Frank F.
►CEO/Bd Director ►IT Governance Advisor ►Future-Proof Strategy ►Keynotes ►Inno-Change ►Social Media Mktg ►China Advisor
Should Limits be Placed on Internet Traffic?
Is this trend good or bad, for whom? How will it pan out? Implications for business; which sectors?
(AP story, Nov 4/08)
AT&T is testing limits on the amount of data that subscribers can use each month. It will initially apply the limits in Reno, and see about extending the practice.
ISPs are tending to place limits on uploads/downloads to curb ''bandwidth hogs'' who use most network capacity -- 5% of AT&T subscribers use 50% of the capacity.
ISPs differ on their limits, and whether to charge users for going beyond the caps. AT&T will limit downloads to 20 gigabytes/month for users of the slowest DSL service, at 768 kb/sec. The limit increases with the speed of the plan, up to 150 gigabytes/month at 10 meg/sec.
To exceed the limits, subscribers would need to download constantly at maximum speeds for more than 42 hours, depending on the tier. Normal use of e-mail and the Web wouldn't take a subscriber anywhere near the limit, but streaming video could. NetFlix subscribers who download at 3 meg/sec have a monthly cap of 60 gig., which allows for download of 30 DVD-quality movies.
The limits will initially apply to new customers in Reno. Current users will be enrolled if they exceed 150 gig/month, regardless of their speed. ''This is a preliminary step to find the right model to address this trend,'' AT&T said, and the company may add another test market soon.
Customers can track their usage on an AT&T website. AT&T will contact people who reach 80% of their limit. After a grace period, those exceeding their quota will pay $1 per gigabyte.
Comcast also has a traffic limit of 250 gig/subscriber. It doesn't charge extra for going over the limit, but cancels service after repeat warnings.
Time Warner Cable and FairPoint plan to test traffic limits as low as 5 gig/month, which is easily exceeded by watchers of DVD-quality online video. Verizon has said it does not plan to limit downloads.
Your views?
Good Answers (6)
Keri L.
Director at Lean Growth Consulting
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Frank
Good/Bad? I don't know but is it inevitable the service provider will try.. yes.
Imagine if electricity was not metered or charged per unit. We'd run out of generating/distribution capacity pretty quickly. Or Gasoline/Petrol free at the pump..
Bandwidth costs money to implement, and I can see why a network owner would want to move to a metered model. It seems to follow the moves for cable/TV. The cable companies initially wanted to bundle together huge numbers of channels and differentiate that way. Then they charged premium packages for groups of channels. Finally we see the VoD or pay-per-view model - where you pay for what you want to watch.
I guess it is a logical conclusion to one implementation of the service provider model. It is also a conclusion that different service providers will compete by offering different service packages. I could foresee a future where the internet access plan will be like the mobile telephone plan - you select and pay based on your lifestyle.
Just as there are different "Class of Service" options in terns of prioritising internet traffic, there will be "first class" and "coach class" internet users in terms of time online or amount of data passed. I guess it's a matter of HOW it is implemented rather than whether it is implemented.
As long as there are low-cost ways to access at the bottom of the scale - so low-end users with lower incomes are not excluded from participating in the process - surely it's right that the heavy users pay more. I guess that's an ideological position so there will probably be people that disagree.
Just in case, for those that are interested, I point out that this is a personal response not linked to my role working for a manufacturer of Network Equipment.
An interesting question that should spark lively debate!
Clarification added November 5, 2008:
Lively debate indeed!
I think we are getting a few things mixed up here.
1) Advertised speed of your broadband link is not end-to-end speed of the network.
Pretty much all ISP/SP networks are engineered with the approach of a fast last mile (the connection to the house/office) then condensed into shared backbone. So just because you have 20Mb advertised doesn't mean the network will be 20Mb all the way to the server at the other end. This is particularly true of international links where the entire population of the ISP may be sharing a few 45MB circuits. This is called Overprovisioning, and is a feature of packet-based networks as opposed to circuit-based networks. Therefore, you can expect long distance connections to be slower! This is true for a range of other technical reasons like protocol structure, round-trip times etc. It is also the reason why the network almost never hits the published speed for sustained transfers of data.
2) Charging and Accounting is a fairly trivial change to existing ISP/SP setups.
The charging methodology existed for dial-up ISPs and exists for voice calls already, and is relatively easy to adapt to data. CDR to IPDR is not the biggest step. There will be many mis-steps on the road to the eventual solution, but one thing will be constant - the provider will need to make an adequate return for shareholders or there will be no further investment.
3) The market will decide what is the right model
If you don't like it vote by changing supplier. A high churn rate will make an ISP/SP re-think its pricing models. You are the arbiter of what is right for you.
Bandwidth Speed does not equal data throughput or link quality
I happen to pay for a high throughput, high CoS connection because it suits my use of the internet. I get good voice clarity in VoIP as a result that is important to my home-office. This is despite the bandwidth being the same speed as other cheaper packages. Educated choice is the important thing here.
Ray C.
Brain Cancer at Glioblastoma Multiforme
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No, I don't think they should limit the traffic by any other means other than capping your speed. Make users pay for higher tier speeds that allow them to use more bandwidth per month and leave them the heck alone. My guess is that the vendors that are just canceling people because they 'use a lot' are doing so because they are in markets where they are the only real good choice.
High speed is high speed. If they cant support all of their customers using full bandwidth then what are they doing in the business. To me this is no worse then airlines bumping people because THEY oversold a flight. I pay for high speed 'always on' access so I can use it 'any time I want to'. I pay for a service that affords me a specific speed level (that I can never seem to hit by the way) so to me I should be able to use THAT MUCH for as long as I want. My limit is the simple multiplier of how fast of a connection I have vs. how long I can be on line.
I never remember ISPs complaining about usage when we were all on 56k dial-up lines. Why is this any different? I will tell you why.. because the people controlling the back ends did not plan for the explosive growth of the medium. You can't make the users suffer for poor business resource planning.
If the ISPs start limiting usage that will slow down the growth of rich Internet services and throw the entire thing into a tailspin. Users will not buy services that they will not be able to use because of bandwidth restrictions or have to pay extra for to get it. Limiting bandwidth usage would do to the online economy what gas rationing did for the retail economy in the 70's. People can't spend money if they can't get to the service.
Clarification added November 6, 2008:
This is really (and was the point I was trying to make) a moot point because as consumers we are ALREADY limited, the ISPs just refuse to admit that. WE are limited by the speed we pay for and the numbers of hours in the day. What ISPs need to do is build networks that can support the bandwidth that they already charge us for. The minute that they can serve us data faster than we can suck it up and consume it within the 24 hours a day that we have is the minute I will agree that they may need to be limiting the connections, not a second sooner.
Greg A. W.
Systems Programmer, Senior Partner and Factotum Extraordinaire, Planix, Inc.
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ISPs and network operators should learn to engineer their networks to meet the needs of their users, not artificially attempt to curb the usage of their users.
Obviously those users who push the limits of the engineered capacity of the links they pay for might be forced to sign up for slightly more expensive services.
However if you look at the pricing structure of most ISPs who put various bandwidth and throughput caps on their users you'll see that the overage charges usually look more more like serious fines and penalties than they do incremental increases. If these overage charges were interest rates, they would literally be criminal. ISPs typically seem to rape an pillage those of their users who exceed throughput or bandwidth limits, and usually without warning.
Properly scaled usage fees, based on some N'th percentile of usage, would seem to make sense if indeed maximum throughput is not to be tolerated, but I don't think I've seen any low end to medium capacity plans offering such structures in recent years.
Of course it's the users who are the sheep here -- we should demand better contracts and fee structures.
David S.
Software Architect
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The secrets the telco's don't want you to know. (Putting on electrical engineer hat)
1) Bandwidth is not a fixed resource limited like coal , gas or oil. Bandwidth can be created out of thin air by simply adding additional lambda's onto existing DWDM back end switches. These are the big switches that form the backbones of these companies operations. As utilization goes up the providers can add new deltas for next to nothing.
2) Existing fiber laid back during the beginning of the millenium to accommodate future bandwidth didn't take into account the efficiency of DWDM switches ramping up as much as they have in the last 8 years. Though expensive the switches can literally double total bandwidth across their entire backbone without having to upgrade a single existing fiber line. This will allow them to recoup the costs of laying that fiber rather quickly as they continue to provide bandwidth service options without having to impose artificial caps based on "over use".
3) The reason "over use" caps are popular is because penalizing users for going over is more lucrative than creating a new pricing tier and getting customers to upgrade to it If you purchase a guaranteed bandwidth tier that is what you will pay if you use it or not. If you go over they can hit you with a disproportionate charge ($1 per gigabyte) and keep that fixed despite the fact as time goes by it is cheaper for them to provide MORE bandwidth.
So fight any charges that aren't part of an established plan of usage. If a customer is using 50 gig per month provide a tier that caps service at say 60 and charge them a bit more to use it, prevent them from using more than that and they won't be able to go over! If they hit the wall, offer them the higher tier service as part of reactivation. Don't try and nickle and dime the customer for going over if explicit bandwidth caps are not being enforced. As DWDM switches continue to add more labda's the cost for the tier should come down but since there is no incentive for the telecoms to reduce prices, they will probably just expand the caps transparently while keeping the current price structure going (up)
So much for customer focused!
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Peter R.
Telecom Consultant at RAD-INFO INC
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Bandwidth caps have more to do with preserving TV revenues than network management business. Yes, there are issues of last mile and node congestion for both telco and cableco networks. It is also a function of the band-aid approach that these companies take. instead of one huge upgrade (like say Verizon with FiOS), there have been baby step fixes. It's also about preserving revenue.
Personally, the FTC should be investigating false advertising by the carriers - both on cellular data and broadband. In many cases, it is sold as Unlimited, but isn't. That's false advertising.
This will present an interesting challenge as people will switch. The duopoly is doing everything it can to compete on price and not value. Neither company is trying to court customer loyalty.
The ripple effect on this may be to stymie Internet business growth. Software and Application companies (SAAS, ASP), Web 2.0, and entertainment companies will find it hard to maintain customers under a cap.
I wonder how AT&T's partner, Apple, who makes the Apple TV and owns iTunes, feels about a cap, which will eventually flatten revenues.
Not for nothing but these companies can't bill correctly anyway. There are certain to be many folks billed for overages where there are none. An even bigger erosion of customer satisfaction is coming.
If I'm at the end of the run for a plant that has a bottom feeder that is nailing up their line and everyone else on the plant suffers -- then shame on the marketing and shame on the bottom feeder.
Give me an affordable tier and real time burst windows. You'll have my business for years to come. I don't -need- always on and always nailed up 100%.
For all the people that complain about being forced to buy all the cable channels -- there is another group that will scream at the pay-per-use or by the drink model as well.
Providers must deliver value and artificial anti-competitive barriers must be removed. Let the competition flourish and the consumer wins.
If "white spaces" truly become what they can be, I expect that all this ratcheting and hand wringing will subside.
I use AT&T Xtreme DSL (6/1) and Earthlink on Time Warner Cable (6/1) and AT&T is completely anemic during certain hours and the Earthlink service has never missed a beat other than plant wide outages.
FTTH is something I've assisted and helped deployed and it represents the next logical path for traditional tethered access. I think this really gets interesting when a CO remote can be a multi-radio multi-path egress and access point for communities.
There is more to this debate than the wire or the wireless but the quality of the service that is rendered.
For all the speed in the world to the end of the road -- Internet peering has a long way to go if there are still dustups between the likes of Cogent and [insert other Carrier here].
More Answers (21)
Gary C.
President and Chief Executive Officer at Hy9 Corporation
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There should not be an artificial limit. Instead the providers should develop a better pricing model to address the issue, allowing for market forces and economics to address the situation
Annemarie D.
Management Consultant
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Dear Frank,
This pricing equation will be the next evolution for internet use (it's a strategy that has been in the making for a while). I don't think this will necessarily be bad for the average user. I think it is fair to pay for what is actually used - rather than a flat fee. I believe it will simply be the status quo within the next 2 years.
What are you views on the subject, oh LinkedIn Guru?
Yours, Annemarie
Josh C.
Director of Operations at Web Industries, and Decent Little League Coach
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Hi Frank,
It's tough for me to argue that the cost of usage shouldn't be linked to the amount used. Internet access does have a cost associated with it, and although the ISP industry may not be a "natural monopoly" like most utilities, that cost still has to recognized. Right now, the light users are subsidizing the heavy users, and history teaches us that subsidies are inefficient and inevitably get rectified.
The issue of how demand-based pricing should or could be accomplished is a different one...there are any number of schemes available, including those based on raw usage, type of site, time of day, etc.
Josh.
Susan S.
Oppenheimer & Co. Inc., financial marketing writer.
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If people want more bandwidth and are willing to pay for it, why should capability not be added?
What's next, getting high-users' handies slapped by IT guidance counselors who scold them for "abusing the privilege"?
Sorry to be cross, but this sort of backward business "model" annoys me.
The way they charge is what they want to change. I don't think is either good or bad, today is limited by bandwidth. The impact is to develop systems that measure and show to all the customers how many B/month each one is using; billing systems need to change also to charge by usage instead for a fixed price.
It requires a lot of cost (new device pruchasing, operation cost etc) to make a new pricing model work, does additional revenue worth the effort?
David K.
Principal at CSC
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All of this won't matter once Net Neutrality bill is passed. Artificial limits based on overall use or specific applications should never be imposed on consumers.
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Clarification added November 5, 2008:
Per Frank's request, here are additional information relating to Net Neutrality bill(s). For the Congress, this is being proposed as part of the Internet Freedom Preservation Act of 2008. H.R. 5353. For the Senate, the bill is an amendment to Communication Act of 1934, S.215. The text for both bills can be found in provided links below. As of today, neither the Congress nor Senate has voted on their respective bills.
It looks like the Hype Machine (High speed 'always on' access) and the Business Model (and old infrastructure) got out of synch. And the new FTTH access (20 Mbps) will only make the problem worse.
In my opinion, they need an infrastructure that supports two separate components: best effort (current cost) and committed effort (for new multimedia services). Trying to combine the two just shows that they have now become aware and trying to find a short term solution.
Brian M.
CEO at ComposeTheFuture
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At the residential / SME end then what you do or do not charge for is all part of the commercial competitive mix.
To limit capacity or not will determine whether or not high capacity users consider you - a self selecting process whereby those who provide higher capacity tend to get those users who want it and will use it. Those companies who don't deliberately limit capacity may charge for it, may provide higher capacities for competitive edge, or may simply not provide sufficient capacity and thereby throttle use anyway.
At the higher level, the interconnect model is 10 Gig-E and maybe 100 Gig-E ports, and aggregating traffic across multiple locations (e.g. instead of charging a per Gig price for each port then all traffic can be aggregated across all ports, subject of course to sufficient capacity requirements to make it worthwhile for the provider.
The telcos and cable companies get into marketing wars over how fast their networks are and then when people start utilizing this speed they advertise and tout, they suddenly dont like it...
The answer is to charge for speed. Exactly what is done on the commercial side of the business and what should have been done on the residential side all along. They have dug their own graves by offering 20mbps links for $50/mo.
Well, I'm in Australia. The charging extra model is not popular. The two major providers use shaping, i.e. you still get a service but at reduced speeds, if you overstep your account usage limits. Basically if you signed an account with limits you should abide by it. Basic accounts with modest but reasonable limits are available here for a low price, but we do have last mile issues,
Just seems strange that a capitalism first society, I know very general, should object to ISPs getting what they can.
Irune I.
PHP Developer (Contract) at RUSH Hair Ltd
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Sounds very similar to the system in the UK. As long as the limits are clearly marked, you can control your usage and there's enough providers to encourage competition I am fine with it. People who want higher traffic limits will switch to the providers who want it, while people who are happy using email and the internet will stay on cheaper options that are limited. How are they going to manage this with the current tendency towards streaming and home entertainment systems feeding on the internet is another question...
Changing the terms of the contract for existing users isn't so nice though. And definitly if I am going to be charged extra for consuming more I would like some guarantees in speed that aren't "minimun of 10% of the agreeded speed" and very low net downtimes.
I think there should be no limit or daily usage cap on Internet. Learn something from developing countries such as India and wireless revolution thats happening in that part of the world. A person can afford wireless phone and data if he is earning $50 per month!. This statement is enough for any stereotype and and his/ her idea of carriers that provide wireless and ISP services to web connection. People also have wrong perception of fastest net speed networks in the world.
Jim B.
Senior LAN Administrator
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Given the inexpensive pricing for internet access, I have no problem with vendors limiting a user's total traffic and adding a surcharge for very heavy users.
Normal usage will not incur a surcharge. If you download DVD's all day and night you will be charged.
It is important to remember than internet access costs the major carriers serious money. There is no free lunch.
Peter G.
Nordic Professional Services Manager CGEIT, CRISC, CISA, CISM, CISSP, SBCI, QSA
Here in Scandinavia traffic limitation hasn't officially been used in years (4-5) by any ISP I can recall.
The ones I know did do it a while ago, changed their strategy quickly since the marked demanded unlimited up/download.
Most important for ISPs is to be open and clearly state those terms and conditions to customers.
Diane T. C.
President/Creative Dir/Content Consultant
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Dear Frank:
I just read this story also. Interesting that AT&T is testing the water.
I will not repeat the many excellent points that have already been raised. The only time we need to send large files is for business, and the way around this limit is to upload the files to an FTP site rather than e-mail.
The new Huddle app that you may have seen on LI provides a free account with 1G space limit, and paid plans that allow more G. Their security is tight.
Kitty K.
Owner, KTE: Business Re-Organization Systems
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Hello, Frank. I do believe limits of qualifed applicants should be unlimited; however, last evening I saw on a search of the LinkedIn web, actual individual medications (Valium), and others, as having memberships to this group! I hope you will see to this problem, as there is no need to "bump" up numbers, or allow silly people to qualify for this great opportunity to teach and to be taught by the great partner affiliation with this network. After that problem is solved, perhaps we can limit uploads per member; however, I would never cut short any Q&A's! Your friend, kk
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One sure-fire way to make sure ISPs don't limit usage would be to introduce competition. Not what we see today, real competition forcing Internet service provision into a commodity business model. This would involve operators knowing their costs in detail and only the fittest would survive. Just like PC hardware - it took a long time but now this market is run on a very tight profit margin. The vendors make a living and the consumer gets low prices which keep on decreasing as scale increases. The idea of charging more for more data transferred seems counterintuitive as soon as we take into account the benefits of scale which accrue to ISPs. Yes there are ongoing costs to providing Internet services, but there is no raw resource consumption like gas for heating or water for all our domestic uses. Let the market decide...I know I would sleep better if my ISP took the money they are going to spend on measuring how many Gigs I download and bought a few hundred yards of fiber for me!
