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

  • From: Mark Smith
  • Date: Wed Oct 10 16:42:39 2007

Hi Andrew,

On Mon,  8 Oct 2007 08:36:12 -0500 (CDT)
[email protected] (Andrew Odlyzko) wrote:

> As a point of information, Australia is one of the few places where
> the government collects Internet traffic statistics (which are hopefully
> trustworthy).  Pointer is at
> (which also has a pointer to Hong Kong reports).  If one looks at the
> Australian Bureau of Statistics report for the quarter ended March 2007,
> we find that the roughly 3.8 M residential broadband subscribers in
> Australia were downloading an average of 2.5 GB/month, or about 10 Kbps
> on average (vs. about 20x that in Hong Kong).  While Australian Internet
> traffic had been growing very vigorously over the last few years (as
> shown by the earlier reports from the same source), growth has slowed
> down substantially, quite likely in response to those quotas.

These quotas have been around since the late 90s in .au, pretty much
since broadband became available. Their origins are probably the dial
up plans that were also measured that way - although there were also
dial up plans that were measured by minutes online. 

The only significant change to plans that has happened is that rather
than people who go over their quota being changed a per MB excess fee,
the customer's service is now rate limited ("shaped") down to a dialup
like speed e.g. 64Kbps, resulting in a fixed monthly bill. This feature
was introduced something like 3 to 4 or maybe 5 years ago, and has
wildly spread across the industry (and as you say in one of your
papers, people like it because it's insurance against unexpected and
variable bills).

There are various levels for these quotas. The 500MB ones are really
only aimed to be for people who don't want to spend more per month than they
are for dialup - they probably act as a "taster" as to what you can do
with broadband, rather than being a "broadband" plan. Common "proper"
broadband quota plan values are 4000 or 5000, 10000 or 12000, 20000,
30000, 40000, 60000 or 80000 MB per month.


> Andrew Odlyzko
> P.S.  The MINTS (Minnesota Internet Traffic Studies) project,
> provides pointers to a variety of sources of traffic statistics, as
> well as some analyses.  Comments, and especially pointers to additional
> traffic reports, are eagerly solicited.
>   > On Fri Oct  5, Mark Newton wrote:
>   On Fri, Oct 05, 2007 at 01:12:35PM -0400, [email protected] wrote:
>    > As you say, 90GB is roughly .25Mbps on average.  Of course, like you pointed
>    > out, the users actual bandwidth patterns are most likely not a straight
>    > line.  95%ile on that 90GB could be considerably higher.  But let's take a
>    > conservative estimate and say that user uses .5Mbps 95%ile.  And lets say
>    > this is a relatively large ISP paying $12/Mb.  That user then costs that ISP
>    > $6/month in bandwidth.  (I know, that's somewhat faulty logic, but how else
>    > is the ISP going to establish a cost basis?)  If that user is only paying
>    > say $19.99/month for their connection, that leaves only $13.99 a month to
>    > pay for all the infrastructure to support that user, along with personnel,
>    > etc all while still trying to turn a profit. 
>   In the Australian ISP's case (which is what started this) it's rather
>   worse.
>   The local telco monopoly bills between $30 and $50 per month for access
>   to the copper tail.
>   So there's essentially no such thing as a $19.99/month connection here
>   (except for short-lived "flash-in-the-pan" loss-leaders, and we all know
>   how they turn out)
>   So to run the numbers:  A customer who averages .25Mbit/sec on a tail acquired
>   from the incumbent requires --
>      Port/line rental from the telco   ~ $50
>      IP transit                        ~ $ 6 (your number)
>      Transpacific backhaul             ~ $50 (I'm not making this up)
>   So we're over a hundred bucks already, and haven't yet factored in the 
>   overheads for infrastructure, personnel, profit, etc.  And those numbers
>   are before sales tax too, so add at least 10% to all of them before
>   arriving at a retail price.
>   Due to the presence of a quota, our customers don't tend to average
>   .25 Mbit/sec over the course of a month (we prefer to send the ones
>   that do to our competitors :-).  If someone buys access to, say, 
>   30 Gbytes of downloads per month, a few significant things happen:
>    - The customer has a clear understanding of what they've paid for,
>      which doesn't encompass "unlimited access to the Internet."  That
>      tends to moderate their usage;
>    - Because they know they're buying something finite, they tend to 
>      pick a package that suits their expected usage, so customers who 
>      intend to use more end up paying more money;
>    - The customer creates their own backpressure against hitting their
>      quota:  Once they've gone past it they're usually rate-limited to
>      64kbps, which is not a nice experience, so by and large they build
>      in a "safety margin" and rarely use more than 75% of the quota.
>      About 5% of our customers blow their quota in any given month;
>    - The ones who do hit their quota and don't like 64kbps shaping get
>      to pay us more money to have their quota expanded for the rest of
>      the month, thereby financing the capacity upgrades that their 
>      cumulative load can/will require;
>    - The entire Australian marketplace is conditioned to expect that
>      kind of behaviour from ISPs, and doesn't consider it to be unusual.
>      If you guys in North America tried to run like this, you'd be 
>      destroyed in the marketplace because you've created a customer base
>      that expects to be able to download the entire Internet and burn
>      it to DVD every month. :-)  So you end up looking at options like
>      DPI and QoS controls at your CMTS head-end to moderate usage, because
>      you can't keep adding infinite amounts of bandwidth to support 
>      unconstrained end-users when they're only paying you $20 per month.
>      (note that our truth-in-advertising regulator doesn't allow us to
>      get away with saying "Unlimited" unless there really are no limits --
>      no quotas, no traffic shaping, no traffic management, no QoS controls.
>      Unlimited means unlimited by the dictionary definition, not by some
>      weasel definition that the industry has invented to suit its own
>      purposes)
>    - There is no net neutrality debate to speak of in .au because everyone
>      is _already_ paying their way.
>   Like I said a few messages ago, as much as your marketplace derides 
>   caps and quotas, I'm pretty sure that most of you would prefer to do 
>   business with my constraints than with yours.
>     - mark
>   -- 
>   Mark Newton                               Email:  [email protected] (W)
>   Network Engineer                          Email:  [email protected]  (H)
>   Internode Systems Pty Ltd                 Desk:   +61-8-82282999
>   "Network Man" - Anagram of "Mark Newton"  Mobile: +61-416-202-223


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