North American Network Operators Group

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Re: Home media servers, AUPs, and upstream bandwidth utilization.

  • From: Steve Gibbard
  • Date: Wed Dec 27 16:11:29 2006

On Sun, 24 Dec 2006, Roland Dobbins wrote:

In the U.S. and Canada, the expectation has been set to an assumption of 'unlimited' bandwidth consumption for a fixed price in the consumer market. AT&T WorldNet helped popularize that model early-on (you can thank or curse Tom Evslin for that, according to your inclinations, heh), and it has become de rigeur for most U.S./Canadian broadband SPs to follow suit.

Which raises a related question of whether North American operators believe that offering value-added services such as placeshifting (which is a familiar enough concept that a significant population of the userbase seem to grasp the idea without a lot of explanation) might prove amenable to metered billing?
IANAE (I am not an economist), but:

At the Peering BOF in Saint Louis, somebody commented on how when you put a group of network engineers into a room, pretty soon they stop talking about engineering and start talking about economics. There are a whole bunch of factors that go into what it costs to provide a service, which differentiate the costs of upstream versus downstream traffic:

In theory, downstream traffic uses more resources. Given hot potato routing, traffic gets handed off from the sending to the receiving network close to the source, and the receiving network pays the cost of hauling the traffic over a long distance. If we could measure the cost of traffic purely in bits per mile, upstream traffic would be cheap, and downstream traffic would be expensive.

A lot of networks have ratio requirements in their peering policies. If they're receiving more from a peer than they're sending, they threaten to depeer. On the surface, this makes sense. They're receiving traffic and having to pay to carry it, while the other network isn't paying as much to hand off traffic locally. But it leaves content heavy could-be competitors desperate for inbound traffic.

Exchange point ports and private peering cross connects tend to be symmetric. If we ignore the longer distances that inbound traffic has to be hauled, and the resulting increases in required capacity of inter-city backbone links, we can say that the cost of handling inbound traffic has already been covered in the course of handling outbound traffic. There may be one too many "if we ignores" in the previous sentence, but there's enough fiber in the ground between major US cities (as well as to Western Europe and East Asia) that it's pretty affordable.

What's a network desperate for inbound traffic to do? They either risk losing their peering, or they find customers with lots of traffic flowing inbound. When there are lots of networks with this problem, they start competing for the inbound-heavy customers. It's been a couple years since I last shopped for inbound-only bandwidth, but at the time the cost for inbound-only bandwidth in large quantities in major US cities was rapidly approaching zero. This was putting downward pressure on what those who already had balanced ratios could charge, as well.

Inbound bandwidth, while theoretically more resource intensive, was cheap or free. To the extent that the costs weren't just resulting in more debt for the transit providers, the outbound-heavy customers were subsidizing this. This meant big price differentials between outbound and inbound bandwidth.

Then we've got the issues of what gets charged to the users:

In the US, downstream bandwidth doesn't cost much. End user customers are expected to use small amounts of downstream bandwidth. Billing the end users for the bandwidth consumption would cost more than covering the cost of the occasional excessive user. In other words, it is "too cheap to meter." Hosting is a different story. Hosting customers often use enough bandwidth to affect their providers' transit bills, or even to require infrastructure upgrades, and the traffic is almost all upstream, the expensive direction. Hosting is almost always billed by usage.

In some other parts of the world, where the ISPs bear the cost of bringing their inbound and outbound traffic over expensive connections from far away places, the cost model can be quite different. As the costs of transport and transit go up, the costs of dealing with excessive use surpass the cost of metering. There are lots of places where it's common to have separate rates for local and long-distance Internet, with the long distance connectivity being billed per bit.

We keep being able to push more data through the same fiber, and more data through equivalently priced hardware, than previously possible. But I suspect that if traffic patterns were to change and cause the costs of dealing with excessive use by US broadband customers to go up considerably, we'd see the billing systems change to reflect that.