Why are luncheon buffets so popular? Eat as much as you want for a set price. It is the same psychology with many other products and services.
The problem with the "market solution" is that there is not enough broadband choices in most areas to really make a market. Monopoly or duopoly is too often the case. If that changes, then "innovative" pricings schemes might be a good idea. Although honestly, to simply charge according to the meter doesn't seem like much of an innovation. It is a choice that providers have abandoned, by and large, since the early days of AOL and Compuserve, where you were charged by the hour.
I'm probably a moderate user -- not a hog, but more than average. It remains to be seen which side of the line I'd fall on if the ISP's made a distinction.
Tim Lee
· 2 years ago
Adam, I that ISPs have unlimited bandwidth plans for the same reason cable companies sell extended basic cable bundles and cell phone companies give free nights and weekends: most of the time, there's plenty of extra bandwidth, and so it doesn't really cost anything to make extra bandwidth available.
The ISP has to have enough bandwidth so that performance will be reasonable during peak times (which I think are generally in the evenings for residential ISPs, although that's just a guess). That means that for the rest of the day—probably 20-22 hours—bandwidth is effectively a non-scarce resource.
In a world with no transaction costs, ISPs follow the lead of cell phone companies and meter during peak hours and have unlimited bandwidth the rest of the time. However, this would greatly increase the complexity of the billing process, and would annoy and confuse consumers.
I think this point is buttressed by the statistics you cite, that a tiny fraction of Internet users abuse the network. It doesn't make sense to impose the mental and administrative overhead of metered billing on 99 casual Internet users just to nail the one guy who leaves BitTorrent on 24/7. This is especially true since metering wouldn't actually generate much additional revenues from these users. My guess is that the vast majority of the people using excessive quantities of bandwidth would not be willing or able to pay for that bandwidth, and would drastically curtail their usage if they were being charged by the bit.
Clayton Nash
· 2 years ago
The minority of users are not abusing the network. They've bought an unlimited service and are using it as such. The ISPs made an assumption about how much they could oversell their network and got it wrong. At the same time there was a rush for market share and prices fell. Now that the situation they created isn't working for them the ISPs are complaining and maligning their customers. I get confused by the nonclamenture used in these discussions. These are not community networks run by friends for the benefit of all. They are commercial networks for which we pay. Saying "some users use 90% of the bandwidth" is really the ISP saying "We've underprovisioned network bandwidth". If prices need to rise to cover the services we buy then so be it and that probably means some ISPs need to go out of business. This same argument played out during the days of dial up. Phone companies companies complained that everyones phone calls were too long for the network to support - they'd oversold it and now it was a commercial problem for them.
Tim Lee
· 2 years ago
Clayton,
I'll retract my use of the term "abuse." Perhaps "use more heavily than expected" would be a more accurate way to describe it. In either case, I don't think it changes the substance of the issue.
David McElroy
· 2 years ago
This seems like an extremely easy problem to fix. Simply sell accounts with a certain amount of transfer (whatever the very high number is that the ISPs currently allow) and have those wishing to get more capacity to buy business accounts or something similar. It seems that much of the problem stems from the fact that the broadband providers won't just come out and tell what the limits are. Pretending that this is "abuse" is absurd, because customers are merely using the allegedly unlimited service they think they're buying. Of course, the mental midgets at the providers are likely to use something like this as an excuse to introduce another layer of tiered pricing to confuse everyone, but if they could simply name a limit for a consumer account, that should solve the issue for both them and the customers.
Amanda
· 2 years ago
I don't understand why ISPs don't do what many web hosts do, and charge a flat rate for some high amount of bandwidth, then meter over that. It seems like they could set the limit high enough that 90% of users wouldn't be affected, just as most websites don't go over bandwidth allotments.
Adam Thierer
· 2 years ago
Amanda... That's exactly what I was trying to get at in my essay, but you said much more concisely than I did!
I just think the idea of threatening high-bandwidth users with service termination seems silly when alternative pricing solutions are available.
Richard Bennett
· 2 years ago
There's a better solution, Adam, one that's easy to implement with the technology we have today and doesn't involve a lot of confusing language in user agreements.
I don't want to go into to it here because I'm going to patent it, but take comfort in knowing that there's a cool technical solution to the bandwidth hog problem just around the corner.
Amanda
· 2 years ago
Adam - my mistake. I didn't read very closely and thought you were talking about strict metering. So I guess we agree!
All Comments
The problem with the "market solution" is that there is not enough broadband choices in most areas to really make a market. Monopoly or duopoly is too often the case. If that changes, then "innovative" pricings schemes might be a good idea. Although honestly, to simply charge according to the meter doesn't seem like much of an innovation. It is a choice that providers have abandoned, by and large, since the early days of AOL and Compuserve, where you were charged by the hour.
I'm probably a moderate user -- not a hog, but more than average. It remains to be seen which side of the line I'd fall on if the ISP's made a distinction.
The ISP has to have enough bandwidth so that performance will be reasonable during peak times (which I think are generally in the evenings for residential ISPs, although that's just a guess). That means that for the rest of the day—probably 20-22 hours—bandwidth is effectively a non-scarce resource.
In a world with no transaction costs, ISPs follow the lead of cell phone companies and meter during peak hours and have unlimited bandwidth the rest of the time. However, this would greatly increase the complexity of the billing process, and would annoy and confuse consumers.
I think this point is buttressed by the statistics you cite, that a tiny fraction of Internet users abuse the network. It doesn't make sense to impose the mental and administrative overhead of metered billing on 99 casual Internet users just to nail the one guy who leaves BitTorrent on 24/7. This is especially true since metering wouldn't actually generate much additional revenues from these users. My guess is that the vast majority of the people using excessive quantities of bandwidth would not be willing or able to pay for that bandwidth, and would drastically curtail their usage if they were being charged by the bit.
I get confused by the nonclamenture used in these discussions. These are not community networks run by friends for the benefit of all. They are commercial networks for which we pay. Saying "some users use 90% of the bandwidth" is really the ISP saying "We've underprovisioned network bandwidth". If prices need to rise to cover the services we buy then so be it and that probably means some ISPs need to go out of business.
This same argument played out during the days of dial up. Phone companies companies complained that everyones phone calls were too long for the network to support - they'd oversold it and now it was a commercial problem for them.
I'll retract my use of the term "abuse." Perhaps "use more heavily than expected" would be a more accurate way to describe it. In either case, I don't think it changes the substance of the issue.
I just think the idea of threatening high-bandwidth users with service termination seems silly when alternative pricing solutions are available.
I don't want to go into to it here because I'm going to patent it, but take comfort in knowing that there's a cool technical solution to the bandwidth hog problem just around the corner.