Metered Bandwidth Isn't About Stopping The Bandwidth Hogs; It's About Preserving Old Media Business Models
from the stifling-innovation dept
For years, we've spoken about why metered broadband stifles innovation, by adding serious additional mental transaction costs and limits to anything you do online. If you look at the history of various online services, you know that AOL didn't really catch on until it went to a flat-rate plan from an older metered (by time) plan. It makes a huge difference in how people use the internet, and putting gates and fences around them doesn't just keep the bandwidth down, but it limits all sorts of innovative services that rely on the fact that end users have no limits on their bandwidth. In the end, metered broadband always appears to be a way for ISPs to squeeze more and more money out of people.However, as Canadian regulators seem prepared to let Bell Canada force all DSL providers into offering metered broadband, some are pointing out another reason for metered broadband. Not only does it stifle basic innovation, but it also protects the legacy media/entertainment industry and their business models. If downloading becomes more "expensive," then, in theory, fewer people will use services that require higher bandwidth. And this isn't just file sharing services either, but things like Netflix, which many studios still wish to limit and control when it comes to its online streaming plans. None of this is about "bandwidth hogs," at all. It's all about putting up barriers to anything that might be disruptive to legacy industries.
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Filed Under: broadband, business models, canada, media
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And about investing
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Re: And about investing
Seriously? The infrastructure is overtaxed instead of already paid for and needing to be used?
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Re: And about investing
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I hope metered plans don't last
Just look at cell phones, they use to hand out big, thick notebooks with rates for when you call and where you call. I avoided cell phones as long as possible until I could tell what it was going to cost when I made a call without consulting a book.
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Re: I hope metered plans don't last
There are two solutions:
1-Innovation
2-Regulation
Regulation is easier and guaranteed until a competitor bucks the system.
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Re: Re: I hope metered plans don't last
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Re: Re: Re: I hope metered plans don't last
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Re: Re: I hope metered plans don't last
So should we all pay the same flat price regardless of how much electricity we use? We should all pay the same flat rate regardless of much gasoline we use? Water? Food? Clothes? etc.
On the contrary, I would say metered pricing is the NORM in business, not one price for all you can eat.
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Re: Re: Re: I hope metered plans don't last
Data has zero marginal cost. Capacity has a cost (though off the top of my head I'm not sure how linear the relationship is between capacity and cost). At best there's a very loose relationship between data and cost, in contrast to the very tight relationship in every single example you list.
This is why we're in the whole internet piracy situation. For the first time in the history of the world some goods (namely anything consisting of data) can be reproduced and distributed for practically zero marginal cost. This fact has directly led to an explosion of piracy.
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Re: I hope metered plans don't last
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Commercial stations complaining about anything that enables people to watch their show on a computer with no extra charge.
In Belgium commercial stations complained that offering DVR services with no extra charge would destroy their business and HMG in the Netherlands has said that the public channels offering free streaming services hurt their plans of doing the same and have even sent a complaint to the EU about it.
Both only wanted to offer the streaming/recording for their shows for a fee. No one seems to be keen on changing the status quo and wonder why illegal streams and downloads still have so much appeal.
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Here In Australia.....
OK, in Australia we aparrently only have two "internet pipes" connecting us to the rest of the world. Does this mean it would only take two phone calls to disconnect us from the internet? Oh, wait, that's another topic.... Ah, yes, I remember what I was gonna say now: They say it costs money to shift data around, hence why they say we will always have metered internet in Australia. They also say it's why sooner or later the whole world will be on metered internet.
You know, when I heard that NBC was looking to megre with Comcast, the first thing I thought was "Oh, so THAT'S how they're going to try and stop illegal downloads". It seems a bit drastic, but, hey, if it works, they'll be happy.
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Re: Here In Australia.....
I had a discussions with a member of GE's management on this. He said "I can neither confirm nor deny that the sale of NBCU is due to forecasts on where the content industry is going". He then added "If the content industry were going in the direction you suggested. It could be one of the reasons for us (GE) to remove NBCU as an asset." Total indirect non-answer to my questions. It doesn't bode well for Comcast or NBCU.
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Re: Here In Australia.....
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Re: Re: Here In Australia.....
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Bad practice forced on competitors
The REAL problem is that the CRTC is allowing Bell to force these same rates/caps upon other wholesale ISPs who rent out access via Bell's copper. This effectively eliminates market pressure by forcing Bell's competitors to adopt the same stupid limits.
The CRTC has failed us more than we thought possible.
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Re: Bad practice forced on competitors
http://i.imgur.com/M3G7f.png
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Re: Re: Bad practice forced on competitors
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Re: Re: Re: Bad practice forced on competitors
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Re: Bad practice forced on competitors
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Re: Re: Bad practice forced on competitors
By the way, the word you use for failing to keep something is spelled "lose". If you "loose(n)" something you make it "less tight" or "less confined". HTH.
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Re: Bad practice forced on competitors
Their tone seemed like they didn't want to do this to us but they have no choice, and they also provided some online petitions and automated emails to be sent out to the higher ups to voice our disdain with them forcing this on the others because clearly they can't keep up and compete with the smaller providers
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Re: Re: Bad practice forced on competitors
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Re: Re: Re: Bad practice forced on competitors
That may seem okay to you, but in Europe and Asia it's ludicrously expensive. I'm in the UK and I pay £18 (~$29) for 24mbit. It's unlimited, subject to a FUP and isn't traffic shaped or throttled in any way. I don't know what the FUP is because I've never reached it. At most I've downloaded several terabytes in a month.
I have friends in other European countries who think my connection is abysmal and insanely expensive. They probably wouldn't believe you guys pay as much as you do for so little.
But then, I guess price goes down when you can choose from hundreds of providers...
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Re: Re: Bad practice forced on competitors
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It could turn into a nice fight
Metered broadband is going to throw a nice wrench into these practices and plans. It will be nice to see how the ISPs will behave when they are no longer dictating terms to the captive and powerless audience of private users but have to face powerful industry groups who can throw a lot of money around, lobby the legislators, or even start competing.
Wouldn't it be nice to see the ISPs smacked down hard by bigger bullies?
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Re: It could turn into a nice fight
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Possibly it's simpler than that
To handle higher bandwidth demands, ISPs could invest in more/better infrastructure, or start metering bandwidth, forcing people to use less.
One costs money, one makes money.
The benefit to the legacy media businesses is incidental, imo.
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Thought This Was a No Brainer?
Bell owns CTV, Shaw just bought Canwest and Rogers owns, well... Rogers. 3 major IPS's that own 3 major media companies. Their choices are to sit by while consumers wake up to the fact that they are being overcharged for media via the traditional channels (satellite/cable) and take advantage of the new, legal, services popping up on the internet. Or they can cap data and make it too expensive to make these new services attractive.
What works better for one of these large companies? Having someone pay $7.99 to Netflix every month and stream using their $50/mo internet connection or to cap their data and convince them that their $7.99 is better spend on one VOD rental?
Of course this is all about protecting the old model!
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Instead of metering
To be honest I'm leaning toward John Doe. Since the communications market is steadily consolidating again,it's easy to engage in some old-fashioned, cartel-style price-fixing.
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Re: Instead of metering
That is more in line with the actual costs for the ISP. If they are really so worried about "data hogs" then they will pay more than other users and Grandma will get a nice small bill for checking her email.
You won't see any ISP's jumping on that idea. This is a blatant money grab, made even worse for the fact that Canadian tax payers already subsidize these companies for network build outs.
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Re: Re: Instead of metering
That's greed, pure and simple. There's no way that it's not to make 1000% profit on something they barely pay for.
So.. use a professional line with more redundance, better overall speeds, much higher quota caps... just not at home.
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Re: Instead of metering
As mentioned earlier by another poster, here in Australia every ISP uses metering. However, almost every ISP does as you suggest which is throttle the connection when the cap is reached, normally to 64Kb/s, with no extra charges.
It stops you doing practically everything except email and casual surfing, but at least you don't get bills of $500+ at the and of the month (I'm looking at YOU, Telstra).
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Re: Re: Instead of metering
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Nonsense
It seems to me that "Techdirt" is aptly named. If it were a reputable news outlet, it wouldn't spout bogus conspiracy theories.
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Re: Nonsense
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Re: Re: Nonsense
Neither does that, assuming that is him.
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Re: Re: Nonsense
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Re: Re: Re: Nonsense
You must be getting gouged by your provider or you just like the thought of being able to gouge your customers.
Go blow smoke up someone else pipe.
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The above is proof that he's lying.
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Re: The above is proof that he's lying.
Telekom
Vodafone
1&1
Alice
O2
have been offering flats for years and noone asked them to. Currently you can sign up for a 16000 kbit downstream monthly flat at 25,- Euro and it's getting cheaper.
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Re: Re: Re: Re: Nonsense
You must be getting gouged by your provider or you just like the thought of being able to gouge your customers.
While I certainly won't reveal who this person works for, I will confirm that the comment appears to come from a major provider, as stated.
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Let's not mix our terminology
MBPS is a datarate. ISPs and such do tend to buy lines by capacity per second. That's exactly what 100Mbit or 10Gigabit lines are and why they're described as such.
Those lines cost no more or less to operate if they are 1% utilized or 99% utilized.
Paying 'per Mbps' is not the same as paying per megabyte of data transferred and we shouldn't confuse the two.
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Re: Nonsense
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Re: Nonsense
If you couldn't tell, the inference is that they already paid, thats their monthly bill. You didn't account for them to use so much bandwidth? STOP SELLING WHAT YOU CAN'T PROVIDE. And if you sell them so much a month, mean it, instead of whining that they need to pay what it costs you.
I'm sick and tired of these regional ISPs that oversell bandwidth and then complain that the users hog it all. They are only using what you sold them, that they are paying for. Seems only logical, to me.
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Re: Nonsense
Spouting out pap means nothing; back it up with fact tweedle-dee. What ISP. What is your proof. Show me the numbers.
This is about going back to 1990s standards when technology has essentially removed bandwith issues.
To refute your claims, I state: fibre in Canada is 90% dark all the time, there is no bandwidth issue at all. This is smoke and mirrors.
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Re: Nonsense
"Some parties claim that we should meter all connections by the bit. But this would be bad for consumers for several reasons."
http://www.brettglass.com/FCC/remarks.html
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Re: Nonsense
60 seconds * 60 * 24 * 30 = 2,592,000 seconds per month.
2,592,000 * 100Mbps = 259,200,000 Mbits of data, or 32,400 GB's of bandwidth for 20K.
32,400 GB's * $32/25GB = $414,720 profit, assuming you have enough subscribers (1000 ish). That's not bad, even if we go for your hyper-inflated $200 per Mbit, and take out infrastructure maintenance. It doesn't sound like you are going broke any time soon.
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Re: Nonsense
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Re: Re: Nonsense
If you sell a pipe that is 100mBps, and you get upset because your customer is using 100mBps, you're doing it wrong. However, if you sell a user a pipe that is metered, and charge high bandwidth for the users who use large bandwidth, and say so on the contract, than so be it.
However, if you sell someone a flat 100mBps connection, and then decide six months later that you spent all the money you earned from a user on crack and hookers and not on updating your network, and now you are selling 30 people a flat 100mBps connection and they are using up the 100mBps supply and getting upset with you, switching to a metered plan without telling them is likely to get you sued.
I pay a certain amount of money for a flat rate internet connection which says I get a certain amount of bandwidth. If I am not using that bandwidth, then I am paying a lot for not using it. However, I am certainly *not* subsidizing someone who is using a lot of what they are paying for. The contract says I get what I get. If you don't like that model, then switch to a metered model. But don't go crying to the government if your competitors out-sell you because you were greedy and switched to a metered (and less consumer friendly model,) while they kept their consumer-friendly flat rate model.
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I agree with Mike on this one that it's just to protect the good old dying business model. Why adapt when we can spend millions in tax-payer money to make sure they can't download?
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Exactly. The fact is,
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Here In Australia..... (Part 2)
Internode* http://www.internode.on.net/residential/broadband/adsl/easy_broadband/
TPG http://www.tpg.com.au/products_services/adsl2plus_pricing.php?/pricing/adsl2plus
iiNet http://www.iinet.net.au/broadband/plans.html
These are three of Australia's biggest ISP's and even smaller ones also offer large plans like thse. The phone lines are controlled by Telstra or Optus and both of those companies count uploads (and have done from the get go) and even limit the upload speed to 1MB as a maximum (works out to 120k maximum on average)
*Internode has many plans that do not count uploads as well
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not enough electricity
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Re: not enough electricity
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Re: not enough electricity
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Metered Billing = Death of Online Ads
When everyone starts blocking ads, companies stop buying ads. Lots of new business models are stifled if not completely made obsolete.
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Re: Metered Billing = Death of Online Ads
And they will be more upset about the junk the ISP does too...is there any reason why an ISP isn't filtering out SMB on their networks, or any reason why they require a user to run connection software on their machines that regularly communicate back to the mothership (for support reasons, they say,) and who require said software to be installed on the customers' machine in order to handle support calls?
The ISP I use at home has reasonable limits, but if the ISP includes all of the traffic sent to your machine regardless to whether you asked for it or not, you're going to find a lot more pissed-off people upset that they are getting charged for bandwidth even when they take a month off.
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Re: Re: Metered Billing = Death of Online Ads
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Re: Metered Billing = Death of Online Ads
And they will be more upset about the junk the ISP does too...is there any reason why an ISP isn't filtering out SMB on their networks, or any reason why they require a user to run connection software on their machines that regularly communicate back to the mothership (for support reasons, they say,) and who require said software to be installed on the customers' machine in order to handle support calls?
The ISP I use at home has reasonable limits, but if the ISP includes all of the traffic sent to your machine regardless to whether you asked for it or not, you're going to find a lot more pissed-off people upset that they are getting charged for bandwidth even when they take a month off.
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Re: Metered Billing = Death of Online Ads
And they will be more upset about the junk the ISP does too...is there any reason why an ISP isn't filtering out SMB on their networks, or any reason why they require a user to run connection software on their machines that regularly communicate back to the mothership (for support reasons, they say,) and who require said software to be installed on the customers' machine in order to handle support calls?
The ISP I use at home has reasonable limits, but if the ISP includes all of the traffic sent to your machine regardless to whether you asked for it or not, you're going to find a lot more pissed-off people upset that they are getting charged for bandwidth even when they take a month off.
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Internet Service Providers (ISPs) are about to impose usage-based billing
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Re: Internet Service Providers (ISPs) are about to impose usage-based billing
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Re: Internet Service Providers (ISPs) are about to impose usage-based billing
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Re:
Swing and a miss.
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New business model!
Sell people access to a server from which they can upload and download without metering. Also give them a service where you will send a portable HD with a copy of files from this server, or will receive a portable HD with files to be put on this server.
So, for instance, if you want to download a large set of Linux ISOs but do not want to use up your metered bandwidth, you download them into this service and it will send them to you in a portable HD. On the other direction, if you want to upload some large homemade movies to YouTube, you can send them on a portable HD to this service and upload to YouTube from it.
Amazon already has a similar service, BTW.
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The ISP's are just asking to stall all innovation on the internet.
This is a blatant money grab plain and simple.
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Somebody is NOT Thinking It Through
Then the services that are out there are going to suffer. Will I really want to browse through Amazon anymore? It is going to cost me a lot of money to download all of the flashy displays they have and to look through page after page of products. I won't want to buy anything without seeing a picture and by the time I look at 15 to 20 picture of say a stereo system, I will have paid $10 just to see the pictures. I will probably have to go back to the brick-and-mortar stores and stop shopping online unless I know exactly what I want and where I want to get it.
Google is going to become useless. It will cost $1.00 a page to look at the results of a Google search. That will stop fairly quickly. Facebook, Twitter, LinkedIn will all come to a grinding halt. Who will want to pay to download "I ate stinky fish for lunch" ever again. Or, just how much will it cost to watch a dancing baby on YouTube? All those pictures and wall updates on Facebook will be a lot less interesting at $1.00 a page to look at the updates. On the other hand, newspapers will be happy. Who could afford to search on Craigslist or Monster at $1.00 per page view? The big sports systems will also lose out. Who is going to keep NFL.com up and updating on all the games at $1.00 per refresh? One Sunday of watching Football on NFL.com is going to cost $40 to $50.
The cable companies (at least Comcast) are trying to switch everyone to digital and drop the analog signal from their wires because digital uses a lot less bandwidth. Yet, they charge extra to switch to the less bandwidth version. Why would I want to pay more when it costs them less to send it? Especially with the way that I keep losing the signal altogether.
I sure hope that Google, Amazon, eBay, Yahoo, and those other big 2.0 companies are ready to shutdown, because those services are going to be a lot less useful under a metered plan.
Oh, Yeah! The internet is also going to become a much more dangerous place to surf. I sure won't want to pay $20 to download all of those Microsoft updates, Java updates, iTunes updates and so on and so on and so on. All of the automatic updaters are going to be turned off and deleted from my system so that they don't keep eating up my bandwidth. What about the virus definitions. My current anti-virus package (It's Avast and I love it) checks for updates several times a day. I'll have to turn that off and rely on my memory to check for updates every week or so. Of course I won't get many viruses because I won't be surfing the NET either. I guess that is an OK trade-off for the ISP though. I'm guessing that online stock trading is going to go away as well. Who could afford to let a stock trading system be up and using all that bandwidth all day to watch their stock portfolio? It would cost more than could ever be made.
I should start working on my easy to use advertising blocking system right away.
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Re: Somebody is NOT Thinking It Through
Second, you are 100% right when you say that Google would not stand for it. And they won't. As soon as ISPs start down this road in the US, Google will use the former TV bandwidth they bought for a fortune and release high-speed, unlimited internet nationwide for peanuts, undercutting everyone. They're just waiting for this to happen to ensure that people would switch if they do it.
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Re: Re: Somebody is NOT Thinking It Through
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It's only happening because ...
This situation isn't going to get better till there are more ISPs in Canada.
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It is indeed about a 19th century business model
We need access to the basic physical facilities -- copper, fiber and radios -- to exchange bits among ourselves. As with our home networks we can expect to see capacity increase rapidly to meet the demand once we own our facilities.
More at http://rmf.vc/demystify.td and http://rmf.vc/nncc.td.
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Re: It is indeed about a 19th century business model
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Re: Re: It is indeed about a 19th century business model
and btw.. like someone said : cloud computing. Big companies will have it anyway (volume bandwidth discount) how about small companies?
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Re: Re: It is indeed about a 19th century business model
Yup. Brett does his usual bit of making sure that any of his responses destroys all credibility by coming out with hyperbolic insults of anyone who disagrees with him.
This is why no one takes Brett seriously, though it's fun to see him show up in the comments of various sites with conspiracy theories about how Google is trying to take over the world.
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Metered Bandwidth
Does anyone really think that innovation is being stifled if someone has to pay a little extra for more bandwidth?
Should someone at a restaurant pay the same for a cup of coffee and a piece of pie as someone who goes back three times to an all you can eat buffet?
I am in favor of systems where you pay based on how much you use. That's capitalism and the American way, isn't it? As long as there is competition and choices, it will create the most options for everyone, and everyone can choose what pricing level and usage level is best for them.
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Re: Metered Bandwidth
The whole crux of this is that the CRTC decision is eliminating competition. No one objects to Bell charging their customers whatever they like for bandwidth and usage (though I would argue that they should only sell speed levels at a rate where they can afford to pay the usage for). The problem is that the CRTC has decided to let Bell block the competition from differentiating themselves to attract customers unsatisfied with Bell's offerings.
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Re: Metered Bandwidth
What if the FCC ruled that every single ISP in USA had to use the same model as AOL? Would that be capitalism the American way?
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The inconvenient truth.
...of which there aren't really any.
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Re: Metered Bandwidth
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Re: Re: Metered Bandwidth
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Simple fix
$1/GB
200GB cap, Only use 100GB, then they should pay me $100.
If I sign up for their service and I use 0GB, then they should pay me $200.
I can see making a business model out of this.
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you sir, are wrong
Wrong. What happens in the end of the day is that for the next 10 years internet usage will be worse than it coulda been, and even if the rest of the world starts shaping their internet business model to shape Canada (yeah, right..), you still forced your users to 10 years of crap service.
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Network bandwidth suffering isn't the point at all..
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Metered Bandwith Means Ad-Blocking is a must
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It's all about control
Of COURSE they don't want NetFlicks.... they want to turn the internet into a single content provider TV network with a "pay here" button
The CRTC should be breaking Bell up not giving them the right to gouge the customers of their wholesale customers, and incidentally drive competition out of business.
It's so hard to argue because the very situation is so unbelievable.
Canadians, write letters to your MPs etc.
http://stopusagebasedbilling.wordpress.com/
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at HUGE high costs already of say 50$ per account you get the hint, it's nto making them money it's losing them a lot and this will kill more then 3 million it will erode it down even further they know this. ITS what they want and if you think poor people will buy your cable offering BCE your stupid to retarded.
you can only restrict a highways use so muchbefor epeople just stop paying the toll and either go around that toll highway or just stop using it. When your flight over it is already too expensive ( cable tv lets pretend) they do not return to the old model.
Consider this too.
I have already downloaded enough that i could live without the internet. Yea same old shows a bit would get boring but i have thousands a books and novels too. Many like me just dont see a 25GB cap as any value and would just leave so you get massive net losses in revenue. BCE whom ever had this idea your fired....even rogers allows teksavvy ten megabit unlimted....
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I've been saying something similar...
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Sorry for the foul language, its just that i, like many others, are tired of the whining about money. If shaw and the others can post multi-million dollar profits, then they have NOTHING to complain about.
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The Cash Grab
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Metered Bandwidth
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Re: Metered Bandwidth
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Re: Metered Bandwidth
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Why assume an increase in prices?
Also, where's the evidence about innovation stifling. Remember that the old AOL model was time metered. Bandwidth metering is much different.
My phone, electricity, and natural gas are all metered and my usage decisions are based on cost.
Thanks,
Dave
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Re: Why assume an increase in prices?
Simple reason: it's never happened before. Metered broadband has been used in various places in the past and present, and when adopted it always serves to increase the maximum price without affecting the minimum price.
You are making the critical faulty assumption that the purpose of metered billing is to make people who use little pay little, and people who use much to pay much. It isn't, never has been, and never will be. It's to make people who use little keep paying, and people who use much pay more. It's to increase revenue, not redistribute it.
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What is a fair price for Internet service?
"To find out what is a fair price, I contacted several industry insiders. They informed me that approximately four years ago, the cost for a certain large Telco to transmit one gigabyte of data was around 12 cents. That’s after all of its operational and fixed costs were accounted for. Thanks to improved technology and more powerful machines, that number dropped to around 6 cents two years ago and is about 3 cents per gigabyte today."
I'm actually a bit surprised. As I said in this thread, data transfer has no marginal cost in itself, only the cost for the capacity plus other operational costs. But at $0.03/gig when all factors are averaged out, the fixed and operational costs are even lower than I was expecting (I was thinking along the lines of $0.05-0.15/gig).
For the record, I'm not truly against metered billing in itself. I simple have exactly 0 faith in ISPs to use it fairly, as they never have in the past. Were one of two conditions met, metered billing would be tolerable:
1. There is a free market in ISPs with strong competition to keep rates low. In the US 15% of the country has exactly 1 (broadband) ISP to choose from, and another 75-80% has exactly 2, which is not sufficient to guarantee strong competition.
2. Data rates are regulated by a neutral organization lacking regulatory capture. As it is now, rates are entirely unregulated; yet I can't say I'm inclined to trust people like the FCC or CRTC to be unbiased even if they did regulate rates.
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Polo Outlet
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