Bit Traffic: Who Pays for Internet Traffic and Why?

http://thepbxblog.com/2012/12/03/bit-traffic-who-pays-for-internet-traffic-and-why/

by josh2600 • 14 years ago

30 37 14 years ago

nathan_long4• 14 years ago

TL;DR - internet traffic is paid for by users, but high-bandwidth use like video costs the ISPs more, and they'd like to double-dip by also charging sites like Netflix.

josh260013• 14 years ago

Yes.

It's important to note just how much video content has grown compared to revenues though. If you click through to the link on the Deck, you'll see a bunch of stats about video utilization compared to revenue. The numbers are pretty mindblowing.

Costs for consumers haven't really gone up, but utilization has increased considerably. Any idea about what the answer should look like? (Note: you can't say Google Fiber).

nathan_long4• 14 years ago

>> Costs for consumers haven't really gone up

Costs for consumers are whatever the ISPs decide they are. The answer should look like "if you cost us more, we charge you more," just like every other business on the planet.

It doesn't have to be X bits = Y dollars. It could factor in load; the meter runs faster at high-demand times and slower at off-peak times. That solves the "bandwidth is a renewable resource" argument and the "some people use more than their share" argument. They'd just have to ensure that the meter is highly visible to consumers.

yxhuvud• 14 years ago

If revenues are not rising, then they need to raise prices and/or alter their business models to fit usage.

I kinda expect unlimited data plans to be a very short lived phenomena with the possible exception that it may end up free where the traffic can be offloaded to a wifi.

SilasX3• 14 years ago

Others have mentioned that the answer should look like "charging more to those who use more".

But I see it differently the relevant scarcity is over bandwidth: total data transfer at any moment in time. That is, downloading when everyone else is "hurts" the network a lot more than when you download when it's below capacity.

So why not just throttle heavy users when at full capacity, and only then?

I know a lot of people here don't like anything involving throttling, but it only seems fair that (if you don't want metered usage), then people who put less load on the network should get priority when there's only a scarce amount to go around. (It should be weighted, of course, by how much of your usage was on or close to peak hours so that you're punished less if you schedule your torrenting for off-peak.)

What am I missing?

npsimons2• 14 years ago

Do the "costs for consumers" take into account the $300 billion in public money that was supposed to be put towards improving broadband in US?

http://www.newnetworks.com/broadbandscandals.htm

nathan_long4• 14 years ago

Now my own opinion: double-dipping like this is a stupid, stupid concept.

If an ISP were to charge Netflix for consuming its bandwidth, it would be like a taxi service slapping fees on an airport for generating so many rides.

"DARN those selfish airports, they're driving my taxi business under with their huge demand for rides!"

If ISPs can't figure out how to make more money from providing more service, they should hand in their business licenses.

josh260013• 14 years ago

Yes it is dumb, but another way to look at your analogy would be if there were only one road to the airport and that road was controlled by AT&T or Comcast.

Imagine that for a second and consider what impact that might have on your ability to hail a taxi :D.

All kidding aside, you make a fair point, but I don't think the playing field is quite as level as you're making it out to be. You can't just start an ISP that can peer at the same level of AT&T, you know?

bigdubs• 14 years ago

The taxi/airport analogy is almost there but needs one extra tweak for correctness. In that analogy the ISPs would be the state / local government that built the roads. They would be trying to extract additional money out of the increased traffic, because one the roads are built it's harder to set up toll booths because of stringent regulation.

The issue is, and this going to be a huge tug of war for a long time to come, is the role of ISPs; either as 'content providers' or as merely a utility provider. One provides huge profits, one is a low margin business.

In the real world, tolls on highways are run typically by the local governments, or in the case of around where I live (nyc) 'public benefit corporations'.

Publicly traded corporations, obviously, don't want to be turned into government run utilities, even though this would probably be in everyone's best interest eventually.

JoshTriplett• 14 years ago

Which would actually double-charge sites like Netflix, since those sites already have to pay for bandwidth/peering on their end.

astrodust2• 14 years ago

This article is misleading. The "originator" refers to the sender of any traffic in any direction. Google and Netflix already pay an enormous amount of money to push their traffic to users. They don't freeload on the backs of local providers as those lobbying would have you believe.

They're just upset that as local providers they don't get money directly from Google. Instead they get a lot of money from their user base because their user base wants to get to Google.

bryanlarsen• 14 years ago

To be accurate, Google doesn't pay directly for most of their own bandwidth. They have lots of their own fiber and peering agreements with most providers. Because of that, providers don't have to pay a backbone to send bits to Google, and Google doens't have to pay a backbone to send bits to the providers.

Of course, Google pays indirectly -- they have to buy, build & maintain those backbones.

mikemoka• 14 years ago

the only way for isps to grow is not to block the progress but to embrace it, they should try to find a way to improve the technology behind their networks imho, could 4g networks bring something to consider here?

josh260013• 14 years ago

The problem here is Shannon's law. Ever go to a big event like SXSW and try to make a call? That's what massive deployments of 4G utilization look like; similar to downtown SF post-iPhone.

Wireless has a long way to go but fixed-wave might help here. There are also solutions from Ruckus and Meraki/Cisco which could help, but it's a big problem with no clear solution.

tolos• 14 years ago

So I've never really understood why landlines should charge per data transferred. I mean, after all the communication lines have been run and hardware has been setup, the only additional fees are for power, right?

montecarl• 14 years ago

Lets say I'm an ISP and I have a gigabit connection to an internet backbone. I pay $X/month for it regardless of how much data is transferred. If I run fiber out to each of my customers that can run at gigabit speeds, how should I regulate/charge each user?

1. I could artificially rate limit them to less than the physical link speed. So I could let each user connect at 10 mbit/s. That would let me have many customers using there max speed at once and if I have 100 or less customers then they are guaranteed to get their full 10mbit/s. If I have more then they only get 10mbit/s at off peak times.

2. I could let everyone connect at the full gigabit speeds and put a quota on how much data they can send in order to prevent hogging.

Would you rather than 10mbit/s with unlimited data or 10mbit/s * 1 month of data transfer at a max rate of 1 gbit/s?

I imagine that you might want the first or second option depending on your use case.

[edit: forgot third option]

3. I could do fancy traffic shaping and make sure everyone gets at least 1/(number of active users) bandwidth and can burst up to full gigabit speeds when the connection is idle.

This seems like the best way to share the resource fairly.

josh260013• 14 years ago

See this is only with an even playing field. You're thinking about how you'd design a network in a world that didn't have all the embedded rules and dogma that we have in the US.

The biggest question is not network management policies, but last mile access. There are tons of ISPs with great bandwidth practices. Guess what? None of them have enough footprint to compete with the big guys.

The problem is not network management, it is edge distribution.

apenwarr• 14 years ago

That powerpoint deck is awful. So video is an increasing percentage of internet bandwidth - so what? Price/performance of bandwidth is improving exponentially. It's unsurprising that non-video bandwidth isn't increasing as fast as video, since video is automatically big (and easy to make bigger: just move up to higher resolution) whereas "normal" traffic only gets bigger when users create more stuff. This increasing percentage doesn't say anything about increasing backbone costs, even though the graphs are meant to imply that it does.

josh260013• 14 years ago

That deck was done by a research group and yes I think it is intended to imply that the network costs increase as volume over the network increases.

While this is implicitly true, I agree that there isn't an explicit relationship, BUT it was interesting how dramatic the growth of video has been and how much of the network is video.

You do agree that carriers are moving more data than they ever have before, a fact which repeats itself daily. I'm not necessarily arguing that ISPs should be able to charge more for video, only that there is more usage on there network which may or may not impact their backbone costs.

You are correct that the implied linkage is misleading, but I wouldn't call the deck "awful". It's just a viewpoint, and it does provide some useful context/information.

Bit Traffic: Who Pays for Internet Traffic and Why?

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