Of bandwidth caps and pay as you go Internet

Maybe I’m easily amused, but I had fun reading through this huge troll of a thread on LYN yesterday evening. It was clearly posted from a dupe account made for the specific purpose of starting that thread, but the inspiration came from a comment by the real Fikri Saleh during an online interview with the Malaysian Minister for Science, Technology and Innovation Datuk Dr. Maximus Ongkili organized by The Star:

I am an Electrical Engineering undergraduate from the University of Melbourne, currently majoring in telecommunications. In Australia they charge you for download quotas, where the more you download, the more you will have to pay, say 100 GB @ $100 versus 20 GB @ $20, after which the speed is throttled down (slowed). By charging more for more quota, this can improve overall connection quality. The heavy downloaders can still download, but now they have to pay more. Thus we normal users do not have to put up with the network being bogged due to these heavy downloaders, because there will be fewer of them.

Regards,
Fikri Saleh

Predictably this stance met with enraged hostility from the LYN community which we can safely assume are mostly heavy downloaders. Sadly, even by the dismal standards of LYN’s Kopitiam, relatively few people advanced a coherent argument against charging fees according to bandwidth usage and most of the critics were reduced to personal attacks. The only real argument of note was that, given the track record of Tmnet, the largest ISP in the country, this move would simply increase ISP bills but would not result in improved service.

As a libertarian, I find it hard to argue against the principle that payment for the usage of a resource should be tied directly to how much of that resource is used, even when I happen to be a moderately heavy Internet user myself. While it’s true that I like the idea of paying a flat rate for un-metered Internet usage (and researchers have shown that this is generally true for lots of different things as well, even in cases when the consumers would have been better off by paying for each individual item instead of an all-inclusive package), I recognize the reality that no ISP can really offer unlimited usage.

What actually happens is that when you exceed some hidden limit, the ISP progressively throttles your connection so that your download speeds become slower and slower. This maintains the illusion that usage is unlimited but can be frustrating because it is impossible for the user to tell whether his net connection is slow due to it being throttled or due to technical issues or bandwidth limits on the server. This isn’t so bad if you exceed that hidden cap only rarely but if you’re a heavy user and run into the cap often, you’ll likely end up blaming the ISP for falsely advertising its connection speeds. All of which means that instead of trying to sell a single product for everyone, it would be fairer for all if ISPs tailored their packages for diferrent demographics.

Of course, this doesn’t mean that ISPs aren’t evil. Time Warner in the U.S. raised a ruckus earlier this year when it tried to institute tiered pricing schemes. It was forced to back down in the face of heavy protests but it was later revealed that its bandwidth costs were actually getting lower even as usage was increasing. However, I still feel that ISPs should be free to charge whatever the market will bear and customers should be free whether or not to buy what they’re selling. In this sense, the real problem in Malaysia isn’t about trying to reform Tmnet to make it better, it’s that the ISP still has a virtual monopoly on fixed-line Internet access in the country. Bring in more competition and we’ll see how much a gigabyte of data really costs in Malaysia.

3 thoughts on “Of bandwidth caps and pay as you go Internet”

  1. I think it is fair. But so much talk about cloud computing and new services over the internet, I think bandwidth caps can seriously impair efforts like cloud computing and digital distribution.

    My point is potentially our bandwidth usage could exponentially increase in the near future with such ideas cropping up. That is why I’m hesitant to support this just yet.

  2. Even if new services rely heavily on customers having high bandwidth, why should the companies offering these services, and presumably making money off of them, get a free ride on ISPs? Wouldn’t it make more sense for the ISPs to either impose tiered charges or get a cut of the profits of these companies who make use of their bandwidth?

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