stuff.... random stuff....

Why data caps are awsome

, posted: 30-Oct-2014 07:54

After reading the following blog post:

I decided to rehash a Facebook post of mine from October 2013 that went something like this:

I like data caps. With all this talk about data caps are bad i guess i kinda disagree.. then again i also like the idea of toll roads.
ISP's buy bandwidth per Mbit and actually pay quite a lot for it.
To throw some rough and bad maths about, the profit on a $99 unlimited DSL plan would equate to roughly 2Mbits of bandwidth.
If you were to use 2Mbits of bandwidth (1 direction) non-stop for a month you are going to move about 640GB. So if you are using less than 640GB per month then theoretically your ISP is breaking even or making a profit from you. But im picking your connection at home is going to be a bit faster than 2Mbit!
So this means your ISP will be juggling you around in a bandwidth pool. No problem if everyone is using only their slice of the pie, but at busy times things are going to get fairly ugly, resulting in potentially reduced performance.
Just like the toll road, i like to have a fast connection where i can get my packets as quickly as possible so i would rather have a reasonable data cap and an ISP that can give me speed when i need it.
With unlimited plans it normally ends up that a few "bad eggs" chew most of the data and they are being subsided by all the other users in the pool.
Sure for people who want to download the internet in its entirety i guess unlimited is good, for most people who are using modest amounts of data, stay clear from the unlimited plans unless you really need it!

Since October the economics will have changed slightly, but not a lot. The principle still stands that how most ISP's sell bandwidth to end users is not directly comparable to how they buy it with unlimited plans, more often than not they are selling it for significantly less than they buy it. Basic economics dictate that something has to give or someone is subsiding someone else. 

If speed matters to you embrace metered data :)


Usual disclaimers apply, this is my own thoughts and does not represent that of my employer The figures quoted here are based on publicly available information.

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Comment by geekiegeek, on 30-Oct-2014 10:27

Is there evidence of slower connections with the recent move to unlimited plans? I haven't seen this myself on my Snap! unlimited VDSL connection.

Comment by DravidDavid, on 30-Oct-2014 15:19

I spent the last few years on an unlimited plan with Slingshot and maybe had 1 problem with throughput, once...Maybe.  I can't even remember what it was.  The only benefit I saw back then to a capped connection was slightly better latency with regards to gaming.  However, the ability to remove interleaving made that perk almost completely null for me.  In a flat of seven, 23Mb/s connection with three unemployed on YouTube all day, two torrenting and two gamers, we regularly struck 800GB+ per month.

I'm now in an area where I get exactly 1.8Mb/s and have moved to their lowest 20GB plan.  I can't justify an unlimited connection for anything a connection I could barely use.

Perhaps someone else has suffered more than me.  Perhaps they were on "GoLarge" when unlimited plans were in their infancy and Telecom had no idea what they were doing.  Slingshot were the ones that ran with the idea after Telecom ripped "BigTime" out from underneath us and actually made it work properly.  At the same time they proved Telecom's "economically unviable" reason was bull.  This is one of the reasons Slingshot has my full support and have kept my business over the years.

Cheers. :)

Author's note by chris021, on 30-Oct-2014 15:30

@geekiegeek, there has been a number of different cases with people on unlimited plans having the odd issue, for the most part tho you are right nothing has imploded. yet ;)

@DravidDavid, Unlimited plans only work if there is enough low users to balance things out. at 800GB+ you would have not been making your ISP any money and were effectively being subsided by other users.  as a 20GB user you are now ideal ;) 

The other aspect is most users have fairly basic expectations. no buffering on video and responsive Facebook = good internetz. HD video has fairly modest requirements when compared to a 100 or 200mbit ufb.

Comment by rikki, on 30-Oct-2014 16:43

Because I have a 20-20gb data cap on RBI, I have gone out of my way to find and install software capable of downloading almost any video. I don't actually download that much video but this way I don't have to worry about streaming hiccups and I don't have to wade through all the advertising crap more than once. I would still prefer no data cap because of all the unwanted rubbish javascript throws at me.

Comment by johnr, on 30-Oct-2014 18:24

Think of the rural customers connected to older hardware that has far less capacity!

Comment by monkey300, on 6-Nov-2014 17:33

If you have a family with 3 kids who like minecraft youtube streamers, then you'll be fairly glad to have unlimited plans.

This way I can just relax and know I'm not going to get a massive bill one month, without checking my usage every 5 minutes.

Comment by JediDork, on 10-Nov-2014 12:50

Am i the only one that believes that bandwidth is not our problem? 

It should not be up to us to have to "share" bandwidth equally among unlimited and capped users. In fact, the teleco and ISPs need to pull there head out of the sand and realise that if data usage is going up, that they need to provide more bandwidth, and not throttle others customers. We shouldnt worry about the cost and infrastructure required to build the service because thats not our problem. Whats important is that we pay for a service and we should get exactly that. The Telecos and ISPs want us to wear the burden of other peoples greed and for some reason we let them do it.

Just my ten-cents, but there you go.

Comment by deadlyllama, on 14-Nov-2014 14:18

The obvious problem with your reasoning is that people don't tend to use 2MBps exactly for a month.  There are peaks and troughs.  And the ISP has to provision for the peaks, or cope with congestion.

So if I use 10Mbps solid for an hour every day in peak time (is that still 6pm-9pm)? then even though that's 135 GB/month, the marginal cost to the ISP for having me as a customer will need to include 10Mbps of bandwidth on the links used to reach my favourite bits of internet.

Whereas if I use 10Mbps for an hour every day at off-peak time (e.g. 4am) then I'm still using 135GB/month but as my ISP's links will be relatively quiet this usage will not require them to provision more network bandwidth between me and my favourite bits of the internet.

Data caps may cause people to use less bandwidth (or pay more for the privilege) but if this doesn't affect their peak-time usage, then caps should make no difference to ISP costs.

It's worth noting that a billing system capable of billing per gigabyte vs a fixed cost per month is more complex and therefore more expensive to develop and maintain.  Not to mention the cost of taking calls from customers who have run over the cap and don't know why and demand a reduction in their bill.  And the lack of bill-shock is a selling point to customers, especially people in shared living situations.

My current usage would fit comfortably in a 250GB cap but I like not having to care about my usage.

chris021's profile

Chris Hoffmann
New Zealand

Areas of Interest:
Network Security
Computer Forensics


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