheap.
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I didn't miss it. I dismissed it. You have no support for the claim.
Data center bandwidth=cheap rural bandwidth=$ (Score:2)
The cost varies. I can get a 30meg bursable to 90 fiber connection in Downtown Ft. Myers, FL for around $1100/month. Getting it outside of Downtown and the cost is more than 3 times that. And there are many places where I could get bandwidth far cheaper than that (Tampa Miami).
If you buy water next to a river it will be cheap. Want water in the middle of the desert it's going to cost. It's not the cost of the water, it's the cost of moving it.
Video on demand (Netflix, Hulu, etc) uses 10 times the bandwidth
Love the rebuttal (Score:2)
Davies said this is especially the case for smaller ISPs who rent lines on a wholesale basis from BT.
Nice how he compares being overcharged by an internet service provider as the cause behind the need to overcharge people for internet service provision.
The ballooning costs are, (Score:2)
the companies officers over compensation?
Really they are just jealous/greedy that someone else is making money (sometimes more) on their transport system.
There's more (Score:2)
What seems to be missing from this analysis is the constantly changing infrastructure. While the cost for additional traffic may be low given that infrastructure, in the real world the intrastructure - especially the mobile one - needs regular updates, increasing the costs of the future additional traffic that drives the needs for these infrastructure updates.
In the past decades we've seen regular modems, 56K, ISDN, ADSL in many varieties, Internet over cable TV, fiber, GSM, WAP, GPRS, UMTS, Edge, HDSPA, al
Incomplete Picture (Score:3, Informative)
Next up... (Score:2)
Business exagerates cost of X. (Score:3)
This seems to be a general practice of business. Isn't that how the banks have been explaining minimum balance fees? It costs them so much to maintain these particular accounts that they are forced into charging onerous fees.
Just Look Outside the U.S. (Score:3)
Countries outside of the U.S. have no problem offering high speed unlimited data at affordable prices without any of the problems that the U.S. carriers are claiming. And the best deals are often on mobile! And, yes, there is heavy audio and video traffic in other countries as well.
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There's also a lot of countries outside of North America that are smaller than many single US states or Canadian provinces. It's easier to do things on a small scale. Bandwidth is cheap in the US, too. It's the loop costs that get you.
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That's an age old excuse here, but it doesn't explain why the rates are so high in our densest population centers. It also doesn't explain why telecomm companies are so desperate to keep municipal service from being deployed in places they claim they can't profitably service.
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I wish it was an excuse rather than reality. I can get a 100 meg of transit for $1,100 from a provider that is not Cogent. That's perfectly fine until you see the loop price for the last mile is quoted at $3,200 for a cheap Verizon FastE loop. AT&T wanted $10,000 for an OC-3 port (that's not a typo, ten thousand dollars) and they couldn't/wouldn't do FastE. And AT&T already had fiber in the building. The rates are still high in dense population centers because they can and will charge such prices. W
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That still leaves it as an excuse rather than being a valid reason. AT&T uses the excuse all the time and just evades the question when we ask why they want so much in loop charges for a building they already serve in a dense urban area.
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The valid reason is "because they can" and they demonstrably do. There is no excuse.
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Because they can is NOT a valid reason. That's not to say that greed isn't the reason, just that it's not a valid one. In a healthy market they would be forced to charge less or leave the market.
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I find it unlikely that AT&T will ever leave the market and there's no need for them to lower prices, so we're left with "because they can". I suppose we could try the antitrust thing again someday.
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We could try actually regulating the markets to make them healthy OR driving AT&T out by providing the last mile as a socialized service.
What we must not do is ever accept AT&T's excuses for their pricing.
Hold on (Score:4, Informative)
Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB
Is that €0.03 or €0.0003 ?
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Plum Consulting claims the cost per additional gigabyte of data for fixed-line ISPs is between €0.01-0.03 per GB
Is that €0.03 or €0.0003 ?
Ris?
Sorry I don't understand your point, could you explain?
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The biggest cost component (Score:5, Insightful)
It's the same thing with telephony. The long distance market fell apart because the cost to carry the calls kept dropping with increased levels of automation. Now long distance is bundled in with the normal monthly cost of most phone plans wired or wireless.
And even wireless services, they're getting increasingly less expensive to provide too. But they'll try to charge all the market will bear.
And need I bring up banks that rely on some of the technologies above? Why do you pay a foreign ATM fee that's a full 30% of the average $20 withdrawal when we KNOW that the cost for the network transports are hundreths of a cent per transaction? The bottom dropped out, but banks being greedy, rapacious bastards, will charge all the market will bear.
Peer review, please? (Score:2)
Call me when this has been subjected to something resembling peer review and still holds up. As it is, the source of this report has suspect motivations given who paid for it. This could be 90% confirmation bias.
Marginal cost analysis is incomplete (Score:2)
Re:Maybe Plum Consulting should become an ISP? (Score:4, Informative)
On top of that, their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.
Also, it requires there to be actual connectivity available - for example, my country as a whole has something like 30Gbps in/out. Still they're selling 100Mbps for customers to use. It's perfectly sure that if everyone would use that 100Mbps at once to download content off the country, it would not be enough. However, it works out because home users rarely need that kind of bandwidth 24/7.
If you want dedicated bandwidth that is guaranteed, then buy it. Just be willing to pay over $1000 a month for your 100Mbps line. This isn't new to anyone - it's the same in server hosting world too, but there it's more clearly marked if the bandwidth is shared or dedicated as it matters more and some people actually have real need and are willing to pay up to that $1000 a month for it. With home users, no one would do that.
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It's not only infrastructure. Not even starting at wages for workers and other recurring costs, ISP's have to pay each other to buy bandwidth from them. Only the tier 1 ISP's can get away with peering without extra costs.
If your ISP's business plan is to make up those costs on overage charges, I suggest you find a new ISP, as they will go bankrupt as soon as their customer base starts watching what they're doing.
That kind of cost, and everything else you mention in your post, is supposed to be budgeted for in your monthly tithe err... monthly subscription fees. Overage fees are just that... fees for going over the allotted amount of monthly usage. Those fees are completely unreasonable. At that point, it does not cost them
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The point is that at the ISP level you buy bandwidth in large dollar amounts. If an ISP decided from historical data they needed 2 pipes they can't just get a third without massive outlay of dollars. On the best case they just increased fixed costs 50% (on longvterm contract) for pipe they don't have enough customers to pay for. In the worst case they have to pay for new fiber and digging.. A huge up front capital cost.
Re:Maybe Plum Consulting should become an ISP? (Score:4, Insightful)
Of course, if you don't agree you can always go start your ISP.
The 12 year olds approach to arguments.
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I think everyone with a qualified head knows damn well that "start your own ISP and quit whining about the monopoly" has been stomped into the ground by EVERY OTHER ENTERPRENEUR that ALREADY TRIED IT in a given market.
If capitalism is so great and bad companies also go away, then why are many places still stuck with shitty service from an ISP that's been around forever?
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The overage charges aren't supposed to make them lots of money, it's supposed to keep heavy bandwidth users in control so that the rest of the network doesn't suffer. Also, it doesn't matter how much it actually costs to the ISPs at that point. Nowhere they say it costs them $2.50/GB, but that's the price they're billing from you if you use over something like 250GB a month, which most people won't. They're free to do so. You're also free to choose your provider. However, don't bitch if there are no providers that sell you at the price you want.
depends on the ISP... Bell Canada, for example, includes 2GB/month usage with their cheapest plan, and charges $2.50/GB for overage. That is obscene, and considering that they're charging you $30/mo for a 2mbit connection, there's no way you're going to convince me it actually costs them that much when I can get a 5mbit w/ 300GB/mo and $0.25/GB overage charge for $32/mo, and if I were willing to pay $37/mo, I could get 5mbit w/ no bandwidth cap at all, both from a different provider that uses the same netwo
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Of course, if you don't agree you can always go start your ISP.
Sure, just as soon as I get the same billion dollar check from our government they all did to put in their networks back in the Clinton years.
You think they'd even let you do it if you could? Not [arstechnica.com] likely. [fastcompany.com]
Re:Maybe Plum Consulting should become an ISP? (Score:5, Insightful)
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If you want dedicated bandwidth that is guaranteed, then buy it. Just be willing to pay over $1000 a month for your 100Mbps line.
Prices are significantly based on what the customer can pay, so comparing a home pricing to business pricing is deceptive. Businesses pay more for everything because they have more to pay, not because they are getting precious high-grade products.
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"comparing a home pricing to business pricing is deceptive"
Residential Cable Internet: $60 for 18/2 250GB cap
Business Cable Internet: $100 for 18/2 no cap, uses separate fiber routes that have dedicated bandwidth(only shared bandwidth is on the cable infrastructure), ToS claims you get dedicated bandwidth 24/7, personal representative, no wait tech-support queue, 1 business day guaranteed service
That $40 sure gets you A LOT. I'm eventually upgrading, but it is an extra $40/month that I must come up with.
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Check the difference in FiOS prices.
Service Res Bus
15/5 49.99 64.99
25/25 69.99 84.99
it goes on and on, the highest tier is 199.99 vs 199.99 for 150/35 so at the highest rate, business pays the same, that $20 or less really buys some service.
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Move to a FiOS service area, you can get 150/35 for $200. It isn't symetric, but I don't think any US carrier is really setup for symetric unless you want to pay the DS and OC rates for your connection (DS3 45/45 for $3000).
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Four-conductor (and in some places two-conductor) 128Kbps symmetric with 4-hour SLA is available pretty much everywhere in the US. It's called ISDN. Call your phone company and get a price quote, then compare it to your 100 Mbps, 50 Mbps, or 25 Mbps bursting service with crappy SLA.
64 Kbps is a DS-0 equivalent, which is a digital voice line. For ISDN you use what's called a B channel. ISDN is available as one B Channel, two, or 23 (ISDN Prime Rate Interface, or PRI). You'll get guaranteed speeds and a grea
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> their payment model isn't $0.xx/GB of transfer, it's $xxxx per Gbps of bandwidth. If ISP buys too much bandwidth, it means it will sit there without being used, or it may be used in peak times and be just sitting there the rest ~20 hours of day.
Actually its a combination of link speed and bandwidth used.
The majority of upstream links are billed based on the 95th percentile. This allows for your upstream to have more bandwidth then you require during average usage, but can handle your peak times without
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The majority of upstream links are billed based on the 95th percentile.
Correct.
but can handle your peak times without affecting your bill too much.
Incorrect, as least as concerns the quotes I've received from 3 different fibre providers in the past year. My 95th percentile usage is around 13 mbps, which would cost me approximately the same as a 40 mbps dedicated connection from the same providers. 95th percentile billing sounds smart, but in actuality is a rip-off, at least in the Alberta market.
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You countries pathetic internet link is less than 1/4 of the potential speed of a single optical fiber and probably costs less than $100 - $500k.
In the future UK FTTC will be delivering bandwidth potential of your country to 10's of thousands of cabinets across the country.
If you're in the ISP business, maybe you are doing it wrong.
sources (see vid on youtube page)
http://www.youtube.com/my_speed# [youtube.com]
https://secure.wikimedia.org/wikipedia/en/wiki/Fiber_to_the_x [wikimedia.org]
https://secure.wikimedia.org/wikipedia/en/wiki/Fiber [wikimedia.org]
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There is a T1 global back-bone that sells dedicated internet bandwidth at a flat rate of $1/mbit/month in 10gbit increments. That's about $1 for 316GB(bytes)/month. I'm sure a T1 ISP gets it cheaper than that.
Outside of of infrastructure costs, bandwidth is nearly free.
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[citation needed]
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10 gbit over t1? do you mean maybe OC?
http://en.wikipedia.org/wiki/Optical_carrier [wikipedia.org]
Also, when talking about internet connections, it is DS, not T, T is just telephone service.
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You obviously don't understand that Plum Consulting is just pointing out that these companies are using price fixing. They all make an excuse, then all jack their rates. It's collaboration, which carries some hefty fines.
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Think Roads... (Score:2)
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If they sold at cost, we'd be paying closer to $15/month.
I was reading an interview with one of the top consultants for ISPs. He said the average broadband ISP pays under $1/month/customer in bandwidth costs and about $8/month/customer in infrastructure and support costs. The rest is profit.
ohh, and bandwidth costs drop about 33%-50% each year(for Teir1) because supply keeps increasing.
Re:Maybe Plum Consulting should become an ISP? (Score:5, Insightful)
I've been saying the same thing for years - as soon as any technology reaches the stage where it becomes essential infrastructure, ownership should gradually transfer to the public. And to those of you who say, "What about capitalism and free enterprise", I say "What about all the tax breaks, government handouts, favourable legislation, and public rights-of-way that these 'free market' 'capitalist' companies took advantage of to get where they are?"
It strikes me that privatized infrastructure is like patents and copyrights in this regard. A period of full ownership and control is required in order to ensure a fair return on investment and to incentivize creation; after that period expires, the thing created belongs to the public. Everyone who complains about the screwed-up patent and copyright systems ought also to be complaining about the continued private, for-profit ownership of such things as communications infrastructure.
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I agree with you on this. I wonder how long phone and/or telegraph lines were private before they were turned over into a government utility. What about electric?
It'd be nice to be able to change Internet or Cell providers as easily as you can change landline providers.
This can go the wrong way, though, too... look at ESCOs (Energy Service Companies). Google "IDT Energy New York" and see the sort of dirt shenanigans they've been up to. I've yet to meet anyone who actually saved money switching to an ESCO.
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Are you saying that although the US government can gain large amounts information it wants quite easily from private enterprises now - if it became a publicly regulated utility they could gain more? That may be true, but I view it more as a question of political power. My rule of is that those without power tend to suffer. Back in the 60's - when the "Russkies" t
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Someone tried that and the ISPs sued them over it.
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Exactly.
Those cell towers in BFE all have to have 10x the pipes versus plain voice calling. If you have 7meg to your phone... A hundred other users on the same tower adds up to fat pipes... And lots of digging for new fiber.
In addition you have the politics going on. You'd think AT&T owning air and land could upgrade cheaply... But they made a lot of network decisions 5 years ago "for competition" ie to get more money out of other providers for simple upgrades. All those decisions add up to a bunch of t
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Why dig a trench? They could just use wireless!
(yes, it's meant to be funny, not a flame)
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