BBC vs ISPs: Readers blame monkey, organ grinder escapes

And here's an argument supporting tiered pricing.

ISPs are in a weak position to criticize the BBC's idiotic tiered-service pricing proposals, because their existing pricing system is just as demented, and is fraught with perverse incentives that have put them in their present bind.

The thing is, broadband ISPs marketing materials currently pretend that they guarantee something like 1-2 MB/s for a flat rate to all their customers all the time, despite the fact that they know that their available total bandwidth is much less than that, and that if all their customers were to ship packets 24/7, they would all be getting the equivalent bandwidth of a dial-up 56k modem, at best.

This is really stupid, and is the real basis for ISP's freak-out behavior (and misbehavior) upon being confronted with the rise of P2P applications, which bring large increases in data transfer efficiency at the cost of customer computers saturating their supposedly available bandwidth 24/7. In this sense, Comcast's recent loopy public posture can be traced to a variant of the "Tragedy Of The Commons," except that it's more like a black comedy instead.

The solution, which nobody appears to be talking about, is not to make technical fixes to bandwidth-throttling router algorithms. What the ISPs should be doing is charging people for the real cost of their network usage. They should drop the hollow pretense of flat-rate bandwidth guarantees, and instead charge people a flat rate *per bandwidth-hour*. People who transact 2Gb of packets per month should be paying roughly twice what people who only do 1Gb per month, and so on.

A very rough US-centric calculation, assuming a typical 2Mb/s for $20/month current flat-rate contract for an ISP that expects you to use about one per cent of that bandwidth means that they value bandwidth at about $2.60/Gb. These numbers are probably a little squishy, so call it $2/Gb. That's what they *should* charge. Obviously the rate could be adjusted for off-peak-hour use, and so on.

Presto. No more perverse incentives. People start metering their own computer communications costs the way they do their phone and electricity, so the ISPs don't have to do it for them. The free-rider problem goes away. People who really want to watch TV on their computers bear the real costs of doing so.

Another benefit is that people might get a little more careful about their computer security, if they get charged for their commandeered computer whiling away its evenings by sending spam.

To some extent the free-rider problem now gets shifted to the P2P networks instead, since they now must rely on good-citizen community participation by network participants when participation actually costs participants something. Some P2P models might not survive the change. But those would be the ones that thrived due to a distorted bandwidth market. Presumably it would be possible to configure a P2P service that adjusts its costs and benefits to the real economics of bandwidth, so that people can afford to use it without going bankrupt. For example, I should be able to configure my P2P app with a monthly bandwidth-hour cap, with higher caps resulting in more available service to me.

Anyway, the larger point is, the BBC shouldn't be castigated for telling the ISPs how to charge their customers, at least until the ISPs stop doing such an incompetent job of it themselves.

Cheers,

Carlo Carlo Graziani

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