I was reading an EFF article advocating free open wifi for all and it got me thinking. When did people get the idea that internet should be free? Certainly it wasn’t from working at an ISP, getting peering, negotiating bandwidth pricing, buying gear, leasing fiber… Having done all of the above, let me rant! (Ok so I’m ranting about broadband quotas and torrent throttling like always)
Let’s say I buy a full non-burstable gigabit link from one of the cheaper telcos like Cogent or Level 3. Depending on your market, you will end up paying $4-8/megabit for it. Thats not including termination, port fees, the hardware required to route it, cost of transport (i.e. your fiber conduit rental) , etc and those things can certainly add up to 5-20% of the total cost, but for the sake of simplification we’ll ignore them. 1 gigabit, when run to the horrible limit (resulting in very unhappy customers) is 328, 718 gigabytes/month of actual data moved, and frankly is a lot of traffic in any sense. (Lets leave peering out of this discussion, the larger an ISP the more of their footprint they can get through peering, but it really doesn’t help the independents and even mid-sized guys without international fiber to meet in lots of POPs and IXs)
Now presume I don’t want to oversell it what so ever. I want to sell enterprise grade DSL to businesses who demand a reasonable 10mbps guaranteed. This is a very common scenario. If I split my gigabit link up to 10megabit customers, the most I can fit on it and guarantee their performance is 100 customers. If we take our cost to buy just the transit, ignoring any of the related costs, we’re going to run $40-80/customer. Tack on termination of the DSL/cable (hardware, very expensive), lines to the customer (very very expensive) and of course support, you are looking at easily 2x that cost. While a business will have no trouble stomaching this cost+ profit for us, a consumer obviously will not.
This is where over-selling comes in. If I assume that my 10 megabit users will use roughly 50 gigabytes per month of data, that means I can fit in 6400 subscribers onto that link. (Nobody would run their links at 100%, this would add at least 20-30% to the total cost of bandwidth to buy overhead, but we’ll ignore it for simplification sake) 6400 subscribers, each now are only using a dollar or so of our transit, and with support, hardware and line costs fixed, we can sell the service for $40, cover our costs and make profit. Yes profit. People seem to forget, a company needs to make profit or its share holders will terminate them. Profit is not evil or crooked.
This all worked great in the early 2000s. Bandwidth was cheap, space and power to build telecom sites was cheap, and fiber transport was nearly free. Bandwidth is still cheap, but everything else has gone up an arm and a leg. None of that really matters though, because the real problem is that we don’t use the internet like we did 10 years ago. Who can stand to watch Youtube or Netflix at less than 720p? How many households have a kid (adult) running BitTorrent all the time? And really, who wants a sub-25 megabit link nowadays?
Providers cannot oversell at the levels they did even 5 years ago. While we may say boo hoo why do I care what XYZ evil company makes (not fair, remember these are people working like anyone else), remember we also want startup and new ISPs to compete. They have it even rougher as their cost/subscriber is higher.
Basically it comes down to this. The cost to provide internet, in North America, has not gotten massively cheaper, but per capita we are using much much more. In order for providers to maintain their levels of overselling they are imposing quotas and throttling p2p. People hate quotas and DPI, but trust me, people hate rate increases more. Yes it would be totally cool if we all had gigabit fiber to the doorstep, but sadly this is a huge undertaking, and companies like Rogers or Bell is going to invest in it, wide spread, only to have the government force them to let other providers use the links/equipment at cost. It’s not in the private sector’s best interest to do this. (typo fixed ;) thanks everyone!)
So yea, we have out dated infrastructure since we put it in much earlier than say Asia and Europe. I think, the real solution is for the government to step in and use tax dollars to improve it (OMG, I can’t believe I said that) if we really want deregulated residential internet. Run fiber to the homes, maintain it, charge providers at-cost to use it, and yea we’ll have great competitive internet again.
Yes I advocated for publicly funded internets, I must need coffee.