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Three Cents Per Gigabyte

Hugh Thompson has an interesting column on the actual bandwidth costs for ISPs.  He cites one provider that three cents per gigabyte is the likely cost.  Even assuming a ten cents per gigabyte “inflated cost”, that still represents as much as a 50X markup given that some providers charge $5 per additional GB.

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18 Comments

  1. Kind of…
    puts into perspective Rogers “Data Day Pass” of $2 for 24 hours, capped at 20 MBytes. (Data roaming at $0.05/kByte extra).

  2. UBB
    This is why I don’t think UBB is a bad idea. The price just needs to be brought inline with the actual cost to deliver the service.

    Maybe Internet will have to become a regulated utility to make it happen, with fixed fees.

    Just like Gas or Electricity, I have a fixed monthly fee if $10 – $20, then I am billed for usage at a regulated rate.

    If this were applied to Internet, then my $15 monthly fee plus 50 GB of usage at your suggested $.10 per GB would give me a $20 bill.

    This has 2 advantages:

    1) Most people would consider this process fair and inline with how they currently pay for usage of their utilities.

    2) This would address Bell’s concerns as people would be paying for what they use and would have an incentive to use less. The more they use, they more then pay.

  3. I agree, a $20 monthly access fee, with say a 20gb cap. Any usage over the cap will be charged at $0.10 per GB. That is totally understandable, and is something I could agree on. If the ruling does not change, my ISP will change my unlimited internet into a 25gb cap, with $2.00 per GB over the cap.. that I do NOT agree on.

  4. UBB at close to the true cost would be fair but…..
    The big telcos want their cake and to eat it too. It would also make the internet cheaper for people who only check their e-mail and do nothing else, since their usage charge would be next to nothing. We never hear of the other side of the coin; those people not using their full allotment getting a refund or discount. In any case, the ridiculously inflated per GB costs that Bell is charging their wholesalers will squash competition, I’m certain this is their real intent that the CRTC unbelievably bought into. I’ll wait and see the gov’ts response to this fiasco.

  5. ubb
    this is how it should be.(and I stream and play online games a lot)

    $10.00 connection fee with 100 gigabytes included.(it does not cost much at all to activate a modem/line, hit a few keys and its done)

    $x.xx modem rental fee. if you own one then $0.00

    $0.04 per gigabyte.

    example 200 gigabytes X $0.04 = $8.00

    that i would agree on.

    also what makes me mad is if there is a cap i want my isp to stop service when i reach that cap. just like when a bartender cuts of a client from drinking when he had too much.

    imoa

  6. Peter G.
    Canadians already pay some of the highest fees in the world for things like cell phone service, cable TV and internet access. The reason is quite clear the total lack of competition and the CRTC as the industry’s lapdog.

  7. Bye Bye Internet, TV, & Phone
    If this actually is realized, my TV, Computer, and Telephone will be at the side of the road for someone to pick up. I will cancel all my services and will read books instead of using these services. Back to the stone age and much better off for it!

  8. No direct link between billing per Gb and how ISPs buy bandwidth
    There is no direct way to figure out a cost per Gb, because ISP’s don’t buy bandwidth by the Gb — they buy bandwidth *capacity* by the megabit/second, and when they implement in-house infrastructure, they are installing infrastructure with a given *capcity*.

    Cost per Gb is essentially a derivative — you take the costs of providing all the capacity, work out a business model that makes you happy, and say that it’s “$x/Gb”. Everyone else is free to work out their own business model, and therefore, they get very different answers.

    As such, there is no such thing as a true cost/Gb.

    It use to be that I would buy bandwidth, as a small ISP, for about $700/Mbit/second (obviously we pay a tiny fraction of that now, but the pricing model hasn’t changed). That means that if I purchased had 10 Mbit/s, I would pay about $7k/month. If I sent 1 Gb or 10,000 Gb or 100,000 Gb I would pay the same price.

    So, my business model was obviously all about finding as many ways and reasons as possible to get people to buy my services and help pay that bandwidth bill.

    For that exact same reason, the exact cost per Gb for me to send data has no real answer — I could take the number of dollars people had given my business and divide by how much data had been transmitted in the past month to get a number, but it wouldn’t mean a whole heck of a lot.

    I think it makes *a lot* more sense for people to pay for capacity (the right to send data at a certain rate) than to try and bill people per Gb — billing per Gb will inevitably require endless debates about the business model, whereas capacity based billing maps onto the larger business structure of the internet that eliminates a lot of opportunity for MBA shenanigans.

    People also talk about oversubscription — this is not nearly so simply a topic, to my mind. TCP/IP networks are inherently designed to be over-subscribed — the whole purpose of the protocol is to make the most of *shared* communications links. A well run heavily utilized network can run circles around a poorly run lightly loaded network. The relationships between line speeds, packet sizes, latencies, buffer depths, routing, QoS and congestion control algorithms, and so on are complex — but that’s what network engineers are for.

    While the traffic management issues facing large carriers in Canada are inspiring and exciting, they are by no means insoluble, or unsolved.

    Think about it — is the sky really falling, or is Bell really saying “We are too stupid and backwater to figure out how to cope with traffic flows much smaller than other operators in other countries have figured out how to do years ago”?

    Operators in other countries are delivering 100 Mbps fibre to the door (Japan, $35/month), 18 Mbp/s is considered normal for DSL speeds in most of Europe, Koreans kill themselves laughing at how lame our networks are — there is no shortage of countries and carriers that deliver *higher speeds* to *more people* for *lower prices*.

    If we reward Bell for being stupid by giving them even more money, then the jokes on us. We owe it to ourselves, and Bell, and demand that they at least keep pace with the rest of the world.

    -D

  9. When the Fox guards the hen house
    Our major internet providers in Canada are also our providers of satellite and cable TV services. More and more customers are realizing that they pay way too much for a TV package that brags of multi channels which merely repeat the same tired sitcoms and old movies. As a result we depend more on the internet for entertainment which is cheaper and much more complete.
    I am sure that the major providers hate Netflix which for less than 10 dollars per month gives us what 40 dollars per month would (maybe) buy from them.
    Their penchant for stealing from us and calling it service is becoming legendary. There is no way that either Bell, Telus, Rodgers, Shaw, et al can hide their complicity when a light is shone on them.

  10. Video Games
    A lot of stuff will become a thing of the past. WiFi “Hot spots” in cafes, library and school will be very expensive to maintain. Company’s like Sony and Microsoft will have to lay off Canadian online workers for their gaming consoles because thousands will not be able to afford to play. I do agree that it needs to be better regulate it but I don’t think it’s this way.

  11. Follow the money
    I hope everybody realizes that this isn’t just about a competition on the Internet. Its all about Bell protecting its revenue streams. They aren’t buying CTV to loose money to Netflix.

    Bell has already convinced the CRTC that traffic shaping and rate limiting are acceptable traffic management tools by blaming those nasty bittorrent pirates. UBB is all about making it too expensive to use the alternatives. Next up will be the attempted justification to impose some sort of restriction (DPI based of course) on where their customers can surf. They’ll claim its traffic management and absolutely necessary to save the next from all the bandwidth hogs but you can bet that the solution will be tiered pricing models that look suspiciously like cable or BellTV offerings… $50/month for “basic” internet, +$15/month for “social networking” etc..

    Or, worse still, they’ll convince the CRTC and the government that somehow, its unfair that Bell has to pay to let their own customers stream content from Netflix or Youtube and maybe Youtube should should be paying Bell.

    We let that sort of model develop and you can kiss any sort of innovation goodbye.

    Am I over reacting ? Maybe but follow the money… and remember how much Bell, Rogers and Telus complained about letting Wind into the market. They don’t want ANY competition that might eat into their margins.

  12. families will fight over usage.

    Chaos will ensue.

    I, on the other hand, have no been “outside” in years. I hear it’s still there.. might be worth checking out..

  13. One thing no one has brought up
    On reading most of the comments on this page as well as many others. I could not help but notice. Not one person has brought up the fact that Bell in its ultimate wisdom, Has broken many of their own user agreements with this whole UBB. If you were a customer that signed up for DSL in the beginning and read your original user end agreement there is no line stating “they reserve the right to change your agreement at any time”. I personally did not sign their new agreement digitally or otherwise. What gives them the right to break that agreement.Or is the law only favorable to Corporations. If this is allowed to happen then whats next another debt retirement charge that will never be paid and you will never get a statement to what is still oweing!!!(LIKE ONTARIO HYDRO)

  14. fascinating comments here
    loving the commentary people … the UBB scam is transparent to those looking, and more so to those who understand that capacity is the key, not usage … trouble is there are still too many people buying into the ‘why should i subsidize the hog?’ scare tactic … it’s been said already here, but it’s worth saying again, this is not about usage it’s an attempt to kill competition for the large telcos who are also content providers … caps are arbitrary and will kill innovation and stifle wider acceptance of new technologies

    my favourite comment was the family fight chaos over usage … can you imagine it?

    Finckenstein et al are either completely clueless, or worse, completely complicit

  15. All over again.
    I personally think that,as per usual,
    We are getting the wool pulled over our heads.
    When the government/big business wants more money they put in an unacceptable motion or law…then after public outcry… they put forth a more “acceptable” so called motion or law and we “average Canadian sheep” always turn the other cheek and fall for it hook line and sinker.
    That was the plan in the first place.
    Witness when certain govt’s want’s a war, they “create” a way for the people to accept it. When big business wants more money they do the same thing.
    This is nothing new (it’s been going on for centuries)and we should have seen it coming a long time ago.
    Mark my words we WILL be paying more and we “sheep” will pay it(many will even do it with a smile, thinking they got their way).
    Wake up and smell the coffee everyone.

  16. I just watched the late news
    If the providers are sure they have a pat hand they should show their cards, those being their costs and margins. No? Something to hide perhaps?
    Well it is all up to the social engineering folks to show us detractors the error of our thoughts.
    When there are billions involved count on lobbyists (polite word for bribe experts) to remind a great many government and appointee types where their future fortunes lie.
    They do not want us to find out how the rest of the world does it better and cheaper for their people and businesses before they have stolen a few more billion, and i would bet those billions will not help those of us outside of cities who struggle and beg just to get off dial up and onto a measly 3mg DSL at a high price.

  17. Richard Pitt says:

    Level playing field is a must
    cable video and now telco-supplied TV are all digital services now. Either these services must be charged at competitive rates per Gigabyte, or the owners of the infrastructure and purveyors of the content must be broken up.

    A low-res video (the live eagle cameras as example) uses about 100Gigs of bandwidth per month – 350Kbps for 24×7.

    A 1080P video needs something in excess of 6 times this, so burns from 600-1500Gigs/month (1.5Mbps to 4+Mbps) so that TV program you’re getting should be costing up to $1000/month or more the way they’re trying to price the internet data plans; even more if you have the ability to watch more than one program at once.

    Level the playing field and the problem (for the internet) goes away

    richard

  18. Ubb punishes people who don’t like paying Bell for sat services, or Rogers/Shaw for their overpriced cable either
    This is just an attempt to prevent people from seeking alternatives to their duopoly on television/movies in the home. This is why they work so hard on keeping Direct TV and others from the south our of this country, in the name of ‘content’, which is code for protection, and is a contravention of the free trade bill.

    It is far cheaper to pay one fee a month to Netflix than it is to do it piecemeal for movies to Bell or Shaw, not to mention that we are forced to pay for advertising on those other channels we get forced to support whether we watch them or not (yes I am also including all those French stations), something we used to get for free with antennas. Thankfully, they haven’t shut down radio. Yet. I am sure advertising supports those broadcasts, so wonder why anyone continues to pay for them at all. All it would take to change things would be for everyone to call their provider and tell them you are canceling, tell them why (too expensive), and then refuse any inducements they offer to stay on as a consumer. One month of no customers for TV (I think we all could do with some time away from the idiot box) would really slam home the power that consumers do have if they choose to act on it in concert. If you really are tired of paying too much and getting little in return, this is what you must do. They only ever listen to financial matters, the bottom line speaks loudest, and nothing about fairness or equity matters when dealing with a corporate entity, because you aren’t dealing with a person at all.

    Myself, I pay a slightly higher fee to my ISP provider (Teksavvy) for unlimited usage and no caps from them (though Bell still plays their game at my expense, even though I am no longer a customer of theirs). If Teksavvy and others could connect directly, Bell would lose their grip on the marketplace and it would become free, not a shackled serf. Their threat to take their ball and go home is an empty threat, and nothing more than marketplace blackmail. I’d say to the CRTC and government, call that threat. I’m tired of them telling me what I can watch, when, and making me subsidize bad programming just because it’s Canadian. Does anyone even know what that means?