200GB to 25GB: Canada gets first, bitter dose of metered Int

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Xeio » Wed Feb 02, 2011 1:13 am UTC

I've always wondered why government didn't just do what it did to power/water/gas with the internet. :?

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Jessica » Wed Feb 02, 2011 2:09 am UTC

Phoenix is essentially right, and is the reason why there isn't really an option to switch. Bell "owns" the phone lines, so any DSL companies that exist either have to put up new telephone lines, or deal with bell. The decision by the CRTC was specifically, whether bell could charge the wholesalers of their lines the same as they wanted to charge their customers. If the CRTC had not allowed Bell to charge the wholesalers, they wouldn't have went through with this. The choice then, is to go with bell, or with Rogers (or other cable runners). But, rogers was generally able to buy most of their competitors to become a monopoly over the lines. They don't have lines which they resell, but instead just have the largest network.

So, that's why there isn't really a choice. There are a few other providers, but the big two control most of the market between them.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Vaniver » Wed Feb 02, 2011 2:20 am UTC

Princess Marzipan wrote:What are your thoughts on these specific business practices, Vaniver?
I don't know enough about the regulatory environment of Canadian telecommunications to comment authoritatively. It seems to me that at some price point, it becomes profitable for another company to lay a new network and charge less, which is a limit on how villainous Bell can be. This limit can clearly be removed or increased by granting special rights to Bell or increasing the costs their competitors face, in which case those rights or costs are a big part of the problem. If Bell is operating under that limit, I'm ambivalent. That is to say, I do not like regulations which limit competition but I do not mind regulations which hurt competitors, and the two are very different things.

My feeling is that, as a company, Bell is betting on the wrong horse. It's better off doubling down on new technology than old technology.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Diadem » Wed Feb 02, 2011 2:26 am UTC

Jessica wrote:Phoenix is essentially right, and is the reason why there isn't really an option to switch. Bell "owns" the phone lines, so any DSL companies that exist either have to put up new telephone lines, or deal with bell.

Ehm, aren't telephone lines rather outdated these days? Can't people get cable or fiber? Or wireless. I guess cable will still usually be a monopoly, but unless they are owned by the same company that's at least one more competitor. And cable itself is already pretty outdated anyway.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Princess Marzipan » Wed Feb 02, 2011 2:28 am UTC

Vaniver, I was referring to the price fixing referenced by PheonixEnigma.

PheonixEnigma wrote:An ISP could probably win more customers if they priced reasonably, but they're highly aware it's in the best interest of all ISPs that none do so. They will (generally) all play ball and go with UBB because of that.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby mmmcannibalism » Wed Feb 02, 2011 2:28 am UTC

That is to say, I do not like regulations which limit competition but I do not mind regulations which hurt competitors, and the two are very different things.


Actually could you explain this, I think its just a syntax thing but I'm not sure what you mean by the second phrase.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Aetius » Wed Feb 02, 2011 2:56 am UTC

Princess Marzipan wrote:Vaniver, I was referring to the price fixing referenced by PheonixEnigma.

PheonixEnigma wrote:An ISP could probably win more customers if they priced reasonably, but they're highly aware it's in the best interest of all ISPs that none do so. They will (generally) all play ball and go with UBB because of that.


It's not an issue of price fixing. Those ISPs can compete amongst themselves for the services they offer, but that is all under the umbrella of Bell because Bell owns the last mile wires. They all have to pay whatever Bell charges for that access, and it is at this point in the system that the financial chokepoint is occurring. Bell's decision will proliferate to every ISP not because of collusion, but because they have no choice.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Hawknc » Wed Feb 02, 2011 3:05 am UTC

EmptySet wrote:
Hawknc wrote:I've never been so glad for the Aussie system, where you just get your speed throttled if you go over your allotted download limit for the month and you can get anything from 10GB to 500GB or more. My sympathies to you guys on this, it truly is a uniformly terrible idea.


I'd be more glad for the Aussie system if I didn't have to pay three times as much for a service which is both slower and has a lower download limit than the oh-so-terrible system which Canadians are apparently horrified about.

I don't disagree that the quality of service is well below that of other comparably ranked nations. We're just not charged for excessive downloading off a too-small base, which is what's happening in Canada. Hopefully NBN Co. doesn't see it as a shining example of a way to make money.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby PhoenixEnigma » Wed Feb 02, 2011 3:08 am UTC

Diadem wrote:
Jessica wrote:Phoenix is essentially right, and is the reason why there isn't really an option to switch. Bell "owns" the phone lines, so any DSL companies that exist either have to put up new telephone lines, or deal with bell.

Ehm, aren't telephone lines rather outdated these days? Can't people get cable or fiber? Or wireless. I guess cable will still usually be a monopoly, but unless they are owned by the same company that's at least one more competitor. And cable itself is already pretty outdated anyway.

Generally, here's it's one DSL and one cable provider. We're still one of the worst places in the world for cellular data, IIRC, and wireless broadband has serious capacity limits - it doesn't scale well at all, you can't use it as a DSL replacement in metro areas very well. Fiber is on the horizon, but it's just the DSL companies putting it in to replace (old, crappy) copper, no new competitors. Generally, the DSL guys and the cable guys are nice to each other, because it's a big, juicy pie to split, and if they get along the pie gets even bigger.

Basically, anyone who wants to get into the market would somehow have to find a business model that lets them compete with the highly profitable incumbents while building out what would, quite literally, a multi-billion dollar network - and even if they could, history shows they'd likely get purchased by one of the incumbents, and we're right back where we started.

Ninja-edit: Aetius, it's Bell screwing over the indie DSL based ISPs and collusion (effectively) with the cable internet providers that causes the problem. One or the other should be correctable by market forces, but not both together.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Vaniver » Wed Feb 02, 2011 4:09 am UTC

Princess Marzipan wrote:Vaniver, I was referring to the price fixing referenced by PheonixEnigma.
Cartels are typically unstable, and the freer the market the more difficult it is to form a cartel. Should price-fixing be illegal? It's not clear to me that it's fraud, or anything besides a win-lose bargaining tactic, and I don't think it being win-lose is enough that it should be illegal. I think the case against monopolies and cartels has historically been so overstated it is safer to underestimate their danger than overestimate it, but am not entirely opposed to government even-handedly preventing collusion by any combination of businesses, labor, and customers.

My understanding of the Canadian situation is that Bell is the only internet provider, but it has a number of independent faces that repackage its services for the final end-user, and this regulatory decision is diminishing the ability of those independent faces to repackage its services, hurting a particular class of end-users. It seems to me that this isn't price-fixing so much as breaking up buyer's cooperatives, which... seems unpleasant and a bad decision, but possibly within Bell's rights.

mmmcannibalism wrote:Actually could you explain this, I think its just a syntax thing but I'm not sure what you mean by the second phrase.
In many American legal cases, the standard used for anti-trust law was "would X's action drive X's competitors out of business?" rather than "is X preventing competitors from appearing?". It is illegal to manufacture and sell iPods unless you are Apple, which is a fine application of IP law, but it is not illegal to manufacture and sell an mp3 player you design. It would be unfair monopolizing if Apple leveraged its buying power from suppliers to convince them to not supply anyone else who makes an mp3 player- then Apple would be preventing competitors from appearing.

However, if Apple simply made the best mp3 player in existence, and sold it for a fraction of what anyone else could sell crappier mp3 players for, then Apple isn't unfairly monopolizing. It's possible to compete with them and they haven't stacked the field in their favor, and so it's just very difficult to beat them on their merits.

This comes up because a company like Netflix might come along with a business model so much better than any of its competitors that the competitors are doomed to go out of business. Netflix isn't acting anti-competitively; they're just competing better than anyone else on the field. It's not Netflix's fault they're so much better than everyone else, and everyone is better off if they take market share from the competition until only Netflix is left. Under the first standard I mentioned above, one could make the claim that Netflix is a "monopoly" solely due to its large market share, which entirely ignores what monopolies are and why it is beneficial to regulate them. The downside of monopolies is that they put prices above where a competitive market would be, not that they drive prices so low their competition dries up. Those competitors, however, have a strong interest in twisting anti-trust laws to save themselves.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby mmmcannibalism » Wed Feb 02, 2011 4:16 am UTC

Spoiler:
In many American legal cases, the standard used for anti-trust law was "would X's action drive X's competitors out of business?" rather than "is X preventing competitors from appearing?". It is illegal to manufacture and sell iPods unless you are Apple, which is a fine application of IP law, but it is not illegal to manufacture and sell an mp3 player you design. It would be unfair monopolizing if Apple leveraged its buying power from suppliers to convince them to not supply anyone else who makes an mp3 player- then Apple would be preventing competitors from appearing.

However, if Apple simply made the best mp3 player in existence, and sold it for a fraction of what anyone else could sell crappier mp3 players for, then Apple isn't unfairly monopolizing. It's possible to compete with them and they haven't stacked the field in their favor, and so it's just very difficult to beat them on their merits.

This comes up because a company like Netflix might come along with a business model so much better than any of its competitors that the competitors are doomed to go out of business. Netflix isn't acting anti-competitively; they're just competing better than anyone else on the field. It's not Netflix's fault they're so much better than everyone else, and everyone is better off if they take market share from the competition until only Netflix is left. Under the first standard I mentioned above, one could make the claim that Netflix is a "monopoly" solely due to its large market share, which entirely ignores what monopolies are and why it is beneficial to regulate them. The downside of monopolies is that they put prices above where a competitive market would be, not that they drive prices so low their competition dries up. Those competitors, however, have a strong interest in twisting anti-trust laws to save themselves.

Thanks for the explanation
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Vash » Wed Feb 02, 2011 4:58 am UTC

Obby wrote:The only people who ever ... more, as well.


I now have had to change to business internet for $15 more per month in order to remove the bandwidth cap. It's garbage. It's literally the same internet connection with a few extra features and no cap. Absolutely nothing will change, but I have to pay more.

That said, it's not nearly as garbage as 25GB caps. That's absurd. You can watch, what, 2 HD movies? Seriously, even with a 250GB cap, I don't understand how Netflix would work at all.

Jessica wrote:
broken_escalator wrote:I wonder how this will effect services like netflix that allow you to stream or download movies in HD.
A lot


I hope that pressure from Netflix can get these changes reversed, and prevent it for the US as well.

Obby wrote:The only people who ... more, as well.


This is frequently cited by the cable companies, but I have never seen any evidence for it. That said, most users who simply browse webpages should use less than a 25GB cap. Having had to monitor my bandwidth, I know that you can use a good deal of it even through web browsing alone, however.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Magnanimous » Wed Feb 02, 2011 5:19 am UTC

Xeio wrote:I've always wondered why government didn't just do what it did to power/water/gas with the internet. :?

As far as I can tell, the main reason is that usage varies so widely. Everyone uses the same amount of water more or less, so it makes sense to charge the same rate for everyone... But some houses use less than a gig of bandwidth per month, and others can go over 300 GB easily. ISPs could charge based on <expected profit>/<total bandwidth, GB>, but then internet bills would range between a few cents and fifty bucks and that would feel awkward. (?)

I can agree with the principle of bandwidth capping, but charging two dollars per extra gig is ridiculous. I could understand 5-10 cents/GB, but... no.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby villadelfia » Wed Feb 02, 2011 6:21 am UTC

Wow, and just think that we in Belgium only got the 2 big ISP's on the no limit train recently. It's a pity that Canada will be forced to take a step back.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby LaserGuy » Wed Feb 02, 2011 6:56 am UTC

Hawknc wrote:I've never been so glad for the Aussie system, where you just get your speed throttled if you go over your allotted download limit for the month and you can get anything from 10GB to 500GB or more. My sympathies to you guys on this, it truly is a uniformly terrible idea.


Canadians get their speeds throttled below the download limit. Any time you're using the Internet during "peak hours" in Canada, there's a half decent chance your connection is being throttled. I have never come close to hitting the advertised download rate on my Internet connection. If I remember correctly, someone tried to sue one of the ISPs for advertising theoretical maximum download speeds that were impossible for the consumer to ever hit. I don't remember how that was resolved.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Triangle_Man » Wed Feb 02, 2011 7:58 am UTC

Well, that could be part of the reason why my internet crapped out of me at school the other day for no reason.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Qaanol » Wed Feb 02, 2011 8:00 am UTC

Magnanimous wrote:
Xeio wrote:I've always wondered why government didn't just do what it did to power/water/gas with the internet. :?

As far as I can tell, the main reason is that usage varies so widely. Everyone uses the same amount of water more or less, so it makes sense to charge the same rate for everyone... But some houses use less than a gig of bandwidth per month, and others can go over 300 GB easily. ISPs could charge based on <expected profit>/<total bandwidth, GB>, but then internet bills would range between a few cents and fifty bucks and that would feel awkward. (?)

I can agree with the principle of bandwidth capping, but charging two dollars per extra gig is ridiculous. I could understand 5-10 cents/GB, but... no.


That’s an interesting take, but one I disagree with. With water and electricity, there is a significant marginal cost associated with generating and transporting the commodity. For internet connections, the marginal cost of delivering data is negligible. The only costs are installation, maintenance, and upgrading.

Maintenance and upgrading are ongoing costs, so it makes sense that there should be some regular payments, either in terms of monthly fees or annual taxes, in order to cover them. But any reasonable pay-per-use system should base its costs on the marginal cost to deliver the commodity that is used. In other words, almost none.

What could make sense is a sort of “soft-cap” on instantaneous transfer rates, whereby everyone’s connection is slowed down evenly when the network is unable to physically support the bandwidth requested.

Vaniver: The cost to construct a separate broadband network is enormous. Presumably an ISP can make a healthy profit charging much less than what is poised to take effect in Canada soon. However, if someone, let’s say me, decides to start building a network to compete, then Bell can just drop its prices a little bit so that it no longer looks so profitable for me to enter the market. Once I give up on constructing my network, they can jack up their prices again.

Since I recognize they can do this, I realize there’s no sense in starting to build the competing network. Even if I sunk in the huge capital investment to complete such a network, then I’d be in a price war right from the start, and I’d probably have to operate at a loss for a long time just to get some customers, because the current ISP would be apt to drop its prices further to drive me out of the market.

In the short term that would be great for customers, to have a competitive market. But both ISPs would be losing money, and most likely one of them would go out of business. The survivor could jack up prices again, and the loser would be out of luck and out a lot of money. And the customers would be right back where they are now, with only one ISP charging stupid-high prices.

This is, I’m sure you recognize, a natural monopoly. The cost of entry is absurdly large, as it entails constructing a transcontinental broadband grid. The marginal costs are dirt cheap, especially if you go the route of burying the fiber-optic cables so you don’t have to worry about phone poles blowing down in the winter.

No matter what the market initially looks like, no matter how competitive, the commodity in question inevitably and intrinsically leads to monopolization in a free market. In a monopoly situation, as you know, the sole remaining supplier sets prices to maximize its profits. This results in higher prices and less quantity of the commodity available than the ideal maximally-competitive equilibrium point. In other words, it leads to a net deadweight loss, where on balance everyone is worse off (the amount that the monopolizer is better off is exceeded by the amount that everyone else is worse off).

Because it is the principle directive of any government to improve life for all its people, any commodity which is a natural monopoly—and which also improves life for people—should be strictly regulated or even managed entirely by the government. Exactly how the real costs of provide the commodity (in this case laying the cable, maintaining the network, and upgrading the equipment) are to be met is open for debate, but in no case should there be any profiteering.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Joeldi » Wed Feb 02, 2011 10:12 am UTC

Sorry to be a bit 4chan in here but I take every opportunity to complain about my terrible internet compared to everyone else in the western world.

>25GB Cap
>Ridiculously small

HAHAHAHAHAHAHAHAHAHAHA, My cap is 1500MB/month before getting shaped from the already small 256kb/s to 64kb/s.

I live in bumfuck nowhere, true, but I'm pretty sure most people in the closest city are only on 10-15GB/month.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Gelsamel » Wed Feb 02, 2011 10:23 am UTC

I have no problem with metered/capped internet, as long as it's reasonable and not exploiting a monopoly. It makes sense to pay more the more you use, and it circumvents the problem of not having enough money to maintain and expand infrastructure (which leads to companies wanting to charge content providers for clogging up the tubes!).

The problem is when you don't have much choice in the matter or the prices are exploitive of a monopoly or anti-trust or whatever. So the top 1% should be able to buy a larger plan, or a plan that has low meter fees 'cause they'll expect to use a lot of it.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Hawknc » Wed Feb 02, 2011 11:21 am UTC

Joeldi wrote:Sorry to be a bit 4chan in here but I take every opportunity to complain about my terrible internet compared to everyone else in the western world.

>25GB Cap
>Ridiculously small

HAHAHAHAHAHAHAHAHAHAHA, My cap is 1500MB/month before getting shaped from the already small 256kb/s to 64kb/s.

I live in bumfuck nowhere, true, but I'm pretty sure most people in the closest city are only on 10-15GB/month.

Well, that's the point of the NBN - anything worth using the internet for is going to need a lot more bandwidth than that. You should have access to better speeds and download limits, even 25GB will be barely adequate moving forward.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Vash » Wed Feb 02, 2011 12:10 pm UTC

I think we are forgetting what was intuitively one of the reasons bandwidth caps came about in the first place (at least for Comcast), which was to limit illegal downloading through P2P. I am not quite sure that the idea that bandwidth was limited in the first place was true. If there are only a few heavy users in a local system, it is hard to believe that limiting their bandwidth would change anything, as well. Further, businesses all in the same place you would expect to have much higher load, but there is no mention of that being the case, and no major rate hikes in business internet (it is only slightly more expensive). The cable company story is obvious bull. I don't know if we can find out the precise facts without legal action.

Joeldi wrote:64kb/s.


Just go back to 56k, if it's cheaper. Anyone who offers 64 kbps is honestly an idiot for that reason. Does 56k have bandwidth limits? I have no idea at this point.
Last edited by Vash on Wed Feb 02, 2011 12:21 pm UTC, edited 1 time in total.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Zamfir » Wed Feb 02, 2011 2:07 pm UTC

Vash wrote:I think we are forgetting what was intuitively one of the reasons bandwidth caps came about in the first place (at least for Comcast), which was to limit illegal downloading through P2P. I am not quite sure that the idea that bandwidth was limited in the first place was true. If there are only a few heavy users in a local system, it is hard to believe that limiting their bandwidth would change anything, as well.

Not sure about that. Lots of users don't use p2p, do not download software and don't use their computer as a kind of TV. Those users will rarely reach a GB in a month.

So 100GB+ users might well be generating as much traffic as a hundred or more modal users. A few thousand heavy downloaders might well generate as much as an entire city of non-downloaders.

of course, a lot of that traffic is off-peak, but it still seems very possible that heavy users put strain ont he system.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Jessica » Wed Feb 02, 2011 3:38 pm UTC

The government is in the process of "considering to repeal" the decision. We'll see where it goes. I really hope that the government realizes what a horrible thing is going on right now.


As for wireless - The big two companies also own the wireless networks.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Technical Ben » Wed Feb 02, 2011 4:11 pm UTC

I can totally understand a "pay as you go" option.
I mean, that is how electric is done right? I do not see anyone offering "eat as much as you can electric" or "300kwh a month!". Why? Because being cut off would make customers mad. Because it's open to abuse with heavy users.
Why can ISPs not do the same as electric and water billing?
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Zamfir » Wed Feb 02, 2011 4:25 pm UTC

Technical Ben wrote:I can totally understand a "pay as you go" option.
I mean, that is how electric is done right? I do not see anyone offering "eat as much as you can electric" or "300kwh a month!". Why? Because being cut off would make customers mad. Because it's open to abuse with heavy users.
Why can ISPs not do the same as electric and water billing?

I am not that much of an expert, but as I understand it the cost of internet service is to a very large degree determined by the maximum capacity, not the total use. That's true for the hardware of the provider itself, and to some extent for the bandwidth they hire in turn too.

So once a prvider has enough capability to offer their user base a certain level of performance at peak hours, it is relatively cheap for them to offer that level of performance for the rest of the time too. If you max out your conenction 24/7 downloading, they probably only care about that for a few hours a day, when everyone else is using their connection too.

or in other words, unused bandwidth anywhere is just wasted opportunity. While unused power grid capacity can only be filled by actually generating power somewhere, using fuel.

If nuclear power was the only source of electricity (so that unused power capacity is mostly wasted too), you might see electricity payment schemes resembling ISP payments: a fixed amount per month, and only a cap on your power.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby iop » Wed Feb 02, 2011 5:28 pm UTC

Vaniver wrote:The downside of monopolies is that they put prices above where a competitive market would be, not that they drive prices so low their competition dries up. Those competitors, however, have a strong interest in twisting anti-trust laws to save themselves.

Sure, but in a business with a huge financial barrier to entry (like burying wires everywhere, or building an oil refinery), a monopoly can protect itself by threatening to lower prices a bit. And with any business that needs a huge financial investment upfront, returns have to be both large and secure so that you can find investors. Thus, realistically, there won't be any competition for the last mile for Bell, because there is no guarantee that today's technology will be used for long enough (maybe we all get satellite uplinks soon) for the investment to provide better returns than, say, investing in pharmaceutical companies.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby cjmcjmcjmcjm » Wed Feb 02, 2011 9:34 pm UTC

iop wrote:
Vaniver wrote:The downside of monopolies is that they put prices above where a competitive market would be, not that they drive prices so low their competition dries up. Those competitors, however, have a strong interest in twisting anti-trust laws to save themselves.

Sure, but in a business with a huge financial barrier to entry (like burying wires everywhere, or building an oil refinery), a monopoly can protect itself by threatening to lower prices a bit. And with any business that needs a huge financial investment upfront, returns have to be both large and secure so that you can find investors. Thus, realistically, there won't be any competition for the last mile for Bell, because there is no guarantee that today's technology will be used for long enough (maybe we all get satellite uplinks soon) for the investment to provide better returns than, say, investing in pharmaceutical companies.

I think what you two are both saying is that monopolies price themselves as high as possible without being priced so high that a competitor selling at "normal" market value would make a notable return of investment.

Anyway, I'd have some better-formed plans, but my school's internet (in the UK) is so terrible that I have a hard time feeling sorry enough to do anything. If this still is an issue once I'm back in the US, I'll probably be much more vocal
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Qaanol » Wed Feb 02, 2011 9:57 pm UTC

cjmcjmcjmcjm wrote:I think what you two are both saying is that monopolies price themselves as high as possible without being priced so high that a competitor selling at "normal" market value would make a notable return of investment.

I can’t vouch for what either of them were saying, but I can state that monopolies have other limiting factors on their pricing. Notably, at a certain price, if they raise it any further then enough people will simply stop buying the commodity that the monopoly would realize decreased profits. That is the expected price an unregulated monopoly will tend toward, according to basic economic theory.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby iop » Wed Feb 02, 2011 10:31 pm UTC

cjmcjmcjmcjm wrote:
iop wrote:
Vaniver wrote:The downside of monopolies is that they put prices above where a competitive market would be, not that they drive prices so low their competition dries up. Those competitors, however, have a strong interest in twisting anti-trust laws to save themselves.

Sure, but in a business with a huge financial barrier to entry (like burying wires everywhere, or building an oil refinery), a monopoly can protect itself by threatening to lower prices a bit. And with any business that needs a huge financial investment upfront, returns have to be both large and secure so that you can find investors. Thus, realistically, there won't be any competition for the last mile for Bell, because there is no guarantee that today's technology will be used for long enough (maybe we all get satellite uplinks soon) for the investment to provide better returns than, say, investing in pharmaceutical companies.

I think what you two are both saying is that monopolies price themselves as high as possible without being priced so high that a competitor selling at "normal" market value would make a notable return of investment.

Sort of.

A monopoly will raise prices as much as they can. However, they're limited by a few factors: People can just stop buying, as Qaanol says, because either it's just not worth it anymore, or because substitute goods become more attractive. Also, in the real world, if what they sell is something considered important for the nation (e.g. gas), there will be political pressure or even regulation to keep monopolies or oligopolies in check. Finally, for free (as in ideal) markets, there is no entry barrier for competitors, so a monopoly that sells above the fair market value will get competition fairly quickly.

However, the "last mile" is one of these things where you have to make a huge upfront investment before you can actually start earning money. As long as money is tight, i.e. there is no shortage for investment opportunities, the money will go somewhere where there will be interesting returns. Sinking your money into a technology that may be outdated before the investment pays off is not an optimal investment strategy. Thus, a monopoly that is protected by strong financial barriers will not have to lower prices to stave off competition, all they have to do is be able to lower prices in case a competitor were to start digging up streets, which would make an investment in a competing business very little profitable.

/aside: Another example for a business with large financial barrier of entry is oil refineries, where Californians used to complain that evil businesses were keeping prices artificially high in recent years by not increasing capacity. However, who in their right mind would shell out tons of money to be able to refine oil that is likely to run low (or out) before the refinery is paid off?

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Crius » Wed Feb 02, 2011 11:08 pm UTC

Vash wrote:That said, it's not nearly as garbage as 25GB caps. That's absurd. You can watch, what, 2 HD movies? Seriously, even with a 250GB cap, I don't understand how Netflix would work at all.


Netflix will take up to about a GB/hour, so 25GB will give you more than 2 movies. That's more like 10-15 movies a month, which is still super easy to hit.

250GB would mean something like running netflix 8 hours a day every day to hit the cap.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Yakk » Wed Feb 02, 2011 11:20 pm UTC

cjmcjmcjmcjm wrote:I think what you two are both saying is that monopolies price themselves as high as possible without being priced so high that a competitor selling at "normal" market value would make a notable return of investment.

Nope. Weirdly, the price that a natural infrastructure-style anti-competitive monopoly sets has little to do with competitors.

Take something with high upfront costs, like last-mile wiring. You, as an existing company, can lower prices down to the point of paying for current maintenance on your infrastructure and not go operationally bankrupt.

And a competitor knows this.

So they have to have a plan to enter the market, pay for all of their infrastructure, compete with you when you are at "dumping" rates of "only paying for maintenance", and still generate a profit (accounting for building the infrastructure!)

Note that none of this has anything to do with the current prices you are charging. Because the current prices that your company is charging are NOT going to be the prices you'll charge when competition arrives -- you'll cut prices, put them out of business, and then bring the prices back up. This costs you little, lets you keep your high prices, and teaches that it is a bad idea to try to compete with you. This strategy, which is a really strong one, is one of the reasons why "subsidizing from a monopoly" is considered anti-competitive.

Now, there are other issues here. First, your strategy can be to blackmail the existing monopoly -- it might be cheaper to "buy you out" than keep prices low until you go bankrupt. So you build your capacity, start selling, drive prices down, and offer to sell out back to the monopoly. This is the case where the monopolies current prices factor into the equation of "do I enter this market". This is a shorter term strategy than the above for the monopoly, because this just encourages people to start such companies.

The monopoly could decide that letting you compete is a better idea than dumping prices, or buying you out, because they care more about short-term profits. This as well means that your current prices matter to new competitors. This is an even shorter term strategy, because such companies can start to grow and spread, and become real competitors.

Another issue is that as you set high prices, your inefficiencies can creep up. Modern business practices attempt to make sure that costs and prices are not all that related, pushing costs down even when they are nowhere near revenue. So a monopoly with inefficiencies can be defeated by a young nimble company with lower costs... even if the monopoly tries to dump and engage in a price war.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Ryom » Thu Feb 03, 2011 2:36 am UTC

Downloading "Star Wars: The Force Unleashed" from Steam will put you over the cap as the download is nearly 40GB. Downloading Dragon Age Origins will use up half your cap... downloading the DLC will use up half again what is left. Watching one 1.5 hour movie on netflix every day will put you over the cap.

You'd use up your allotted bandwidth of 25GB at 5mbps of sustained use before the first day. Lawsuit worthy.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Vash » Thu Feb 03, 2011 4:43 am UTC

Crius wrote:Netflix will take up to about a GB/hour, so 25GB will give you more than 2 movies. That's more like 10-15 movies a month, which is still super easy to hit.

250GB would mean something like running netflix 8 hours a day every day to hit the cap.


That estimate has to be wrong for HD movies. 1080p is 5GB/hour. Are you sure that is not the estimate for standard definition (480i or 480p)? Standard definition is about 1GB/hour. In fact, 720p is 3GB/hour. I don't think Netflix could have that much more efficient compression. From what I am reading, their top-quality movies are 2.5GB/hour, which would make sense if they were sending 720p maximum DVD resolution and had somewhat more efficient compression.

I suppose 250GB is hard to hit, even with 11GB movies (that's 23 movies). Then again, if you have 2 or 3 people watching their own movies, then it's not hard at all. There are also other demands, some of them voluminous. For my internet, there are multiple users and internet backup. Most months have been 150GB or more with rather restricted usage. That's not even with Netflix.

25GB is indeed 2 or possibly 3 movies in 1080p.

Yakk wrote:Nope. Weirdly, the price that ... in a price war.


How would you interpret how, in my region, FIOS is moving in, is around the same price (or slightly cheaper for the amount of bandwidth), lacks caps, but Comcast is not lowering prices? Might Comcast has too slim of a margin? I do know that they had to update their cable TV for 720p, and then probably again for 1080p. I don't know the second thing for sure, though.


As for possible solutions to the problem of internet/tv monopolies, how hard would it be for the government to build infrastructure that would allow the installation of cables/fiber-optics by a few different companies with relative ease? It would certainly be a public good. I suppose it would be a lot of money, though.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Iceman » Thu Feb 03, 2011 5:33 am UTC

Just to clarify a bit,

2 Major competitors, Bell and Rogers dominate Canadian Internet Access.

Bell doing this shuts out competitors who re-sell access to what is ultimately Bell communication lines, so they increase their business by cutting off alternative services.

But Rogers will still remain their external competitor offering cable access.

Basically, people are looking at this as if people's limits are actually being lowered or that it will actually cost more...but it will only cost more If you use one of the systems using Bell's system.

If you switch to Bell or Rogers directly, you'd still get the same thing at the same price.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby KittenKaboodle » Thu Feb 03, 2011 7:03 am UTC

Magnanimous wrote: I can agree with the principle of bandwidth capping, but charging two dollars per extra gig is ridiculous. I could understand 5-10 cents/GB, but... no.

You darn kids got off my lawn! :wink:
Y'all are making me feel old, I remember when Compuserve advertized that one could could download a "floppy full of data for less than a dollar".
Runing a 9600BAUD modem 24/7 one couldn't get more than 2 GB a month even if one could afford to pay a couple thousand dollars for it*
Wasn't all bad though, for a time Compuserve wound send users a CD by snail mail each month with multimedia and stuff that was too freaking big to transmit online. Of course I did have to walk 6 miles uphill in the snow to get to the post office :P

Someone else already asked, but I didn't see a good answer to; why do the French speaking have to pay more ? There is a thread titled (incorreclty) "Canada censors Dire Straits" where people are upset about a word offensive to a certain minority, but it is ok to charge another minority more money?
Sure the population density in northern Quebec is low, but they aren't exactlty cheek by jowl anyhere in Canada are they?


*yes i know that if one had that kind of money there were better options that 9600 dial up, but it makes the comparison the "ridiculous" $2/GB more vivd to suggest $1000/GB, and that was back when $1000 was real money, why, one could buy a 600DPI/8 PPM laser printer or 32MB yes, 'M' of RAM or a pretty good 17" SVGA monitor for $1000.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Zamfir » Thu Feb 03, 2011 7:51 am UTC

KittenKaboodle wrote:Of course I did have to walk 6 miles uphill in the snow to get to the post office :P

In my time, we had to walk uphill both ways.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Gellert1984 » Thu Feb 03, 2011 9:53 am UTC

good news everyone!

Spoiler:
OTTAWA—A controversial CRTC decision that effectively imposed usage-based Internet billing on small service providers will be reversed, the Toronto Star has learned.

“The CRTC should be under no illusion — the Prime Minister and minister of Industry will reverse this decision unless the CRTC does it itself,” a senior Conservative government official said Wednesday.

“If they don’t reconsider we will reverse their decision.”

The promise to reverse the ruling comes as CRTC Chair Konrad von Finckenstein is scheduled to explain the decision Thursday before the House of Commons industry committee.

While the Canadian Radio-television and Telecommunications Commission is an independent agency, its decision can be overturned by cabinet. The Star was told that could happen as early as next week.

The CRTC decision has sparked outrage across the country with Canadians rushing to sign petitions asking the Conservative government to reverse it. Industry Minister Tony Clement has received tens of thousands of emails requesting that it be struck down.

“Frankly, a decision like this is clearly not in the best interest of consumers,” the senior official said.

“This is a bread-and-butter issue.”

The CRTC’s ruling affects the wholesale business of the major Internet service providers, who sell capacity to smaller resellers. To encourage competition, major telecom operators that have spent heavily on infrastructure are required to lease bandwidth on their networks to small providers.

Major providers charge customers extra if they download more than the monthly limits they set, typically between 20 and 60 gigabytes. Small providers, however, offer plans with 200 gigabyte ceilings and even unlimited use.

The issue came to a head last week, when the CRTC denied independent service providers the right to continue offering unlimited Internet plans.

Although critics say the CRTC ruling will lead to lower download limits and higher rates, major Internet service providers say usage-based billing based is fair because it means heavy users pay more than those who just surf the web and use email.

As it invests billions in new broadband capacity, Bell says old pricing structures need to be brought in line with the huge amount of growth in Internet usage. Businesses and consumers are increasingly relying on the Internet to download videos, documents and even software. Rogers says its customers are using about 40 per cent more data each year.

Consumers’ Association of Canada president Bruce Cran said the CRTC decision is nothing but corporate gouging by Canada’s monopolistic communications companies.

John Reid, president of CATA Alliance, a group that advocates for innovation in Canada, said, “This has to be a decision that Canada makes — that it wants to be the best in the world in the provision of high-speed Internet.”

He added, however, that usage-based billing is not the answer.

“You don’t want to stifle the sort of richness that comes from using high-speed Internet,” says Reid.


TLDR; The CRTC either reverses its decision or the prime minister and the industrial minister will do it for them.
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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Yakk » Thu Feb 03, 2011 2:44 pm UTC

Ah, Tony finally gets to share some good news!
One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision - BR

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby iop » Thu Feb 03, 2011 2:54 pm UTC

KittenKaboodle wrote:Wasn't all bad though, for a time Compuserve wound send users a CD by snail mail each month with multimedia and stuff that was too freaking big to transmit online. Of course I did have to walk 6 miles uphill in the snow to get to the post office :P

The fastest way to transfer large amounts data is still fedexing storage media, though it's not much fun to receive a spindle of DVDs that you have to copy manually.

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Re: 200GB to 25GB: Canada gets first, bitter dose of metered

Postby Zamfir » Thu Feb 03, 2011 3:02 pm UTC

iop wrote:
KittenKaboodle wrote:Wasn't all bad though, for a time Compuserve wound send users a CD by snail mail each month with multimedia and stuff that was too freaking big to transmit online. Of course I did have to walk 6 miles uphill in the snow to get to the post office :P

The fastest way to transfer large amounts data is still fedexing storage media, though it's not much fun to receive a spindle of DVDs that you have to copy manually.

Why not fedex a hard disk?


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