I agree with you to a point. The problem with this scenario is that the ISP business is built off the principle of giving users high download speeds, but with the expectation that they won't be maxing out their connection all that frequently. The higher the average/peak usage, the higher the infrastructure costs to provide good service.
It used to be that the only people who did this we're downloading games or movies off BitTorrrent: when that was the case, it didn't affect the ISP business model that much.
Enter Netflix. It's pretty ubiquitous and even your grandma can use it. Everyone loves it and everything works well. For a while. Then Netflix decides they want to push 1080p videos out to all their users instead of 720p. This doubles or triples the bitrate of the videos overnight. With adaptive bitrate players, the stream will adjust to use all available bandwidth.
Who should bear the cost of technical changes that Netflix makes? Many would say "the ISPs! Stick it to the man!" But at the end of the day, ISPs are a business. If their costs rise, they will raise prices on consumers unless they can cover those costs another way.
In the end, you're gonna pay the ISP one way or another. Which is more fair to you? ISPs raising rates across the board (including some people who aren't netflix users) to cover those costs, or passing the costs on to Netflix, who then pass them to Netflix subscribers only. It's all about who should bear the cost for technical upgrades given the way the ISP business model works today.
I prefer option 3 - ISPs charge more for people that use more. I know this would require marketing changes, and many customers wouldn't like it, so it won't happen and instead they'll just keep doing what they're doing and trying to extort money from data-heavy services.
Option 1 is unfair to some people, Option 2 puts a huge barrier to entry in place for businesses. Option 3 is the only real solution IMHO.
The problem with option 3 is people don't really want to pay for what they consume, and the state is happy to oblige by placing itself as the middle-man between concentrated benefits and dispersed costs.
Option 3 is data caps and/or metered billing. It's not exactly the most consumer-friendly option, but the ISPs would love to do it that way if they could.
I love metered billing. The problem with it is that the video streamers will discover how much more bandwidth than everyone else they're using, and AT&T and Comcast's all-you-can-eat video services that use the same wire will look a lot more attractive to them.
Ultimately, that may be a threat to network neutrality as the prices are raised on the metered internet in order to shift bandwidth to those siloed TV services, and the public won't care because they're not streaming video over the open internet anymore.
Well, the reason it works for all-you-can-eat video services is that the cable companies are providing a distribution service to the content owners. So for HBO, they provide both cable distribution and caching of video for HBO Go. They could pretty easily do the same for Netflix; considering Netflix is basically HBO that's sold outside the cable companies at this point. HBO does in effect pay the cable companies for distribution in that the cable companies take a percentage of the monthly HBO subscription fee that the customer pays, so I don't see why Netflix shouldn't.
I think a lot of geeks are in love with net neutrality because they see it as a fairness thing and think it will keep the cable companies from gouging them. In reality, it's just about cost allocation. Companies are going to take their profits under net neutrality or not; and the profit margins on cable aren't astronomically high. Netflix would never have gotten off the ground under true network neutrality; the costs have to be allocated somewhere.
If you want pure speed though; metered billing is the way to go. Look at how fast mobile data has become in the US relative to the rest of the world -- a large part of that is because it's profitable for Verizon and AT&T to have customers use more data. Businesses are going to make their profits and regulation isn't going to have much effect on the prices that consumers pay -- but under the right rules, if you create a situation where companies can make more money by providing a better service, everyone wins.
>but with the expectation that they won't be maxing out their connection all that frequently.
It's an old, antiquated expectation. It needs to die. Ever since the advent of peer to peer technology, there has been a perfect use-case for permanent saturation of available bandwidth.
>But at the end of the day, ISPs are a business.
ISPs are a utility. There's no dancing around it. It doesn't matter what the FCC says or what anyone tries to lobby for or against. They are a utility.
>If their costs rise, they will raise prices on consumers unless they can cover those costs another way.
We did pay for a national broadband network. To the tune of 300 billion dollars at this point. You know what they did? They took the money and pocketed it. We've known about this for more than a decade now, and nothing has come of it.
> It's an old, antiquated expectation. It needs to die. Ever since the advent of peer to peer technology, there has been a perfect use-case for permanent saturation of available bandwidth.
It's not antiquated; it still applies to the 99% of broadband users who don't use high-bandwidth P2P services on a regular basis. Dedicated connections are available for those who don't fit within this model, but it's a lot more expensive to provide (e.g. a much lower ratio of circuits to switches/concentrators/routers). Burstable connections still exist on the backbone side as well; Netflix may have access to up to 300 mbps burstable from Level3, but they're only guaranteed 50. They make economic sense and they're not going away any time soon.
> ISPs are a utility. There's no dancing around it. It doesn't matter what the FCC says or what anyone tries to lobby for or against. They are a utility.
I disagree, but let's say you're right. Utilities are still businesses and they're not sustainable as a money-losing operation. If the FCC regulates them as a utility, they would likely move to a metered-billing model where you pay for bandwidth in and bandwidth out.
> We did pay for a national broadband network. To the tune of 300 billion dollars at this point. You know what they did? They took the money and pocketed it. We've known about this for more than a decade now, and nothing has come of it.
That $300 billion figure is very suspect if you read your own links. It includes rate increases to customers which would have happened anyway due to inflation, and is a number over roughly 15-20 years. You know that 50 mbit cable modem you like to bitch about how slow it is? In 1994, the best option for most homes was a 56.7kbps dial-up modem. 1.5 mbit ADSL wasn't even widely available until 1998 or so. Cable internet above 10mbps wasn't widely available until 2007. And as part of the tax credits, the FCC required companies to build out broadband infrastructure in a lot of places that were grossly unprofitable: the cable companies basically broke even on the credits they did get. But even if we make a vast assumption that your number is correct, $300 billion across ~5 companies over 20 years is roughly $3 billion per company, per year. The real tax subsidies were closer to $80 billion over 20 years for the entire industry (many of which went to small, rural cable providers and not the big ISPs like Comcast or Verizon.)
But claiming there has been no progress is a flat-out lie. Citing 5-10 year old articles doesn't help your case. The money was spent where it should have been; it just took a while for the build-out to happen because large capital investments move slowly.
> We did. With billions and billions of taxpayer dollars.
And the major telecom companies spend roughly $15 billion per year EACH on infrastructure. Of their own money. On which they make roughly a 10% profit (more in some years, less in others.) Good money, but hardly a windfall by corporate standards.
It used to be that the only people who did this we're downloading games or movies off BitTorrrent: when that was the case, it didn't affect the ISP business model that much.
Enter Netflix. It's pretty ubiquitous and even your grandma can use it. Everyone loves it and everything works well. For a while. Then Netflix decides they want to push 1080p videos out to all their users instead of 720p. This doubles or triples the bitrate of the videos overnight. With adaptive bitrate players, the stream will adjust to use all available bandwidth.
Who should bear the cost of technical changes that Netflix makes? Many would say "the ISPs! Stick it to the man!" But at the end of the day, ISPs are a business. If their costs rise, they will raise prices on consumers unless they can cover those costs another way.
In the end, you're gonna pay the ISP one way or another. Which is more fair to you? ISPs raising rates across the board (including some people who aren't netflix users) to cover those costs, or passing the costs on to Netflix, who then pass them to Netflix subscribers only. It's all about who should bear the cost for technical upgrades given the way the ISP business model works today.