Why are there data caps in New Zealand?

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#827007 28-May-2013 13:30

ChillingSilence:
freitasm:
myfullflavour: ... unlike the energy sector where the measurement is in units, bandwidth is sold as a speed.

Here's the thing: ISPs buy gigabits per second (speed) but sell gigbytes (quantities)...

NBR worked out it costs (ballpark) 6c per-GB internationally?

Yet it's being sold either per-GB for 79c (HD for example) or overage charges at $5 for 2GB (Maxnet).

There's other ISPs though that will happily give you a larger data cap, so the question is: Do customers *actually* care enough to switch ISP's to one that gives them more data at a cheaper price and a better service, simply because they have lower overheads to cover?

Apparently the answer is no...

You can't ignore time of day though - GBs used at 7pm will be an order of magnitude more expensive than GBs used at 3am, in terms of pressure on infrastructure (size of pipe ordered from SXC).

Given that ISPs don't rollover your data month to month (well most of them), its in their interest for you to have too-big a plan for your needs (lots of unused data) and so having prohbitively expensive overage is a great tactic to encourage people to subscribe to big plans.

myfullflavour

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#827008 28-May-2013 13:30

freitasm:
myfullflavour: ... unlike the energy sector where the measurement is in units, bandwidth is sold as a speed.

Here's the thing: ISPs buy gigabits per second (speed) but sell gigbytes (quantities)...

I guess our model is different to most other ISPs where we buy speed and sell speed.

This is normally done in a combo i.e. buy CIR (guaranteed) and get PIR (best efforts peak) thrown in.

ChillingSilence

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#827010 28-May-2013 13:35

nickb800: You can't ignore time of day though - GBs used at 7pm will be an order of magnitude more expensive than GBs used at 3am, in terms of pressure on infrastructure (size of pipe ordered from SXC).

Given that ISPs don't rollover your data month to month (well most of them), its in their interest for you to have too-big a plan for your needs (lots of unused data) and so having prohbitively expensive overage is a great tactic to encourage people to subscribe to big plans.

Precisely! You'd hope that 6c per-GB is for peak times, but I honestly can't comment on their findings, but I do recall them saying it was *roughly* around that price. Again, you buy more, you'll likely get it cheaper vs if your ISP buys less it'll cost them more per-megabit.

Edwood

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#827011 28-May-2013 13:37

Thinking out loud here...
(Because you're a smart bunch, and i don't understand why the answers aren't bleedlingly obvious... perhaps because i'm not that smart, and i've missed the bigger picture)
Oh well, here's my laymans understanding.

Fuel is a true consumable... like bananas. I eat a banana, and nobody else can eat it. Banana gone.

Electricity... is a slightly more complex consumable, but can still be consumed. Domestic power usage is also quite predictable and there is little variance between a 'low user' and a 'high user'. This means that your Jan bill is going to be similar to your Feb bill which will be vaguely similar to your neighbors bill.

Phone minutes... are like bandwidth. The network is provisioned to handle a given load and the prices and plans are made to try and incentives usage that maximizes utilization without overloading. This is why we used to have cheap off-peak minutes.

Bandwidth is neither a consumable nor finite. When I load this webpage, nothing is actually consumed or lost. If the network is congested, then I simply have a slower speed of access. Bandwidth can, in practical terms, deteriorate infinitely.

Bandwidth is more like a parking garage.
- You can pay an hourly rate and park if there's space - often over subscribed, often undersubscribed
- You can pay a monthly rate and park in the 'cardholders' area - slightly over subscribed.
- You can pay an annual rate and get a secure numbered car park - managed so that

Supply, demand, and competition dictate pricing.

Data caps allow people who consume less bandwidth to pay less money than those who consume more. Its a fair system - it would not be if Grandma Poppet had to pay for unlimited b/w for the 7 emails she gets each month whilst Salty pauses his 24x7 Steam downloads only so he can stream his nightly movie marathon.

(OK, in hindsight, my parking gge analogy doesn't really work all that well).

kobiak

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#827013 28-May-2013 13:41

@freitasm when you purchased PC - you now have an unlimited use of your product, same with your car. You paid registration and wof to be able to utilize your ability to use your car from getting from one point to another. and by paying a fee you're allowed to use roads, but we need to pay for petrol too, to get car going?

PC version: if that would apply to Internet (which are your roads) we will have it unlimited use (plus paying yearly fee to get access to infrastructure), but we need to pay for electricity to get PC started, right?

:)

upd. sorry, added below

So I'm saying if roads have an unlimited use, why Internet could not be? Same service, once infrastructure is there - you can charge one fee...

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plambrechtsen

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#827017 28-May-2013 13:42

I think the other area people are forgetting about is support.

If when things go wrong you could all sort it out yourself (as many geekzoners can) then no problem. But if you expect someone to be at the other end of the phone to help if things do go wrong. This is also a non-trivial part of providing service.

I would say approximately half of Telecom is within retail working on the various helpdesks.

When you have 600k+ customers economies of scale come into play with support expectations, and that comes at a cost.

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ChillingSilence

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#827024 28-May-2013 13:48

plambrechtsen: I think the other area people are forgetting about is support.

If when things go wrong you could all sort it out yourself (as many geekzoners can) then no problem. But if you expect someone to be at the other end of the phone to help if things do go wrong. This is also a non-trivial part of providing service.

I would say approximately half of Telecom is within retail working on the various helpdesks.

When you have 600k+ customers economies of scale come into play with support expectations, and that comes at a cost.

True, but a lot of that is also their own damn fault for providing sub-par routers :p
This is why places like Orcon have the "While you're waiting, switch it off and on again to see if that fixes it" while you're in the queue... Working in VoIP, I see first-hand that routers have a *lot* to answer for, and over 90% of the SME ones out there are *nasty* as hell!
So, it's good to see them (Hopefully) taking a step in the right direction with this Telecom / Geekzone initiative.

Behodar

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#827026 28-May-2013 13:50

I'm using option 3 at 30c/GB. It works out well for me because my usage fluctuates; I can use less than 50 GB one month and then more than 150 GB the next. If I pay for, say, 200 GB every month then I'll end up paying for a lot of data that I don't use. If I only pay for 100 GB then the overage charges are usually very high (I've seen $2/GB from some ISPs!)

kobiak

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#827028 28-May-2013 13:51

and in case I did not explain well enough. Just think as:

car (fixed price) = pc (fixed price)
road (per year fee, unlimited use) = internet (further we go - pay more)
petrol (further we go - pay more) = electricity (further we go - pay more)

Something like that.

helping others at evgenyk.nz

plambrechtsen

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#827029 28-May-2013 13:52

ChillingSilence:
plambrechtsen: I think the other area people are forgetting about is support.

If when things go wrong you could all sort it out yourself (as many geekzoners can) then no problem. But if you expect someone to be at the other end of the phone to help if things do go wrong. This is also a non-trivial part of providing service.

I would say approximately half of Telecom is within retail working on the various helpdesks.

When you have 600k+ customers economies of scale come into play with support expectations, and that comes at a cost.

True, but a lot of that is also their own damn fault for providing sub-par routers :p
This is why places like Orcon have the "While you're waiting, switch it off and on again to see if that fixes it" while you're in the queue... Working in VoIP, I see first-hand that routers have a *lot* to answer for, and over 90% of the SME ones out there are *nasty* as hell!
So, it's good to see them (Hopefully) taking a step in the right direction with this Telecom / Geekzone initiative.

I would say out of the issues I have dealt with over the last 6+ months, perhaps 1 or 2 were related to the old Telecom supplied modem. I have only had one customer fault with the new one (TG582N). That is from dealing with well over 100 folks in that time.
The vast majority of issues is poor internal wiring causing fault. And with that... Most people see the $100 (wlg with Cyril7) or $150 (akl coffeebaron) vs $200+ (Chorus) to get a Master Filter as a good investment, but there have been approximately 20% of the folks I have dealt with that refused to put any investment in and expect their provider to pick up the tab... So IMHO it goes both ways.

The internet is a scarce resource, it's never been and will never be unlimited. The sooner we treat it that way and think "if I need this much broadband I should pay for it" then the sooner the whole "why do we have caps" arguments goes away.

Behodar

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#827033 28-May-2013 13:55

ChillingSilence: I see first-hand that routers have a *lot* to answer for, and over 90% of the SME ones out there are *nasty* as hell!

That doesn't surprise me at all. A few years ago I reconfigured my ISP-supplied modem/router to be a "dumb pipe" (half bridge) and got a $300 router to do the heavy lifting. It did wonders for my network stability.

Then you have situations like at work where they have the Telecom-supplied "home" router crashing because it can't handle 200 people all connected at once. When I suggested that they replace it, they called Telecom and replaced it with the exact same model. *headdesk*

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universenz

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#827036 28-May-2013 13:58

Great discussion, but please stop comparing it to Cars.

There is a reason why the internet is commonly referred to as the "Information Super Highway".

In my opinion I think we've got it all backwards in NZ..

The network should be treated like toll roads and reverted to the days of 56k where you could pay for an unlimited data plan that was limited by speed (aka congestion). If you wanted faster speeds, you needed to upgrade to ISDN lines etc (aka pay to use the toll road).

By backwards I mean, unlimited 1mb/1mb for $50 should be standard for every NZ household.

You want super speeds and prioritized traffic? Pay a premium for a faster connection.. Afterall, chances are your need for faster speeds is probably because of your dependence (or dependents) on the connection is greater.

TL;DR - Internet should be unlimited data in every home, but limited by speed ie. 1mb/1mb. A premium should be charged to those who want faster speeds and no congestion.

Behodar

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#827043 28-May-2013 14:05

universenz: By backwards I mean, unlimited 1mb/1mb for $50 should be standard for every NZ household.

Just the other day one of my friends was having connection issues; he was getting "dialup speed". After asking a few more questions it transpired that he was actually getting 0.74 Mb/s! If people think that 0.74 is "dialup speed" then I'd imagine that there would be all sorts of complaints if ISPs reduced the base speed down to 1 Mb/s.

ChillingSilence

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#827045 28-May-2013 14:05

universenz: TL;DR - Internet should be unlimited data in every home, but limited by speed ie. 1mb/1mb. A premium should be charged to those who want faster speeds and no congestion.

Why? Still has to be over subscribed, and do you know what 1mbps costs, CIR? It's *not* pretty...

NonprayingMantis

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#827047 28-May-2013 14:08

universenz: Great discussion, but please stop comparing it to Cars.

There is a reason why the internet is commonly referred to as the "Information Super Highway".

In my opinion I think we've got it all backwards in NZ..

The network should be treated like toll roads and reverted to the days of 56k where you could pay for an unlimited data plan that was limited by speed (aka congestion). If you wanted faster speeds, you needed to upgrade to ISDN lines etc (aka pay to use the toll road).

By backwards I mean, unlimited 1mb/1mb for $50 should be standard for every NZ household.

You want super speeds and prioritized traffic? Pay a premium for a faster connection.. Afterall, chances are your need for faster speeds is probably because of your dependence (or dependents) on the connection is greater.

TL;DR - Internet should be unlimited data in every home, but limited by speed ie. 1mb/1mb. A premium should be charged to those who want faster speeds and no congestion.

speed is one option, but a difficult one under current NZ laws and using DSL technology. there are so many variables that effect speed it is virtualy impossible for an ISP to tell you what speed you can get and therefore if they sell you something you can't or don't get, you have cause for complaint.

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