> Gillis Cashman, a managing partner at MC Partners in Boston, says it makes sense to charge extra to big content providers like Netflix, whose services at peak hours can sometimes consume more than 30 percent of total Internet traffic. Video is “significantly congesting these networks, and causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks,” he says. “There is currently no model for monetizing that required investment.”
This argument doesn't make sense to me. The ISP's customers are using the ISP's network by downloading Internet content. The nature of the content should be irrelevant to the discussion. The ISP's customers are purely responsible for that usage, and it is part of - from what I understand - the service they are already paying for. The ISP's network is only "congested" if it is incapable of delivering on the service that was advertised (assuming for the sake of argument, some particular speed of access).
Thus, how can Cashman argue that "there is no model for monetizing the required investment?" Isn't that exactly what ISP customers are buying when they pay for access to the Internet through the ISP? The onus should morally be on the ISP to make a good-faith attempt to build sufficient connections to any content that's popular enough to saturate the links providing it.
Furthermore, why isn't it naturally the ISP's responsibility to price their access sufficient to cover current usage and expected growth in usage? New use-cases for the Internet are constantly going to appear. It is the ISP's responsibility to provide Internet access with sufficient throughput that it is not congested for any reasons under the ISP's control; and to price their access sufficient for investment to achieve the throughput.
"The latest BigMac hamburger caused hungry residents to swarm McDonalds and caused drive-through lines to be congested today in Cloudville. Gillis Cashman, managing partner at McPartners, Inc. says that, despite selling happy meals in record numbers, delays in drive-through lines will continue, since since there is "currently no model for McDonalds to monetize the required investment" to upgrade its drive-throughs.
"Electricity supply companies have found that almost 30% of the total electricity capacity in their networks is being consumed by customer's light bulbs. In order to support future demand, the electricity supply companies will begin charging light bulb manufacturers for light bulb users electricity usage."
Who knows how well it would go over? I would be pleased to pay a metered rate, provided that the metering was standardized and easy to understand - like the electrical meter outside my home - and the pricing was fair. I would also expect there to be no speed tiers; everyone using a service gets the same nominal speed. I would not be interested in purchasing e.g. bandwidth blocks with f-you overage fees like what we used to have (still have? I don't do mobile data) with mobile carriers. That, I agree, would not go over well.
I think that the real problem is not perceived acceptance by customers, but that moving to metered billing makes the service look more like a utility. If I were running an ISP I would want to do everything I could to keep people from equating my service with water or electricity.
There's an efficiency argument against metering. Bandwidth is "free" unless service is near capacity, so introducing pricing that discourages use during that off-peak period can create needless problems. So maybe you only want peak-period pricing (kind of like how some cell providers give free minutes on nights and weekends).
This is already done at commercial providers. Those of us who operate networks are pretty well used to paying monthly rates based on 95th-percentile bandwidth utilization.
Internet service is metered. It's just metered in very large chunks instead of by the penny. Try going over your monthly bandwidth cap and see what happens.
The ISPs have total control over their subscribers' connection fees. If they set them too low to make a profit,* then they need to raise those fees and live with the consequences, not go trying to extort profits from new sources.
*I don't believe for an instant that the major ISPs are actually hurting, mind you. They just see an opportunity to make even more of a profit.
Ha! Sorry can't read statements like that without laughing/cringing. We all lost our "unlimited pipe" years ago .. in fact I'd argue we never had it in the first place only that the technology prevented us from hitting our limits in the early days.
That's one form of metered pricing, but I'd argue that granularity of a month is much too coarse to make much sense form a network utilization perspective. As I've said in other comments, pricing based on 95th percentile circuit utilization (which is common among commercial ISPs) is a much more practical way to balance efficient utilization with incremental cost.
For phones the demand is very different: a subscribers connection is either in use or not. When it is in use, it typically consumes no more than 64kbps at most. And it is easy to model expected peak demands in normal (non-disaster) scenarios because everyone that people might be calling tends to have a fairly low number of inbound connections, so the total peak bandwidth usage is still quite small - miniscule by todays standards.
When you're paid per subscription, and you at most carry 64kbps through a small local area before long distance fees kick in, it works.
Even so, in Europe (and I believe most of the world) landline usage is metered. It is the US model of free local calls that is unusual.
It's a bad analogy. If you buy a cell phone so you can talk to your grandma (who lives 1600 miles away) on the weekend, the phone company shouldn't be obligated to buy her a phone too. Not even if she only uses it for incoming calls.
If you're offering a service where you let other people interconnect their computer networks to each other, by definition you're only offering the service of connecting them to other people who (choose to) connect to the network.
If the two are to be connected, someone must pay. Consumers are screaming "they're violating network neutrality!" any time someone suggests they (the consumers) pay, so who is left?
Grandma just wasn't (until very recently) paying anything at all.
This is why we shouldn't conflate peering disputes with network neutrality issues. We're reading and hearing quite a bit that is abysmally stupid.
Comcast has no obligation to spend it's own money letting Netflix connect for free. The peering arrangement they had with Level3 was more than adequate to handle everything but the Netflix traffic, and now Netflix/Level3 is expecting Comcast to pay for the upgrades? Why? How is that fair?
I get sick of defending Comcast here. They are an abominable company that I hope goes bankrupt and out of business. But I keep reading really stupid things from people who aren't thinking through the implications of what they're saying.
The US operates a bill-and-keep [1] model for phone calls, which is why people pay to receive calls on their mobile phones, and why spam texts are more prevalent.
If a call is made from Verizon to AT&T, no money changes hands between them.
ISPs have typically operated a B&K model where the traffic is largely symmetrical between carriers. The argument arrives when the flows aren't symmetrical (such as streaming video).
As for Comcast paying to upgrade their network, there is precedent in the Cable TV model where they both pay for the content and pay to upgrade their network to receive, carry and bill it.
Networks derive value from the connections. If there was proper local competition then this would fix itself over the course of a contract cycle since a competitor would enter offering a network with a better value.
This is American capitalism, morality doesn't enter the picture.
More seriously, the McDonald's argument doesn't work because McD's business model is profit on turnover. If they sell more, they make more. Comcast's model is renting out wires. The money they make is the price set by the "market" in internet connections. Actually providing a service is a cost, and therefore they want to reduce it as much as possible without driving away customers.
Building more won't enable them to charge their customers more, so they're sending a rent bill to Netflix to see if they pay it.
"Actually providing a service is a cost, and therefore they want to reduce it as much as possible without driving away customers."
Brilliantly summarized. I recently had intermittent issues with my crappy Comcast (only viable option, where I live now) Internet connection. The technician who came over, after viewing my ping logs and things, immediately decided I was onto something, and was awesome. Like really awesome. He was representing the very best a very bad company. Felt bad for him. I directly told him "If you can, get another job, somewhere else [equivalent pay, benefits of course]."
I've had similar experiences with my [monopolistic, US] cable provider. Everyone who has come out to do any service has been surprisingly competent and very willing to do more than what needs to be done. I had a guy come out this past Sunday who didn't like the angle the cable was coming out the wall panel (sharp turn against furniture), so he moved the coax connection inside the wall. The only way I can figure it is they are heavily incentivized to solve it right the first time, so they like to cover all the bases.
"Building more won't enable them to charge their customers more"
Why not? If I'm noticing slowdowns due to saturation, and my ISP said "we're expanding in your area and upgrading equipment, capacity, etc, but it's going to add another $9/month on your bill" of course I'd pay it. A) I'd have no choice and B) I want better service.
And if you noticed slowdowns due to traffic shaping and your ISP with their government-enforced monopoly said, "We're racketeering. It's going to add another $9/month on your bill." of course you'd pay it. You'd have no choice.
Building more capacity and offering better service doesn't really enter into the picture in most American cities.
Point to even a single example or you earned every downvote you get.
I know a lot of people hate the "government," but it's no more rational than hating "corporations." Which government? Why? My impression of US government ISPs from college campuses is that most leave a wide open pipe for pretty much free use with few exceptions. Many forget that the Internet was entirely given away to private interests by the government. Most public ISPs are understaffed and may at worst limit something by accident while targeting illegal activity.
I suspect few people will - and there's a limit to this, if they add $9 every few months for a different service, eventually you will refuse to pay $$$/month for the service.
Imagine if every speed upgrade from 56k modems had also come with a price increase.
No, it's not, but if they can increment prices once, why not again? If they can announce extra billing for "infrastructure upgrades" every few years, why not more frequently?
Boil the frog as fast as possible. After all, where would it go?
And there's clearly some models since I can get 1gb internet in Seoul for like $40/mo and Google apparently has some kind of model a well. This just reeks of an attempt to try and build up support for greed and laziness.
Can we get rid of the FCC now it's pointless having it if they don't understand what is and is not the responsibility of the ISP regardless of content.
The entire FCC is entirely corrupt and in pockets of the cable companies.
It is not doing its job worse yet it is harming the system it was designed to protect.
"causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks"
I've been reading over and over again how the ISPs should already have this upgrade money allocated and available to spend on network infrastructure upgrades.
He can argue it because he has a lot of money (indirectly) invested in the outcome going his way. There will be winners and losers if net neutrality is abandoned and it looks like Cashman would be a winner. Most of the rest of us would be losers.
I hate when reporters find the most biased people in the debate and quote them as if they were an objective opinion. This reporter, to his credit, immediately follows the Cashman quote by saying "Some less financially invested observers have little sympathy for this argument" and then quotes Rob Faris, who may have strong opinions but at least isn't talking his book.
This argument doesn't make sense to me. The ISP's customers are using the ISP's network by downloading Internet content. The nature of the content should be irrelevant to the discussion. The ISP's customers are purely responsible for that usage, and it is part of - from what I understand - the service they are already paying for. The ISP's network is only "congested" if it is incapable of delivering on the service that was advertised (assuming for the sake of argument, some particular speed of access).
Thus, how can Cashman argue that "there is no model for monetizing the required investment?" Isn't that exactly what ISP customers are buying when they pay for access to the Internet through the ISP? The onus should morally be on the ISP to make a good-faith attempt to build sufficient connections to any content that's popular enough to saturate the links providing it.
Furthermore, why isn't it naturally the ISP's responsibility to price their access sufficient to cover current usage and expected growth in usage? New use-cases for the Internet are constantly going to appear. It is the ISP's responsibility to provide Internet access with sufficient throughput that it is not congested for any reasons under the ISP's control; and to price their access sufficient for investment to achieve the throughput.
"The latest BigMac hamburger caused hungry residents to swarm McDonalds and caused drive-through lines to be congested today in Cloudville. Gillis Cashman, managing partner at McPartners, Inc. says that, despite selling happy meals in record numbers, delays in drive-through lines will continue, since since there is "currently no model for McDonalds to monetize the required investment" to upgrade its drive-throughs.