[hugh]

Clearly, no one wants to pay more for internet service, but at some point the price of just about everything goes up. So recently I decided to investigate whether the spate of price increases were justified and fair.

Man, I like this guy. The Globe and Mail should use him more often

 

[topherpaquette]

^^^
Yeah... not to bad I guess. He deserves a weekly spot, not a monthly

 

[PokerChip]

Nice column, Hugh.

I'm gathering things are headed in the right direction for you. Well deserved for all the hard work you've put into this site. Very happy for you man.

 

[pixellj]

Great article, but it made me angry- not your writing, but the truth of it all. Hopefully your article reaches many people.

I do have a tech question though, bandwidth related. I am a hobbyist geek, civil engineer by trade. So, to understand bandwidth, I use water pipes. As population grows, water isn't upgraded to larger pipes (generally until rehab is required). Why doesn't this work for bandwidth? Isn't it just a matter of more data moving within a smaller pipe, but faster as load increases? I realize copper et al will have an upper limit, but with throttling used anyways, I don't see where the 'crunch' is.

I hope this is article related- at least your artcle put the question in my mind .

 

[99gecko]

Nice job by the author. hugh, should encourage him to sign up as a member here.
_____________________

I doubt that we will completely eliminate UBB, since in theory, if it is implemented fairly and equally, it should reduce the base cost of providing Internet service. I am afraid that completely eliminating all forms of UBB, will eventually force ISPs to charge all users as if they were large downloaders, increasing the costs for the average user substantially over time. I suspect we will eventually see Internet pricing structured somewhat like my gas or electricity bill is structured; i.e. broken down into:

1. A flat-rate component which is designed to cover the administration, delivery/speed, infrastructure maintenance/enhancements, marketing, other overhead, and profit. Different connection speeds would set a higher or lower flat-rate fee.
   
2. Tier 1 band-width (off-peak period).
   
3. Tier 2 band-width consumption (on-peak period).
   
4. No caps, unless requested by the consumer (i.e. warn me at 250 GB, and cut me off after 300 GB)

If all the major ISP's and TPIA service providers followed the same model, then competition would be fairer, since the consumer could evaluate all providers equally, based on their expected personal BW consumption.

But maybe I'm just delusional....

 

[JamesK]

So, to understand bandwidth, I use water pipes.

Both water pipes and networks have some maximum limit. What happens if you keep on increasing water users, without increasing the distribution capacity? Eventually, you'll have low water pressure at the taps. Otherwise, why not just cover the entire city with just a single 1/2" line?

With networks, every link has some maximum capacity. Common ethernet typically has a maximum of 1 Gb or 100 Mb per second. While you may often use less, you cannot stuff more that that through it. With Bell, there are two types of links. The ADSL connection to the home has some maximum bandwidth, but it is dedicated to that customer. At the central office, you now have shared equipment, where one user, using a lot of bandwidth, might affect others. So, Bell has to balance costs of equipment and connections to the internet against customer needs. So it is quite reasonable to charge more for heavy users. However, with the way they've gone about it, as Hugh mentions in his Globe article, the charges are excessive. In fact, they are obscene and punitive.

 

[thegiffer]

Great article Hugh, most cogent presentation of the issue I've seen. For years, I've been pointing to the imposition of "too low" caps as a major looming problem for consumers, both as a barrier to video via Net and as the wedge issue that will usher in widespread CRTC regulation of the net in Canada.

That shoe has finally dropped. It's encouraging to finally see public awareness raised about the issue and to see people starting to ask questions like "wait a minute, if I download a movie from Shaw/Telus, does that count toward the cap? Does it count differently than Netflix?" i.e. grasping the net neutrality issue, finally. BTW, I have no problem with reasonable caps - these ain't those.

I think the feds and the companies misjudged the anger about cellular plans and how rapidly the public would see this as an extension of that situation. From an issues management perspective, the companies and their regulatory partner have definitely mishandled this. Timing was terrible (they should have pushed this through in the summer pre-Netflix launch, Netflix has raised public consciousness of the future of downloading video content enormously)

Or was the timing terrible? Something tingles when I see the proximity in time of the CTV/Bell hearings and the Shaws sports channel announcements to the caps decision. Did the industry push their regulatory partner for a ridiculous download cap structure in order to set it up as a straw man, knowing they would back off in exchange for concessions on cross-ownership and carrier/content decisions?

Probably not, it implies too much collusion and control over timing. But the fact that I'm thinking it points to how the perception of these companies is sinking in the public mind.

And the number of people that are asking me about the pros and cons of unplugging from cable is growing by leaps and bounds...

 

[Wayne]

Let's move to pure UBB!

I have no problem paying for what I consume as long as it is reasonable - we should pay a monthly flat fee plus a reasonable charge per GB.

How does this sound:
Express 5Mbps down, 0.5Mbps up $30/month plus $0.05/GB
Extreme 15MBps down, 1 Mbps up $40/month plus $0.05/GB
Extreme Plus 25Mbps down, 1.5Mbps up $50/month plus $0.05/GB
Ultimate 50Mbps down, 2Mbps up $70/month plus $0.5/GB

You start paying for the first byte that you download. It is just like water or electricity - a base fee plus a purely variable fee.

This still leads to a wide profit margin for the ISPs assuming that Hugh's $0.03/GB figure is accurate.

 

[agover]

Hi Wayne,

Thats something I was actually thinking about too although i think you prices are too high for the initial out lay. Remember this is nothing in - ie no base amount.

For your charges I think the first 100gb should be included. (or give a $5.00 discount)

Also your recommended costs arent really off what is currently there so without a min purchase of bandwidth it would seem like a price increase (even though it would be MUCH cheaper in the end).

Aside from that I think thats the best for everyone.

 

[TKG26]

If things have to go down this road. Why can we not pic our pricing as follows:

Setup your internet service. Select one of each below
STEP 1
Pick your speed: GUARANTEED SPEED!
-2 Mbps
-6 Mbps
-12 Mbps
-24 Mbps
-ect ect

STEP 2
Pick your cap:
-2 Gig
-10 Gig
-30 Gig
-60 Gig
-120 Gig

OVERAGES: The same price for all subscribers.

What ever the thresholds allow me to pick a speed and my Cap. If i want my downloads low and slow with a high cap i should be allowed that. If im not downloading much but want a rocket fast speed for gaming i can get the high speed with low CAP.

I just hate how they can some how bill me down to the byte but cannot garantee my speed of 6Mbps even thought they have the power to provide much higher speeds. How come they cannot throttle down speeds to give customers exactly what they are paying for. Thats what i expect from my service..

Great read Hugh.

 

[audacity]

STEP 2
Pick your cap:
-2 Gig
-10 Gig
-30 Gig
-60 Gig
-120 Gig

I disagree with this. I think if you just have a bandwidth rate, why have a cap? It doesn't serve a useful function for billing. Just take the bandwidth used, multiply by the price, add the "base rate" for your connection type and presto! You have your monthly bill.

To quote an earlier post I made:

Connections:
DOCSIS 2.0: $10
DOCSIS 3.0: $15

Bandwidth Use:
1 GB: $0.20

We can discuss what those numbers should be. I got my $.20/GB number by taking Shaw's 250GB bandwidth package add-on and I figured that it shows they aren't against selling a GB of bandwidth for $0.20.

The problem with caps is that if you don't hit your cap, then you're paying for bandwidth you aren't using.

 

[hugh]

It's something I've been advocating for years (see many posts on the subject over the years on this forum) but I highly doubt it will ever happen in this country.

In my world though there would be no speed tiers.

Just a flat connection fee of say $5 per month plus so much per GB. In this world, the ISP would want to give you the fastest connection so you use more Gigabytes. I also could see a tiering in GB pricing. The first 10 GB would be a $1 per GB, next 10 would be 80 Cents, next 10 would be 60 cents so a 30GB connection would be $29.00 a month.

After 30 GB, the next 10 could be 50 cents per GB then 40 cents, 30 Cents, 20 cents, 10 cents and maybe even 5 cents per GB over 100 or 200 GB per month.

These numbers are just samples so please don't anyone quote and say why it should be 40 cents instead of $1 or some such nonsense, but the idea would be to make your bill consistent with your usage.

I'd also tier based on time of day. Premium for 8pm to 1AM. Regular from 9am to 6pm and Low from 1am to 9am.

The ISP's busiest time is between 8pm and midnight so over discounts for other times. This would encourage folks to download at off peak times.

 

[Wayne]

The ISP's busiest time is between 8pm and midnight so over discounts for other times. This would encourage folks to download at off peak times.

That makes some sense but that would push folks to using Bittorrent rather than services like Netflix as you are making it easier for illegal services vs. legal.

But perhaps Neflix could allow you to cache files overnight.

 

[hugh]

Frankly, I think a higher price for internet price at peak times will make people start pirating.

But Netflix and/or Apple or any movie streaming service use DRM so it's possible to cache files.

In fact, this would benefit Netflix and Apple too because they would balance out their own server usage.

 

[farr38]

I agree with you Hugh.

I am not upset that the resellers have to charge the same rates as Bell and Rogers charges.

The problem is the rates are ridiculous. I renegotiated my contract with bell because I was having issues keeping below 60 gigs. My package went up to 105. This month I am up to 135 so I will pay an extra 60$ (I thought is was a 30$ max)

So much to say I will not be renewing my contract in July.
I have had sympatico for 15 years
Teksavy will be installing cable internet next week.
I will remove my pots line from Bell as well come July.

I wonder how much bandwidth the average user is using?
It must be growing every month just like mine.
I was thinking of adding net flicks.

My Wife and kids watch YouTube, tv shows and movies allot.
Is that not what the internet is for. Bell advertises it that way.

I could see using 200 gigs a month in short time.

 

[hugh]

I did not see this but I am told that Bell told the CRTC that 10% of its users exceeded their bandwidth caps. Don't know any details but I believe it.

The important thing is the percentage exceeding their caps a few years ago was only a couple of percent so the percentage going beyond their caps is steadily increasing.

 

[Wayne]

The important thing is the percentage exceeding their caps a few years ago was only a couple of percent so the percentage going beyond their caps is steadily increasing.

And, just as importantly, more of this usage is coming from legal services like Youtube, Netflix, RODO, gaming, etc vs pirating of videos and games on Bittorrent.

And this will continue to grow as people get more and more devices such as iPads that are very well suited to watching video. The way these devices are set up it is easier to watch video streamed over the net vs streamed over your LAN.

 

[hugh]

According to CISCO

Global IP traffic will quadruple from 2009 to 2014. Overall, IP traffic will grow at a compound annual growth rate (CAGR) of 34 percent.

Global Internet video traffic will surpass global peer-to-peer (P2P) traffic by the end of 2010. For the first time since 2000, P2P traffic will not be the largest Internet traffic type.

Peer-to-peer is growing in volume, but declining as a percentage of overall IP traffic. P2P file-sharing networks are now carrying 3.5 exabytes per month and will continue to grow at a moderate pace with a CAGR of 16 percent from 2009 to 2014. Other means of file sharing, such as one-click file hosting, will grow rapidly at a CAGR of 47 percent and will reach 4 exabytes per month in 2014. Despite this growth, P2P as a percentage of consumer Internet traffic will drop to 17 percent of consumer Internet traffic by 2014, down from 39 percent at the end of 2009.

Honestly, the P2P argument and "illegal download" argument put forth by ISPs doesn't hold much water anymore.

 

[pixellj]

JamesK, thanks for the primer. I guess my analogy works to a degree then, it just doesn't account for the rate of growth in data vs water. I do realize there are limits to bandwidth (data or water), but I thought that's what capping was addressing. From my simpleton's perspective, it seems they're capping speed and quantity, so what's the problem? If I'm paying for extra bandwidth, it seems doubly punitive to have a speed cap too.

 

[JamesK]

^^^^
Bandwidth is determined by your plan and also the connection. The cap is the total amount of data over the month. With greater bandwidth, the quicker you can reach the cap. I wonder how Bell, Rogers etc. managed to be profitable all these years, but suddenly need to do this?