pulled from Google Reader (click on title for original post)
Netflix on the use
of data caps by Canadian ISPs:
data caps are actually a very poor
way to manage demand and limit Internet congestion. All of the costs of
supplying residential broadband are for supporting the peak loads,
typically Sunday nights for residential customers.
Bandwidth consumed
off-peak is completely free; it literally has no marginal costs. If
ISPs really wanted to limit their costs and congestion, they would
limit speeds at peak times. But if their goal is instead to
increase
revenue, then making consumers pay $1 or more per gigabyte is an
excellent strategy.
When we state the marginal costs of
residential wired gigabyte are below one penny, but are not zero, that
is because we are making the appropriate costing assumption that some
of an average gigabyte is transferred at costly peak times.
Canadian consumers have been
outspoken against the excessive charges they face, and hopefully
Canadian ISPs will listen to them by raising the caps or abandoning
them altogether.
