North American Network Operators Group

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Re: Why do some ISP's have bandwidth quotas?

  • From: Joe Greco
  • Date: Wed Oct 10 13:22:20 2007

> On Mon, 8 Oct 2007, Joe Greco wrote:
> > It's arrogant to fix brokenness?  Because I'm certainly there.  In my
> > experience, if you don't bother to address problems, they're very likely
> > to remain, especially when money is involved on the opposite side.
> There's a big difference between fixing brokenness and demanding that 
> somebody else do something that might make sense in your situation but not 
> in theirs.

Well, then, when someone actually demands that, then why don't you have
that little chat with them.  Otherwise, you might want to recognize that
someone actually /asked/ me what I would do - and I answered.  For you
(or anyone else) to turn that on its ear and make it out like I was
demanding that somebody else do something is, at best, poor form.

[lots of boring and obvious US Internet boom/bust history snipped]

> In other words, capacity in the US is cheap because a bunch of investors 
> screwed up.  That's nothing new; it's how the American railroads got built 
> in the mid to late 1800s, and it's how the original American phone 
> networks got built in the early 1900s.  Investors will presumably keep 
> making similar mistakes, and society will be better off because of it. 
> But counting on them to make the same mistake while investing in the same 
> thing within the same decade may be pushing it.

So there's nowhere else in the world that there's cheap capacity?
There are other areas of the world that are served by the Internet, and
it seems unlikely to me that cheap bandwidth in every single area is due 
to the competition/bankruptcy cycle.

Actually, the thing that tends to be /most/ special about a location such
as Australia is that running the capacity out there is a lot different
than running fiber along tracks in the US.  The race into financial ruin
caused by competitiveness among carriers was not a certainty, but the
excessive levels of excess capacity from numerous providers probably 
forced it to become one, as smaller fish fought for a slice of the pie.
The lack of large amounts of excess capacity on competing carriers 
clearly keeps the AU costs high, possibly (probably) artificially so.

Therefore, I'm not sure I would accept this argument about why US
capacity is cheap as being a complete answer, though in the context of
talking about why AU is expensive, it's certainly clear that the lack
of competition to AU is a major factor.

> If you're an ISP in an area served by an expensive long haul capacity 
> monopoly rather than a cheap competitive free for all, the economic 
> decisions you're likely to make are quite different than the decisions 
> made in major American cities.  If you can always go get more cheap 
> capacity, encouraging your customers to use a lot of it and thereby become 
> dependent on it may be a wise move, or at least may not hurt you much. 

I'm not actually certain under what circumstances *encouraging* your
customers to use a lot of bandwidth is a wise move, since there are still
issues with overcommit in virtually every ISP network.

> It's probably cheaper than keeping track of who's using what and having to 
> deal with variable bills.  But if the capacity you buy is expensive, you 
> probably don't want your customers using a lot of it unless they're 
> willing to pay you at least what you're paying for it.  Charging per bit, 
> or imposing bandwidth caps, is a way to align your customers' economic 
> interests with your own, and to encourage them to behave in the way that 
> you want them to.

Well, my initial message included this:

: Continued reliance on broadband users using tiny percentages of their
: broadband connection certainly makes the ISP business model easier, but
: in the long term, isn't going to work out well for the Internet's
: continuing evolution.

So, now you've actually stumbled into a vague understanding of what I 
was initially getting at.  Good.  :-)

I am seeing a continued growth of bandwidth-intensive services, including
new, sophisticated, data-driven technologies.  I am concerned about the 
impact that forcing customers "to behave in the way that you want them 
to" has on the development of new technologies.

Let's get into that, just a little bit.

One of the biggest challenges for the Internet has got to be the steadily
increasing storage market, combined with the continued development of
small, portable processors for every application, meaning that there's
been an explosion of computing devices.

Ten years ago, your average PC connected to the Internet, and users might
actually have downloaded the occasional software update manually.  Today,
it is fairly common to configure PC's to download updates - not only for
Windows, but for virus scanners, Web browsers, e-mail clients, etc., all
automatically.  To fail to arrange this is actually risking viral
infection.  Download-and-run software is getting more common.  Microsoft
distributed Vista betas as DVD ISO's.  These things are not getting

Ten years ago, portable GPS-based navigation systems weren't really 
popular.  Five years ago, we had CD- or DVD-based systems as fairly readily
available options.  Today, we have a huge variety of devices.  All of these
devices suffer from problems where data is out of date; the latest devices
that store their database on non-RO medium, however, can be periodically
updated.  I fully expect that we'll be seeing more frequent updates, along
with more specific regional information downloads about construction and
temporary obstructions, which will only drive that process to be more

Ten years ago, 35MM cameras were king.  Today, digital multimegapixel
cameras are king.  Users are finding that they can easily upgrade that
128MB SD card that cost them an arm and a leg a few years ago to a nice
new 2GB SD card that costs twenty bucks (maybe with a coupon).  They like
to e-mail around their pictures - and their MPEG video-movies.

Now, I want to make a point here - I do not consider ANY of these to be
the sort of "new killer app" that I'm talking about, yet within each
of these classes of device, we're seeing the potential develop for the
need for some more bandwidth to do things that your AVERAGE END USER
is going to want to be able to do.

The continued growth of technology is a key.  Look at the state of the 
art.  I can get a 4GB storage module the size of my pinky fingernail
(MicroSD).  That wasn't the case ten years ago.  While some - or even a
lot - of that data is being originated from non-Internet sources, such
as digital cameras, PDA's, cell phones, etc., it seems obvious that some
percentage of the storage device capacity being sold is going to result
in additional Internet bandwidth used, and that this is going to scale
upwards along with the increasing capacity/decreasing price of storage.

So even if there isn't a next killer app, there's likely to be continued
growth and demand for Internet bandwidth for current apps.

> I should also note that those advocating "carrier neutral" fiber to the 
> home probably won't get high speeds at low prices, as long as that 
> "carrier neutral" fiber is a monopoly.  Even regulated monopolies are 
> generally allowed to charge enough to make back their construction costs, 
> and if the ISPs are paying for the fiber monthly rather than up front, 
> that's going to put a pretty firm floor on what ISPs can charge.  What 
> would theoretically push consumer prices down would be to have several 
> competing companies build fiber to the same set of homes, that they or 
> their post-bankruptcy successors would continue to control.  We've sort of 
> got that in much of the US, with the DSL/cable duopolies, and speeds do 
> seem to be creeping up slowly, although not nearly as much as in some 
> other parts of the world.  The question, of course, is how to convince 
> investors to go for such a thing.

Obviously (and, yes, I pointed this out /much/ earlier in this discussion)
this is a serious problem.  We currently have a system here in the US that
was distorted by the incumbent telcos and cablecos.  To understand how to
convince the investors to go for such a thing, you can look at the sorts
of incentives included in the Info Superhighway proposals.  We offered
great incentives for them to build this - and even granted most of them. 
However, we lost out because there was a lot of clever lobbying, and we 
didn't actually end up requiring them to hold up their end of the bargain.
The short form is that they took the incentives and ran; some people have
valued those incentives as being as much as $200 billion.  I'm not making
that up.

This is somewhat slanted, but there's a lot of truth in it.

... JG
Joe Greco - Network Services - Milwaukee, WI -
"We call it the 'one bite at the apple' rule. Give me one chance [and] then I
won't contact you again." - Direct Marketing Ass'n position on e-mail spam(CNN)
With 24 million small businesses in the US alone, that's way too many apples.