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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 thatkid_2002 (1529917) on Sunday January 19, 2014 @07:07PM (#46008661)

    This is the norm for us... Though we are finally starting to get somewhat reasonably priced Unlimited* plans now.

    * Unlimited plan may be limited

    • by exomondo (1725132)

      This is the norm for us...

      Really? I've always been shaped when I hit my data cap on broadband, never charged additional for overages. And I've certainly never paid anywhere near the prices they are charging (unless you count the way I used to pay for 'hours' on my old dialup connections, getting 5GB on dialup would take quite a while).

    • by luther349 (645380)
      yep see how the usa works in reverse your getting unlimited net wile we are regressing to limited.
    • Though $200 for 100gb seems a little harsh even by Aussie standards let alone the US "I want it all" standards. I'm on 300gb for $130....

      That said I was one of the original Optus cable internet customers where you got unlimited internet over HFC (Hybrid Fibre Coax). That was great for a few years and then they introduce their fair usage policy which was you couldn't exceed 10 times the average user. This was a bitch to monitor as you had no idea what an average user did and I apparantly was not an averag

    • 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.

      • OK, true - things have gotten a lot cheaper in the past 5 or so years and I should have made that a bit more clear than I did. However outside of a handful of providers Internet in Australia is still fairly pricey.
    • by AmiMoJo (196126) *

      Limited and unlimited are like flammable and inflammable. Subtle difference but basically the same thing. In this case it means "limit stated up front" and "limit hidden in Fair Usage Policy".

      Here in Japan I can get 150mb/sec in both directions TO MY PHONE. For less than I was paying for a 100/10 fixed line in the UK.

  • by rolfwind (528248) on Sunday January 19, 2014 @07:07PM (#46008667)

    if there were competitors, and not just vendors screaming free market when they adjust prices but then hold up monopoly contracts with the city/state when a community tries to come together and go their own way.

  • by luther349 (645380) on Sunday January 19, 2014 @07:11PM (#46008703)
    please have people leave that provider in mass.
  • by EmagGeek (574360) <gterich@@@aol...com> on Sunday January 19, 2014 @07:15PM (#46008739) Journal

    My wife and I are pretty close to just turning off Internet at home. We can only get AT&T, and we can only get legacy DSL at 1.5mbit. Usually when I'm sitting on the PC at home I'm thinking that I'd rather be doing something else anyway, like right now, in fact.

  • 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.

    • by fermion (181285)
      Precisely. A cooperative has to cover their costs from a limited number of users. They are often in rural ares, where subscribers have to put in their own utility pole. We all pay a fee to subsidize, but the costs are mostly covered locally. In such a case it may not make sense to charge $40 for an all you can eat plan, where some are data they may not use, and if too many people use too much data then costs are not covered. I mean for many people 5 GB a month is plenty.
  • by tomhath (637240) on Sunday January 19, 2014 @07:19PM (#46008777)
    Can someone please explain that connection? Really seems like a long stretch to get the topic back on the table. Maybe tiered pricing is caused by global warming and GMO crops?
    • by Mitreya (579078)

      Can someone please explain that connection? Really seems like a long stretch to get the topic back on the table. Maybe tiered pricing is caused by global warming and GMO crops?

      If that provider stays and faces no competition it will not take long until they start establishing "partnerships" to make this connection usable again.

      For example, Netflix or Amazon for streaming video that does not count towards the cap. It's not so far away -- if the connection is completely unusable, it will eventually be modified by "oh, this partner does not count towards the cap" or "this partner only counts @30% towards your cap"

  • by TheRecklessWanderer (929556) on Sunday January 19, 2014 @07:23PM (#46008827) Journal
    Clicking the link to the provider shows that they provide Cable TV Service as well. This makes it not difficult to figure out what they are trying to do. I wonder how long until one of the other providers comes in and helps them close their doors forever.
  • TV lineup seems like it stuck in the past how old is there network?

    http://www.eastbuchanan.com/internet/p_registration.htm [eastbuchanan.com]

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  • by Kjella (173770) on Sunday January 19, 2014 @07:28PM (#46008873) Homepage

    From TFA (heresy, I know):

    He goes on to explain that EBTC has 1,057 customers as of Dec. 31, 2013, and serves a 165- mile area. That means customer density is roughly seven customers per square mile. (...) Since 2009, he says, the FCC has decreased access charges by $285,004 and Universal Funding by $282,228, for a total of $566,232 or $531.68 per customer.

    These are people in rural areas, where it's not very profitable to deliver service in the first place. Public funding is going down, actual bandwidth going up, a little fiber laid down in the dotcom days is growing old and they're in a short squeeze. These prices smell more of desperation than gouging, it can't be easy to break even with those numbers. I doubt any competitors will move in to take over this gold nugget.

    • by SuperKendall (25149) on Sunday January 19, 2014 @07:42PM (#46008987)

      I'm curious, how does it feel to be the only person on Slashdot who READ THE DAMN ARTICLE?

    • by MtHuurne (602934)

      Also from TFA:

      Meanwhile, electronics in each cabinet costs approximately $50,000 but only serves approximately 12 customers/ cabinet, and EBTC says they have updated original components twice bringing total investment to $150,000 for each cabinet, bringing the grand total (for16 cabinets) to $2,400.000.

      So they probably bought equipment that could serve a few hundred customers but since there don't live that many people within range, only a dozen are connected. Did they make the wrong purchase decisions or does the equipment that fits their needs simply not exist?

  • by DarkOx (621550) on Sunday January 19, 2014 @07:31PM (#46008907) Journal

    What they should do is throttle it at peak times, lock everyone down to 2mbt during peak hours, charge extra for everyone who does not want to be snapped

    • by Solandri (704621)
      1) Throttling doesn't work because residential internet service is over-provisioned by about 20x. i.e. if you're paying for 10 Mbps service, the ISP actually only has 0.5 Mbps of bandwidth per customer. If you're ok with being throttled to 512 kbps, then I guess it could work. But the vast majority of customers would riot. Yeah they could not over-provision, but then they'd have to charge you about $1000 for 10 Mbps. And the vast majority of customers would again riot.

      2) It's over-provisioned becaus
  • I'm only glancing at the article here but that seems to be indicating those are the DSL, not mobile data prices, is that right? Those prices are completely insane and I live in Australia. I can get around 300gb per month for $80 or so on ADSL2.

    Is there literally 0 competition available in this region? Those prices are ...utterly appalling, virtually making the internet unusable for anything but casual browsing in that region.

  • 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 w_dragon (1802458)
      This is about rural Iowa. The main cost for maintenance is probably getting a person to the area where a problem is. They cherry-picked the date to be in the middle of a recession when they could pay peanuts for someone to drive 3 hours to the middle of nowhere to replace a repeater, versus now when they have to pay 9 peanuts.
    • by bmajik (96670)

      My closest neighbor is 3/4mile away.

      Apparently to lay fiber, you trench when you can, but bore to go under roads. I was told $10-15k per mile to trench/bore. The costs to actually put in the fiber and light it up are on top of that.

      I think there may be some fiber about 3 miles from me. So if I paid about $50,000, there's a chance I could get some pulled to me. Of course, finding an ISP to provision a circuit on top of that is extra.

      There's one other person that might plausibly on the route from wherever

  • by luther349 (645380)
    im sorry my new mansion payment yacht privet jet and Lamborghini drove prices up 900%.
  • 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]
  • Apparently it must not be an competitive marketplace or they just want to find a convenient way of going out of business, since the Local Cable company (if they have one) is going to make a killing there.

    Hell, Verizon HomeFusion is about the same price as the 25GB plan. You can drop your phone line, It'll blow the doors off DSL speeds, and it can be added to a share everything plan so the data can be shared with a 4G hotspot/Phone. If you're going to pay that much you might as well get something that's goin

  • Drive them into bankruptcy. Screw them and their 1980s throwback to the bad days of CompuServe, GEnie and AOL

  • Write your Congress and Senate and if they can't effect a legislative change then FIRE THEIR ASSES!

    Its time we were represented by our electorate and not the K street corporate lobby. Remember, voters must be US citizens but shareholders are from anywhere. Isn't it time we take our government back from Wall Street pimps of the bottom line? VOTE!!

  • 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).

    • by Cimexus (1355033)

      Replying to myself here, but just had to add, I took a look at the map to see exactly where this ISP serves. It's a tiny little town. In fact, I've actually been there (!?), as I drove from Dubuque to Cedar Falls on a recent trip to the US and this place falls on the highway between them. Small world.

      Either way, even in a similar small town in Australia, you wouldn't be paying anywhere near that much, even if Telstra was your only option (provided you had a phone line of course ... if satellite was your on

  • We already effectively have metered pricing. We pay $125/month for 1.5Mbps. We only get about 90% uptime. If we were to use that at absolute maximum date throughput (impossible) we would get 6GB per month of usage. In reality we only use a small portion of that. So we're paying 5x as much as the plan they're proposing. This is the reality of rural aDSL.

  • by Xicor (2738029) on Sunday January 19, 2014 @08:00PM (#46009103)
    we have one of the most expensive/slowest internet connections in the first world, if not THE most expensive. it is ridiculous that our government allows this kind of bullshit. it isnt just in rural areas that this occurs... it also happens in city districts where the city has a contract with an internet provider to where it is the only one that ppl can get in an area. Our university falls under this category... we are in the middle of a city, but the only internet we can get in the area is time warner... and they use this to totally screw everyone over. we pay almost 30$ a month for 5mbit internet.... and it has a shitty connection.
    • I dub this post "First World Problems, Slashdot version". I have to pay $30/month for 5Mbit/s internet?!? WORST COUNTRY EVER .
  • The important part of this story is that the costs this co-op has to pay for bandwidth have gone up 900% since 2009.

    Maybe someone needs to ask why it costs nine times more to connect today than it did five years ago.

    If, as I assume, the increase comes entirely from the telecom who sells the co-op bandwidth, then the Justice Department needs to come down with a heavy foot on the neck of the telecom.

    We've allowed just a few companies to control communications for an entire nation. They need to be broken up i

  • In an environment with truly open competition, prices must be driven down to the costs of production, plus whatever profit pays for the seller's own work and risk. Anybody charging more is outpriced by somebody willing to accept that minimum.

    Every service provision has capital and operating components. Connection to any network - water, gas, power, comms - has a fixed price whether you use it or not, and an incremental price proportional to usage. Keeping a network to a whole city running costs a good $

  • Well... A bit more and will be the end of the Internet.

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