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January 05, 2011

5 Reasons ISPs Implement Bandwidth Caps

I’ve been asking engineers around for reasons why ISPs around the world have been implementing bandwidth caps and got several possible scenarios to consider. Here are the top 5 most probable reasons behind the issue of bandwidth caps.

Some or all of these reasons might also be true for our local telcos/ISPs as well.

1) Subscription Mis-match. Residential subscribers using their connection beyond “residential use” (like for powering their internet cafe businesses). If you see one of those small mom’s and pop’s internet cafe that’s placed as an extension to a house, it’s highly probable they’ve used their residential line instead of getting a business subscription. (Why? Because a 2Mbps residential subscription is 50% cheaper than a 2Mbps business subscription.)

2) Over-subscription. ISPs take on more subscribers than they can actually handle. That means, if they sell you a 1Mbps connection for Php999, they might be actually allocating just 0.25Mbps to that subscriber so they can sell 3 more accounts to fit the actual 1Mbps allocation.

If ISPs didn’t allow “over-subscription” on their network, they might need to double the monthly service fees of subscribers just to hit the same annual revenue targets they currently get.

3) Abusive Users. Subscribers who are downloading files 24×7. That usage pattern can already be considered a business subscription rather than a residential subscription. The term “abusive” is debatable though. It’s the service provider that determines what “abusive” in the same way they’re the ones who defined what is “residential subscription” and “business subscription”.

NTC puts this figure at 1 – 2% of total broadband users. It might seem a bit small but that percentage is already equivalent to 30,000 to 60,000 subscribers (from an estimated 3 million broadband subscribers in the Philippines). If all of them sustained a 1Mbps download 24×7, that will use up 30-60Gbps of the whole network. Not sure if my figure is accurate but my guess is that total bandwidth available in the Philippines is in the 250Gbps to 300Gbps (half of which goes to big companies such as BPOs).

4) Mis-distribution. ISPs allocate a certain bandwidth to specific areas but oftentimes, the allocation to those areas do not match the cumulative usage of subscribers there. Hence, there will be areas where internet speeds are better than others.

5) Increase Subscriber Capacity. This is actually similar to over-subscription but the short explanation here would be — if the ISPs can just clamp down on the 1 – 2% of those abusive users from hogging the network, they can probably increase their subscriber capacity by an additional 10 – 20% more of their existing user base.

I believe the issue stemmed from a combination of several points raised above — I’d point the finger on over-subscription first then the network hoggers.

The article on bandwidth caps from Wikipedia mentions:

Many broadband Internet Service Providers in North America and Europe introduced bandwidth caps in the early 21st century. The same practice has been in place in Australia, New Zealand, Malaysia and South Africa since the release of broadband. NTT Communications in Japan imposes a 30GB/day upload cap with a warning for a first violation and disconnection for repeat offenders.

Remember that ISPs have already implemented the caps years ago, even before NTC made this draft memorandum. Just go over your Service Order Agreement with your ISP and there will be a section there that covers P2P throughput and month bandwidth caps (here’s a sample contract for Globe Broadband).

I strongly believe in the Free Market Economy — that the service provider that offers the best service will always get the most customers; that healthy competition will allow the market to stabilize and result to cheaper prices and/or better service (I used to pay Php1,995 for a 384Kbps connection; now it’s Php1,995 for 2Mbps — not a huge improvement but an improvement nonetheless) making the customers the ultimate winner.

Subscribers just need to be vigilant and I think what should be removed from the contracts is the lock-in period — that if you’re not satisfied with their service, you can just request for dis-connection anytime and switch providers immediately.

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82 Responses to “5 Reasons ISPs Implement Bandwidth Caps”

  1. re says:

    Assuming that I consume 30 GBPS Per month, a 6 mbps connection with 30 GBPS pricing only at P1000 could solve my rant!

  2. Vince
    Twitter: Vincent
    says:

    @re

    wrong unit. GBPS is a unit of speed (gigagbits per second). the correct unit you want is a unit of size, simple GB or gigagbyte

  3. jingle2x says:

    it doesn’t work that way explaining bandwidth allocation like an eat all you can restaurant.in the first place subscriber has a internet speed based subscription.that’s already capping..sample if have a 1mb subscription you can not and never will have a 5mb internet ,,why because from the beginning your connection is already limited to your based subscription,,so the term capping is just one way of lie,,,they want more subscriber more than what they can handle..there no need to reduce allocated internet speed if the isp has limit there subscriber to what there network can handle…

  4. Tim says:

    If a car dealer sold 1 car to 4 different people at full price and expected them to share it, he would be a criminal. Why can internet companies oversell accounts and expect customers to limit what they use so they company can sell more accounts?

    Don’t punish the consumers. Punish the companies selling things that they do not have! If they do not have the equipment to provide the kind of internet they are selling to people, they should not be allowed to take people’s money.

  5. WAAbuffet says:

    I think the capping is a good idea, as long as we get our money’s worth (i.e. if i get an CONSISTENT/UNINTERRUPTED 1Mbps at Php995 per month, with a cap of 5GB/day, well i’d be happy as heaven!)

    It think the solution is for ISPs to create more pipeline, to increase consumer capacity and avoid traffic. Also, huge companies like BPO should acquire their own their own internet connection server. They are the real network hoggers!

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Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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