What do you mean there is no inherent scarcity? There is only a certain amount of capacity in any infrastructure. When you pay for a bit on a network with metered bandwidth, you are paying for the fact that you used up that infrastructure for a short amount of time. It’s exactly the same concept as paying more to deliver a larger package.
On a network with scarce capacity, flat rate billing (vs metering or caps) means that light users are subsidizing heavy users. A real world illustration of this fact is that ISPs actually prefer flat rate because it is easier to market. On networks with lots of capacity they sell “unlimited”, while on tighter networks (like the cellular networks), they almost always use metered billing.
I’m not sure why some people (mostly only on Reddit or HN) are confused about this, but one theory I have is that they don’t understand the oversale of bandwidth. If you want to get a dedicated 1gbps per second of internet bandwidth, that will cost over $2000/month in most areas. So what all ISPs do is to sell that same gigabit to many subscribers. You can get hundreds of subscribers on 1gbps.
But they advertise “up to 1gbps speeds” instead of “1gbps with a 100x oversale ratio” because that would confuse people. So maybe people think that means they are actually supposed to be getting a dedicated 1gbps. If that was the case, then it wouldn’t make sense to bill for data. But most people don’t want to pay $2000/month for their internet.
The real issue that you are complaining about is that ISPs in many areas are monopolies and feel no need to upgrade infrastructure.
To start, realize stating that a dedicated 1gbps link is $2000 may be true but it does not justify the price, which is what I'm speaking to.
What observations I had were: 1) the price of dedicated links went up in time disproportionate to their capacity; 2) network operators began moving to a per-bit charging model, forcing users to bid against each other, and; 3) at least here, non-DC dedicated links can be had much more cheaply than a link in a DC.
There is scarcity but for practical purposes the scarcity is so far off that I'm not sure it makes sense to consider it. The true scarcity is related to the availability of land and the size of the data links, neither of which are yet very limiting. Regulation related to right of way (or more commonly) city involvement in high level planning could be blamed for creating market failures if these costs really are that high.
Otherwise, in regards to #1, we would expect a downward trend of dedicated network link price while capacity goes up, following storage density and transistor density (or more appropriately computational throughput). But we don't see this, even though throughput does increase, and integration costs decrease.
For #2, going to a bidding model could imply scarcity, but as there are unjustified monopolies often there is no increase in capacity so it seems prudent to assume this is done solely to increase price.
And with #3, well, certain usages are priced higher than others, also implying some kind of bidding. This might reflect space scarcity but seeing as the price tends to not go down even if the customer provides their own network equipment and pays for its space it just seems like a reluctance of the DC operator to perform upgrades.
The fairest model I can imagine has users paying the amortized cost of the network equipment and its installation and maintenance.
On a network with scarce capacity, flat rate billing (vs metering or caps) means that light users are subsidizing heavy users. A real world illustration of this fact is that ISPs actually prefer flat rate because it is easier to market. On networks with lots of capacity they sell “unlimited”, while on tighter networks (like the cellular networks), they almost always use metered billing.
I’m not sure why some people (mostly only on Reddit or HN) are confused about this, but one theory I have is that they don’t understand the oversale of bandwidth. If you want to get a dedicated 1gbps per second of internet bandwidth, that will cost over $2000/month in most areas. So what all ISPs do is to sell that same gigabit to many subscribers. You can get hundreds of subscribers on 1gbps.
But they advertise “up to 1gbps speeds” instead of “1gbps with a 100x oversale ratio” because that would confuse people. So maybe people think that means they are actually supposed to be getting a dedicated 1gbps. If that was the case, then it wouldn’t make sense to bill for data. But most people don’t want to pay $2000/month for their internet.
The real issue that you are complaining about is that ISPs in many areas are monopolies and feel no need to upgrade infrastructure.