Nor do you understand the logistics of the ISP business. Delivering Internet service in major cities is also not easy (though the challenges are a bit different from ours) and is extremely expensive.

You’re playing armchair quarterback in a game you don’t even begin to understand.

http://www.nytimes.com/2009/04/20/business/20isp.html?_r=2&partner=rss&emc=rss

With choice quotes from the likes of Comcast: “the nation’s largest cable provider has told investors that doubling the Internet capacity of a neighborhood costs an average of $6.85 a home.”

“What was most striking about the last ten years researching Internet Peering was the rate at which Transit Fees dropped.”

and

“Don’t take these prices as absolutes, but do recognize the historic transit pricing trend as unmistakably downward.”

I was not trying to label you a “hick,” Brett, and I apologize if I sounded that way. My only intent was to say that you may not be fully aware of the particulars of Time Warner’s situation. (And I fully admit I’m only aware as much as what I can read publicly.)

So, Brett, maybe I wasn’t clear when I said something like “New York Times estimates that TWC’s wholesale bandwidth price is 10 cents or less”. What I meant was the cost to transfer that data.

Yes, costs go up with consumption, but because the cost to transfer a GB is that low, it’s not significant in the long haul. Users would have to use 400 GB/mo to go past their usual $40/mo plan and start costing TWC money. Based on the way they’re pitching their tiers, we know that’s a VAST minority of users, and they’re making it up on all of the people that use much less — 30% supposedly using less than 1 GB/mo.

I agree with you on this statement: “Every provider must buy enough bandwidth to handle peak usage. If a user pushes the peak up, he or she increases the provider’s costs 24×7,” But this is exactly the reason why speed-based tiers are the most just. It’s a direct correlation: you want to be able to download more at one time, thus contributing more to peak usage? You pay more.

I understand that your costs lead you to believe that speed tiers are unsustainable for your rural business, and I get that. And I understand that you may have to go to something like consumption-based billing to offer a pricing model that works for your customers. But you must admit that Time Warner Cable, in these larger cities, is under no such burden. The data that we have — NYT and other reports of TWC’s cost-to-transmit 1 GB, TWC’s 2008 10-K filing with the SEC, etc. — indicates that they are not in financial trouble, no matter how much their consumption is growing (and it is certainly not growing exponentially, a word which has been carelessly tossed out there repeatedly by them these days).

If you think a law prohibiting consumption based billing would be a business killer for smaller and/or rural ISPs out there, then do your civic responsibility and communicate that to your lawmakers. SItting idly by because you think they won’t listen is just defeatist.

By the way, why aren’t you charging for consumption? :)

Note that at the time I warned that if implicit limits on bandwidth usage (e.g. transparent throttling, such as what Comcast was doing) were prohibited, metering was inevitable. But the FCC did not listen to me (although just barely; the order went through by a 3-to-2 margin). Now, we’re seeing capping and metering, because they are the only way to ensure that the provider’s revenue covers its costs if the provider is not allowed to throttle.