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An Iowa ISP's Metered Pricing: What Will the Market Bear? 479

Posted by timothy
from the prices-as-pressure-gradient dept.
An anonymous reader writes "The East Buchanan Telephone Cooperative started charging cellular prices for home DSL internet service starting on January 1st, 2014. A 5GB plan costs $24.95 a month while a 25 GB plan will run $99.95 per month. 100 GB is the most data you can get in a package for $299.95 per month. Each additional GB is $5. They argue that the price increase is justified because their costs have increased by 900% since 2009. About half of their customers use less than 5 GB a month while their largest users use around 100 GB a month. They argue that the switch to measured internet will appropriately place the cost on their heaviest users. With the landmark Net Neutrality ruling this week will larger providers try to move to similar price models?"
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An Iowa ISP's Metered Pricing: What Will the Market Bear?

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  • by Anonymous Coward on Sunday January 19, 2014 @07:16PM (#46008761)

    One thing that's getting missed here is what cooperative means. My parents are part of another tele coop in another part of Iowa. Tele coops are relatively common in very rural areas and are owned by the subscribers and, at least in the case of my parent's coop and this coop, the subscribers receive dividends. (see http://www.eastbuchanan.com/about/dividends.htm )

    If the subscribers don't like it, they should show up to the coop meetings and have their say in the company that they themselves own.

  • Re:wtf (Score:5, Informative)

    by Trepidity (597) <(gro.hsikcah) (ta) (todhsals-muiriled)> on Sunday January 19, 2014 @07:17PM (#46008763)

    Here's a map [openstreetmap.org] showing the vicinity of the city in which they're located (Winthrop, Iowa). I'll let you guess how many options there are for broadband internet there...

  • by Cimexus (1355033) on Sunday January 19, 2014 @07:31PM (#46008905)

    No, this is nothing like Australia. Those rates are obscene. Australia may have metered internet but the prices are far, far lower.

    25 USD for 5 GB? (Australian ISPs would typically give you ~50 GB for $30 AUD, which is roughly equal in value)

    99.95 USD for a paltry 25 GB? WTF? 100 bucks in Australia gets you unlimited plans the ISPs that offer unlimited (e.g. TPG) or very-high-quota plans with others (Internode, one of the more expensive ISPs, gives you 1.2 TERAbytes per month for $109 AUD).

    This is only "Welcome to Australia" if the Australia you're talking about is the Australia of the year 2000.

  • by Bengie (1121981) on Sunday January 19, 2014 @07:34PM (#46008929)

    costs have increased by 900% since 2009

    I call BS. Prices are dropping everywhere. Backbone bandwidth, -50% per year. It costs only $1,800 through $3,000 to do FTTH. At $300/month, you could be the proud owner of a 1gb/1gb dedicated fiber connection in 10 months. If I have to choose between someone being a total idiot or being greedy, I'm doing with greedy.

  • by lokidjm (3505611) on Sunday January 19, 2014 @07:37PM (#46008953)
    EBTC's profit margins on internet service were above 40% in 2012. See the document below. They have also built out line of sight wireless internet service, so they will not need to maintain those rural DSL cabinets in the future. https://docs.google.com/file/d/0B1MxEnYSkSD_V2ZjdEdfeFNTMnM [google.com] They could easily serve all of their existing customers using wireless if they chose too. Prairie iNet is a company that uses similar wireless technology. They can serve 250 customers per tower. EBTC currently has 3 wireless line of sight towers. Prairie iNet offers speeds of up to 20 Mbps with unlimited usage for $70 per month. They offer service in a smaller town 8 miles south of EBTC. http://www.prairieinet.net/residential/pricing-plans/ [prairieinet.net]
  • by Cimexus (1355033) on Sunday January 19, 2014 @07:44PM (#46009005)

    I'm Australian so are more than used to metered internet access. Unlike most Slashdotters, I like the concept of metered internet, in that it gives you options to only pay for what you need and not subsidise other users so much. Grandpa who just checks his email every day can get by fine on the $15 plan that has minimal allowance, while Johnny McTorrentLeecher can cough up for the large quota or unlimited plans.

    But even in Australia, a country with a higher cost of living than the US and less in the way of developed internet infrastructure, the costs of metered plans are far, far lower than those quoted in TFA. 100 bucks for 25 GB is like something out of the early 2000s, when broadband itself was relatively new and DSL was mostly of the 256 kbps or 512 kbps variety. For comparison, the offerings of two Australian ISPs that are roughly indicative of a typical "cheaper ISP" and "more expensive but better quality ISP":

    TPG (http://www.tpg.com.au/products_services/adsl2-standalone)

    50 GB - $29.99
    150 GB - $39.99
    500 GB - $49.99
    Unlimited - $59.99

    Internode (http://www.internode.on.net/residential/adsl_broadband/easy_broadband/)

    50 GB - $49.95
    100 GB - $59.95
    200 GB - $69.95
    400 GB - $79.95
    1.2 TB - $109.95

    (And you can take $20/month off the above if you bundle a home phone service with the same provider too)

    Comparing to this, this Iowa ISP's prices are insane. Metering sucks if THAT is what you have to pay (particularly in a country where unlimited plans are ubiquitous for less money).

    Metering CAN work well, and CAN be fair (pay for what you need ... light users don't have to subsidize the heavy users). But it requires proper choice of plans (within an ISP) and proper competition BETWEEN ISPs to work. If there's a monopoly then yeah, it's very unfair. Fortunately for all the issues we have with internet in Australia, most people in urban or suburban areas (which is 90%+ of the population) do enjoy good ISP competition. If you have a phone line, then you can get DSL from a wide range of providers (at least a dozen, sometimes up to 20, depending on location).

  • Re:no (Score:5, Informative)

    by cob666 (656740) on Sunday January 19, 2014 @07:49PM (#46009035) Homepage

    Too often, the situation is that there is no viable competition, as the market is too small or too remote to attract competition, or it has been legislated away by cities granting right of way to exclusive contracts.

    Sometimes is has NOTHING to do with how small or remote your town/city is. I live in a well populated suburban town in New England and our choices for internet are either Cox cable or AT&T DSL. Cable speeds are between 10-15 Mb but the fastest DSL we can have is less than 5 Mb. Verizon advertises FIOS for our area but if you try to subscribe you'll be told they don't offer it in our town. Many New England towns are vendor locked and the consumers are left with little or no choices.

  • Re:50$ (Score:3, Informative)

    by dskoll (99328) on Sunday January 19, 2014 @08:03PM (#46009127)

    Wait, what? You pay for TV?

    I have an antenna in my attic and get about 15 channels for free. That's all the TV I could ever watch.

    Pay for TV???? What a concept!

  • by Guspaz (556486) on Sunday January 19, 2014 @09:17PM (#46009571)

    So you're telling me I can get a 100mbit upstream link with resale rights for $45/mo?

    That's astounding, since as near as I can tell, getting any kind of dedicated circuit at all is over $400/mo, and any CIR is ontop of that.

    You're confusing transit costs with delivery costs. I'm not sure if you can get a 100 Mbps link for $45/mth, but you definitely can get a 1000Mbps link for $450.

    Transit is so cheap these days that it's almost free; it's very cheap, keeps getting cheaper, while many other costs are not getting any cheaper (electricity prices don't ever seem to go down, for example). As a result, transit seems to be making up a smaller and smaller percentage of costs.

    Let's take the example of wholesale internet service in Canada. Say that you want to service 1000 customers, and that each customer uses at peak 2Mbps on average. You've got $15 for the DSL or cable line, roughly $3 for the share of the incumbent aggregation network connection, $40 for the aggregation capacity costs, and $1 for the transit. On top of this, there are obviously colocation costs, manpower, office space, etc. But let's just pretend the only costs are the actual network-related costs: you're already at $59, and the transit is less than two percent of that. Once you add in all the other costs, transit is basically inconsequential.

  • by Optimal Cynic (2886377) on Monday January 20, 2014 @04:01AM (#46011459)
    It's a cooperative, you numpty.

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