You have to understand how a business works, and specifically how the broadband business works, to know that the opinions expressed in this article are actually what is B.S. I'm not saying that some operators might not be taking advantage of a lack of competition, or Covid, although a lot of providers stepped up and removed data caps and usage charges during the pandemic.
It's simple. An ISP sells access to the Internet. How much data their subscriber's use is what determines their cost. The more usage there is, the more expensive their connection is to the backbone, and the more equipment they need in their headend. As usage goes up, they have to increase and upgrade both.
They have a few choices. One, they can charge everyone the same amount, and try to average that out. That's kind of like the Post Office. You can mail a letter across town or to Alaska for fifty cents. It costs the Post Office a lot more than fifty cents to deliver that letter to Alaska, and I assume less than fifty cents to send it across town looking at volume. So, ISPs that don't charge an overage will have to charge every customer a little more, including those that don't have much usage, in order to account for those people who are going to have a lot of usage.
The other option is charging everyone based only on the amount they transfer (charged some amount for every byte). This is like the water department. You're charged by the gallon. If you're single and don't use that much water and are careful, your water bill is lower. If your neighbor has three teenagers, with a mom doing five loads of laundry a week, dad watering the lawn, and everyone taking long showers and washing their cars, their bill is going to be higher. The water company could charge you more and them less, but would you want your water bill a lot higher to subsidize their usage?
Another option is to give everyone a certain amount of usage for a set price, and then if you exceed that, you are charged more. If you are single, are at work most days, and maybe watch something on Netflix every other night, you will probably fall in the base usage amount. Your neighbor with the three teenagers exceeds the limit because they all watch several HD movies and shows on NetFlix and Disney+ every night.
As far as an ISP like AT&T not counting usage for a streaming video service that they provide, that makes sense too. They are getting revenue from that subscriber for the broadband connection, AND they are getting additional revenue from that subscriber for the video service. So, they can bake that additional usage into the cost of their video service. Even if they are just breaking even and covering their costs, which is often the case with Pay TV, it's additional top-line revenue. But, they get no additional revenue from the family that's watching Netflix and Disney+. That is just additional usage costs for them with no upside.
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Broadband Providers have costs too
You have to understand how a business works, and specifically how the broadband business works, to know that the opinions expressed in this article are actually what is B.S. I'm not saying that some operators might not be taking advantage of a lack of competition, or Covid, although a lot of providers stepped up and removed data caps and usage charges during the pandemic.
It's simple. An ISP sells access to the Internet. How much data their subscriber's use is what determines their cost. The more usage there is, the more expensive their connection is to the backbone, and the more equipment they need in their headend. As usage goes up, they have to increase and upgrade both.
They have a few choices. One, they can charge everyone the same amount, and try to average that out. That's kind of like the Post Office. You can mail a letter across town or to Alaska for fifty cents. It costs the Post Office a lot more than fifty cents to deliver that letter to Alaska, and I assume less than fifty cents to send it across town looking at volume. So, ISPs that don't charge an overage will have to charge every customer a little more, including those that don't have much usage, in order to account for those people who are going to have a lot of usage.
The other option is charging everyone based only on the amount they transfer (charged some amount for every byte). This is like the water department. You're charged by the gallon. If you're single and don't use that much water and are careful, your water bill is lower. If your neighbor has three teenagers, with a mom doing five loads of laundry a week, dad watering the lawn, and everyone taking long showers and washing their cars, their bill is going to be higher. The water company could charge you more and them less, but would you want your water bill a lot higher to subsidize their usage?
Another option is to give everyone a certain amount of usage for a set price, and then if you exceed that, you are charged more. If you are single, are at work most days, and maybe watch something on Netflix every other night, you will probably fall in the base usage amount. Your neighbor with the three teenagers exceeds the limit because they all watch several HD movies and shows on NetFlix and Disney+ every night.
As far as an ISP like AT&T not counting usage for a streaming video service that they provide, that makes sense too. They are getting revenue from that subscriber for the broadband connection, AND they are getting additional revenue from that subscriber for the video service. So, they can bake that additional usage into the cost of their video service. Even if they are just breaking even and covering their costs, which is often the case with Pay TV, it's additional top-line revenue. But, they get no additional revenue from the family that's watching Netflix and Disney+. That is just additional usage costs for them with no upside.
Techdirt has not posted any stories submitted by RickY.
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