I haven’t posted in a long time. So if you’ve been here before, then welcome back. The recent throttling of the Santa Clara fire department is making this a critical issue. I feel compelled to talk about this because it’s something I’ve thought about for a long time. Plus organizing and writing out my thoughts helps me explain it better to family and friends.
Here is some context about why I’m writing this post. Santa Clara FD didn’t have an unlimited unthrottled plan when they should have. Verizon throttled them while they were fighting huge wildfires in California. I’m not going to comment about the problems between Santa Clara FD and Verizon. But I do have a lot to say about throttling and data caps in general.
Throttling became a thing when ISP’s stopped charging per megabyte rates. This BS would go away if ISPs started offering rated plans again. Only instead of dollars per megabyte it would be dollars per gigabyte.
T-Mobile and Verizon are tier 3 ISPs. That means they don’t have physical connections to other geographical regions. So they have to rely on others to make those connections for them. Companies like Level3 and AT&T are tier 1 ISPs. Tier 1 ISPs have physical connections spanning the entire world. Tier 3 ISPs make paid peering agreements with upstream tier 1 ISPs. This let’s them “see” the rest of the Internet. Tier 1 providers have always charged a per gigabyte/terabyte rate. At some point Tier 3 providers stopped charging per megabyte rates. Which I assume is because it’s easier on the consumer or for marketing reasons. Throttling wasn’t an issue before because the physical data rates were not that fast.
Consumption has always grown as the pipes got fatter. When Netflix and it’s kin showed up consumption exploded. You could use over a terabyte a month on a fast cable connection. The fixed monthly rate doesn’t jive with how people use the Internet today. I’ve heard of Netflix being used as background noise like it’s some kind of broadcast FM whitespace. 1080p video with 5.1 channel surround sound as background noise! That’s insane to me. It’s like running the hot water all day to humidify your house.
Tier 3 ISPs make their money by building out smaller networks to individuals. They divy up the bandwidth to each user based on how much profit margin they want. The ISP loses money if an individual user goes over their allotted margin. This is balanced out by other users who don’t use hardly any bandwidth.
The ISP for my home is AT&T U-verse and it has a rate cap of 1024 gigabytes. The line rate is 24 megabits per second and is the best achievable rate for my area. I’ve used 402GB this month and 90% of that is Steam and online video content. AT&T’s overage policy is very relaxed. This is as it should be with a Tier 1 provider. They only charge you the overage if you exceed your monthly cap three times. That overage is $10 per 50GB up to $100 total for U-verse customers. You can get an unlimited allowance for an extra $30 a month or by purchasing DIRECTV or U-verse TV on a combined plan.  I could use 1500GB per month and only pay an extra $100.
Nowadays you don’t pay for raw speed. What you DO pay for is the amount of profit margin you eat into. You can get an idea of how much ISPs divy up the bandwidth by looking at the rate cap for similarly priced plans. The total price for my limited plan above, including leases, taxes and fees, is about $70 to $80 a month. This number is a bit inaccurate because I recently changed my plan. It also has a discount applied because it came from an upgrade deal.
At 24 megabits per second I could download 7.884 TB (terabytes) of data in a month. Assuming I used up my data cap three times already, I would pay $180. On the unlimited plan I would pay $110. From 7.884 TB (terabytes), the rated price works out to $13.95/TB and $22.83/TB for each plan respectively. Assuming I wasn’t a crazy person and only downloaded 1.5 TB (terabytes), it works out to about $73.33/TB and $120.00/TB. If you work the sane & limited 1.5TB rate into gigabytes then it’s $0.12 per gigabyte.
In my mind 12 cents per gigabyte doesn’t sound too bad. There are 8 days left in the billing cycle at the time I checked my usage. I have used about 402 gigabytes so far. The rated price I would pay for 1.5TB is $48.24. This includes the equipment lease plus all taxes and fees. I would be completely OK with paying a usage rate subsidized by a $25.00 fixed rate. My natural gas provider does this. It makes sense when you take into account the peaks and lulls during winter and summer. Internet usage rates don’t change anyway near as much as natural gas. But the idea still fits somewhat.
ISPs have been too reliant on nobody using the bandwidth that was “promised”. Hardcore Internet users absolutely kill profit margins for tier 3 ISPs. Everyone should start paying a rated price again. Maybe then, they would stop using Netflix as background noise and sucking up bandwidth like it’s air.
I purposely set YouTube to 1440p because my monitor resolution is 1600×900. 1080p doesn’t fully account for encoding noise so I went one step higher. This gives me the sharpest picture possible without hogging too much bandwidth. I could watch videos in 4K but the extra resolution would just go to waste. Netflix resolution is moot for me because I don’t have the 4K plan.
Here is the math for the $48.24 result I got. All data rate calculations were done with base 10. Base 2 would be the pedantic way of doing things, but base 10 is easier to understand.
402GB currently monthly usage
$10.00 per 50GB overage
$100.00 U-verse maximum overage
Get the maximum “paid for” overage.
$100 / $10 = 10
10 * 50GB + 1000GB = 1500GB
Add overage to approximate monthly fixed rate
$80.00 + $100.00 = $180.00
Find the rated price per terabyte.
$180.00 / 1.5TB = $120.00/TB
Convert terabytes to gigabytes
$120.00/TB / 1000 = $0.12
Find rated monthly price
402GB * $0.12 = $48.24