Comment by simonsarris | Hacker News Reader

Comment by simonsarris | Hacker News Reader

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I think one incredible result of this is that it may raise expectations in the mind of the common consumer. This is very important for the coming data limit war in mobile and landline data caps, a war that consumers are already losing.

(I want to be clear: Speculation ahead.)

Mobile phone providers and internet providers (in America) seem to be setting data caps artificially low and saying that it covers the most common use cases (98% of customers) so it shouldn't be something we have to worry about.

Except that I imagine these very low caps are long play to justify price increases when using 4 or 8 or 20+ GB per month on your phone becomes the norm, or 600GB/month on your desktop becomes the norm.

Hopefully Google (and other companies) can show consumers in America (and perhaps elsewhere) the possibilities of large amounts of data over the wire TODAY so that its not a slow climb to higher caps, but a more abrupt shift for some that leaves far more complaints at Comcast and Verizon's door.

They won't reply to power-user consumers, they don't care. One only hopes they'll reply to mass consumers using their competition, even if it is merely tangential competition for the most part.

I'm reminded of Fake Steve Jobs' dig at AT&T's short-term thinking:

http://www.fakesteve.net/2009/12/a-not-so-brief-chat-with-ra...

"Now there was a lot of demand for [the "Meet the Beatles"] record — so much that the plant that printed the records could not keep up. Now here’s the lesson. Do you think the guys who were running Capitol Records said, Gee whiz, the kids are buying up this record at such a crazy pace that our printing plant can’t keep up — we’d better find a way to slow things down. Maybe we can create an incentive that would discourage people from buying the record. Do you think they said that? No, they did not. What they did was, they went out and found another printing plant. And another one and another one, until they could make as many records as people wanted.

[AT&T CEO] Randall is like, Okay, I get your point. I’m like, You know what, I don’t think you do, because if you did, we wouldn’t be sitting here having this conversation, would we?"

I don't think the analogy works, because you're already an AT&T customer. AT&T building out capacity, doesn't necessarily lead to more sales; the price/GB drops, they don't necessarily make more money, whereas building more printing plants does lead to more sales. Unless of coarse their offering gets better than Verizon's, and people start switching.

A better analogy is airplanes and air travel. We have the technology to build supersonic passenger jets, but the economics don't work: leisure travelers are unable/unwilling to pay more for their ticket to get at their destination two times as fast. Their time isn't valuable enough to justify the added expense. Yet, business executives are willing to pay for supersonic business jets because their time is that valuable. Supersonic private jets are already under development.

Consumers would love faster broadband, but they can't afford to pay more for it. Businesses can, and they have a variety of options available.

Isn't Google Fiber showing us that the cost isn't as extreme as the providers would have us believe?

Google Fiber is a disruption play in a limited market. While not a loss leader, this type of roll out isn't cheap, especially for existing plants.

That being said, I'm jealous, so very jealous of Kansas right now.

If Google's roll-out significantly more expensive than any other type of facilities-based build-out?

In fact Google's product is rational: If you are going to bother to build out in a competitor's territory, you want to get all of your competitor's customers to switch, so you need a disruptive product.

My understanding is that the new build out is cheaper than traditional HFC builds. The difference here is incumbent providers would need to abandon large swaths of their infrastructure to compete with a disruption play in Kansas.

Google is spot on to roll out FTTH, but existing plants aren't going to disappear any time soon, and likely will not react to the disruption play at large.

Yes. That's the point. Google has already stated that they're fiber program is NOT a loss leader, as many have speculated.

Actually, the Concord was operated profitability for several years mostly though a dramatic increase in ticket prices which there customers did not really care about.

Market research had revealed that many customers thought Concorde was more expensive than it actually was; thus ticket prices were progressively raised to match these perceptions.[36] It is reported that British Airways then ran Concorde at a profit, unlike their French counterpart.[127][128] http://en.wikipedia.org/wiki/Concorde

As to network capacity, it's actually fairly cheap, prices are based around perceived value not cost just look at text messaging plans. That and cable competing with hulu/netflix.

A better analogy is airplanes and air travel.

An even better analogy is that the companies that build airplanes also build cars. They have a decent margin on cars but a much lower margin on airplanes. So, even if they could make planes that were larger and faster, they profit more from keeping people driving their cars.

I see what you mean, that AT&T's income does not scale with customer usage, though AT&T did lose (existing and potential) customers due to their network problems.

Could it have been - previously fundamental value of data limits was low because of low smartphone market penetration, but now that all consumers have smartphones and demand for bandwidth has skyrocketed, and before telecommunication companies can catch up with infrastructure upgrades, the value of existing bandwidth has gone up, and therefore, so has the price?

>Except that I imagine these very low caps are long play to justify price increases when using 4 or 8 or 20+ GB per month on your phone becomes the norm, or 600GB/month on your desktop becomes the norm.

I work for a mobile phone provider in the US. I'm at the bottom of the totem pole, so I'm not really privy to what the people at the top are thinking (and don't think what I'm saying is in any way official), but I don't think this is true. We really do have bandwidth constraints, and it takes a small fortune plus a couple years to slog through the process of putting up a new cell site.

The reality is if we don't have caps some percentage of our customers is going bittorrent twenty HD movies at the same time, completely swamping that leg of our network and causing everyone else's cat videos to start buffering. If we double our capacity they'll just double the number of movies they download at the same time. We can't win by adding capacity.

The part that pisses me off about all this is everyone I know who compulsively downloads a bunch of movies hardly ever actually watches them. It's some kind of pack rat syndrome.

That doesn't quite make sense.

Mr Torrent has no real-time requirement. So, shape his traffic when other customers are streaming.

At 3am, when nobody is using your network, torrenting HD movies is no problem.

I don't know if we can shape the traffic on the RF side.

You can shape packet flows at the GGSN. GGSNs are edge routers and that's where features like traffic shaping are usually available.

Companies don't need excuses to justify price increases, it's a fair approximation to say that they just always set their prices at whatever level maximizes their revenue. Now, they might be looking at data caps as a method or price descrimination, but that's something else.

This is the only reason Google is able to take advantage of this situation, and the disruption will be massive. The value for Google to gain by being this provider is possibly the highest synergy possible.

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