Are we all getting taken for a ride with our caps and prices ???

Forums › New Zealand Broadband › Are we all getting taken for a ride with our caps and prices ???

moxpearl

123 posts

Master Geek

#98019 23-Feb-2012 08:23

<Rant>

Just did a quick comparison of what $120 will buy our household (Since we are changing services and that is our budget)

$120 from Slingshot = Phone + 250GB Net (as we know they also have a unlimited plan for cheaper but it is shaped)
$130 from Vodafone = Phone + 120GB Net
$110 from Woosh = Phone + 100GB Net
$125 from Telecom = Phone + 80GB Net
$120 from Orcon = Phone + 70GB Net
$115 from Snap = Phone + 55GB Net
$120 from Xnet = Phone + 40GB Net

So my questions are

1) How can slingshot be so much cheaper than others , if data is "Expensive" ?
2) Isps are charging up to $3 per extra gb (With $2 being the norm) .. how can they justify this ??
3) Are other ISPS simply pocketing the extra profits with data getting cheaper and cheaper ?
4) Sorry I needed to have a rant since this just seems silly :P

As I said.. seems to me ISPs (Bar Slingshot) are not passing cheaper data costs to the consumers

<Rant/>

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6434 posts

Uber Geek

#585549 23-Feb-2012 09:49

Rather than try and dive into the cost per GB and all that stuff, if you want to find if we are being ?taken for a ride? you need to look at how profitable ISPs are. If they are making 30-40% net profit on fixed line then you could make a pretty good argument that we are being gouged. If however, they aren?t making very much profit at all, or if a lot of ISPs are actually making a loss, then that is a pretty good argument that no, we are not being ?taken for a ride?

It?s tough to break out telecom broadband profit because they also have a mobile network and have recently been separated from Chorus.
Orcon is also difficult because they do not report earnings separate from overall Kordia earnings. Vodafone also do not report broadband separately and Slingshot do not report profit at all.
However, telstraclear, (second largest ISP)whose business is by far and away primarily fixed line do report earnings

http://tvnz.co.nz/business-news/telstraclear-returns-profit-4715439

?On a standalone basis, the Auckland-based company made earnings before interest and tax of $1 million in the six months ended December 31, turning around an EBIT loss of $8 million a year earlier, it said in a statement. That came as it sliced 7.2% from its operating expenses to $270 million, bolstering its earnings before interest, tax, depreciation and amortisation 11% to $69 million. Total income fell 4% to $339 million?
Does 1m profit on revenue of $340m for the first time ever after year upon year of losses indicate price gouging? Not to me.

itxtme

2102 posts

Uber Geek

#585552 23-Feb-2012 09:54

Do business models have anything do with this? I would think with slingshot it is a form of GB overselling that they have calculated they are able to do based on average user usages.

Ragnor

8219 posts

Uber Geek

Trusted

#585592 23-Feb-2012 10:39

moxpearl:

1) How can slingshot be so much cheaper than others , if data is "Expensive" ?
2) Isps are charging up to $3 per extra gb (With $2 being the norm) .. how can they justify this ??
3) Are other ISPS simply pocketing the extra profits with data getting cheaper and cheaper ?
4) Sorry I needed to have a rant since this just seems silly :P

As I said.. seems to me ISPs (Bar Slingshot) are not passing cheaper data costs to the consumers

Lots of reasons: Higher contention of international bandwidth, lower ratio of helpdesk/support staff to customers, overall lower quality hence cheaper staff etc.

ISP's buy x domestic and international capacity in Mbit/s or Gbit/s for y customers, it's not economic or efficient for the ratio between customers and traffic to be 1:1 at residential pricing, it's probably anywhere from 200:1 to 400:1 contention on international bandwidth depending on the ISP.

Data caps are just a crude way to ensure users don't download 24x7 and cause a "tragedy of the commons" on the ISP's available capacity.. the alternative is active traffic management/shaping and lots of caching.

Slingshot have invested heavily in traffic management, all their plans are actively traffic managed including those with data caps, un-attended traffic like p2p and large downloads being purposely slowed down to allow real time traffic to have priority.

Other ISP's like Telstraclear and Telecom don't actively manage traffic in the say way Slingshot do and simply use data caps as the mechanism for sharing out capacity.

ISP's are going to have different costs for general things like staff, marketing, infrastructure etc etc... like any product of service there are different niches, from budget options to premium.

What would be the point of having multiple ISP's in the market if they all offered the same quality of service for the same price?

Also ISP's refresh their prices at different times so the ordering of your list will change depending on what month of the year you compile it at.

djrm

191 posts

Master Geek

#585653 23-Feb-2012 12:33

Winseck points out that Australia, Canada, Iceland and New Zealand are the only markets in the OECD to have data caps. “If bandwidth caps were such a good thing all the top performing countries would use them,” he says.

Instead of trying to cater to excess demand, telcos in countries where there are data caps are trying to “beat it down”. He says that data caps are anti-competitive, discriminatory and are justified by flawed economics.

DonGould

3892 posts

Uber Geek

#585659 23-Feb-2012 12:37

moxpearl:
1) How can slingshot be so much cheaper than others , if data is "Expensive" ?
2) Isps are charging up to $3 per extra gb (With $2 being the norm) .. how can they justify this ??
3) Are other ISPS simply pocketing the extra profits with data getting cheaper and cheaper ?

1 - I'll leave SlingShot to address that.
2 - When you sign for a 40Gb plan the ISP makes assumptions and purchases capacity accordingly. The desire of the planning manager is that you take some ownership of your forecast use. Putting a higher price on the extra capacity is the only way to drive you to do your own forecasting.
3. They could be pocketing yes. Saving up to be able to pay for a technology refresh is a sensible thing to do.

There seems to be lots of ranting about data again, I guess we can thank Stephen Fry for that?

Going from 40Gb per month to 80Gb per month doesn't just mean buying more pipe from SCX, a fact that most people seem to either forget or just don't understand.

If an ISP buys 100 more mbit from SCX then they also have to have network core that can process this.

If the core router is 100mbit and is pulling 50mbit now then 100 more means a whole new core router is required. That means a change plan to insert the new router and about two dozen other things that have to be done. These people that do this stuff do not work for free in most cases.

100mbit more can also mean more billing system capacity. Simple stuff like netflow collectors need to be upgraded to deal with more flow. The list goes on and on.

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Check out mine - i.am.a.can.do.kiwi.nz - don@i.am.a.can.do.kiwi.nz

moxpearl

123 posts

Master Geek

#585745 23-Feb-2012 15:13

"There seems to be lots of ranting about data again, I guess we can thank Stephen Fry for that? "

Its something worth ranting about..

Our "caps" and prices are pathetic.. the rest of the world is moving ahead.. while we are going at a snails pace

Times are changing with digi distro etc.. yet our caps are not.. (Slingshot seem to be a exception.. yes they shape.. however people are pulling 300GB+ atm and I am sure they knew people would)

When you are a gamer who purchases lots of games from steam/origin/blizzard/gamersgate etc etc .. with games upto 20gb each and more.. add in some streaming + skype to the family in aus (Just a FYI they pay less than $90 a month for 500gb-1TB) + isky/tvnz on demand/3 on demand.. you get the idea..

I dont understand why people seem happy with the status quo/defending our terrible caps ....

Our "Ultra Fast Broadband" means nothing if we can blow our caps in 20 minutes :/

gzt

17120 posts

Uber Geek

Lifetime subscriber

#585751 23-Feb-2012 15:22

I don't understand why more ISP's do not offer pure per gb pricing.

I also don't understand why this per gb price does not automatically reduce as the data use goes up. It is not as if someone using 300GB requires 100x the support as someone using 3GB.

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NonprayingMantis

6434 posts

Uber Geek

#585802 23-Feb-2012 16:41

djrm: Winseck points out that Australia, Canada, Iceland and New Zealand are the only markets in the OECD to have data caps. “If bandwidth caps were such a good thing all the top performing countries would use them,” he says.

Instead of trying to cater to excess demand, telcos in countries where there are data caps are trying to “beat it down”. He says that data caps are anti-competitive, discriminatory and are justified by flawed economics.

he is wrong.

ETA:
http://www.nbr.co.nz/article/opinion-data-caps-are-evil-and-must-be-destroyed-ck-110557

Ragnor

8219 posts

Uber Geek

Trusted

#585808 23-Feb-2012 16:54

It's data caps OR un-metered but with active traffic management via DPI.. so take your pick, oh wait you already can:

Metered plans:
Practically every ISP

Un-metered plans:
Slingshot AYCE
Compass Mammoth
Maxnet Unlimited
Trustpower Kinect

stevenz

2802 posts

Uber Geek

#585809 23-Feb-2012 16:56

I still say that I'm perfectly happy with my $60 for 60GB/month, and I consider myself a higher than average user.

I suspect very few, if any users of this site would be anywhere near the "average" usage.

I don't download from Steam, as except when they're having sales, the prices in NZ aren't much cheaper than buying a physical copy from JB HiFi, and then have a physical copy which I can later onsell.

At the end of the day, the ISPs are all in the business of making money. They'll all hold fire as long as possible before dropping the price any more than they need to.

@KnightNZ

codyc1515

1598 posts

Uber Geek
Inactive user

#585836 23-Feb-2012 17:39

gzt: I don't understand why more ISP's do not offer pure per gb pricing.

I also don't understand why this per gb price does not automatically reduce as the data use goes up. It is not as if someone using 300GB requires 100x the support as someone using 3GB.

I suggested this the other day and was promptly ridiculed...

NonprayingMantis

6434 posts

Uber Geek

#585838 23-Feb-2012 17:42

codyc1515:
gzt: I don't understand why more ISP's do not offer pure per gb pricing.

I also don't understand why this per gb price does not automatically reduce as the data use goes up. It is not as if someone using 300GB requires 100x the support as someone using 3GB.

I suggested this the other day and was promptly ridiculed...

A lot of people like bill certainty. They like to know that if their package is, say, $80/month then that is all they will pay no matter how much they use.

Having a decreasing price for overage sounds good in principle for those who prefer to keep using, but it;s probably too complex for most people to understand, and certianly much harder for people to check on their bill

codyc1515

1598 posts

Uber Geek
Inactive user

#585842 23-Feb-2012 17:43

NonprayingMantis:
codyc1515:
gzt: I don't understand why more ISP's do not offer pure per gb pricing.

I also don't understand why this per gb price does not automatically reduce as the data use goes up. It is not as if someone using 300GB requires 100x the support as someone using 3GB.

I suggested this the other day and was promptly ridiculed...

A lot of people like bill certainty. They like to know that if their package is, say, $80/month then that is all they will pay no matter how much they use.

Having a decreasing price for overage sounds good in principle for those who prefer to keep using, but it;s probably too complex for most people to understand, and certianly much harder for people to check on their bill

So why not offer both options?

DravidDavid

1907 posts

Uber Geek

#585844 23-Feb-2012 17:46

I would jump on to the un-metered plan while you can! You can always opt out later if its not working for you.

NonprayingMantis

6434 posts

Uber Geek

#585845 23-Feb-2012 17:47

codyc1515:
NonprayingMantis:
codyc1515:
gzt: I don't understand why more ISP's do not offer pure per gb pricing.

I also don't understand why this per gb price does not automatically reduce as the data use goes up. It is not as if someone using 300GB requires 100x the support as someone using 3GB.

I suggested this the other day and was promptly ridiculed...

A lot of people like bill certainty. They like to know that if their package is, say, $80/month then that is all they will pay no matter how much they use.

Having a decreasing price for overage sounds good in principle for those who prefer to keep using, but it;s probably too complex for most people to understand, and certianly much harder for people to check on their bill

So why not offer both options?

some offer throttling or overage (like Telecom or vodafone for example), but the overage rate stays the same because it is easier and simpler for the customer (and probably the ISP billing system!) to work out.

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