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[ NNSquad ] Re: User sues AT&T after $5000+ bill for exceeding 5 GB bandwidth cap

Brett Glass wrote:
At 04:50 PM 3/3/2009, Sean Bradly wrote:
However, this is what not what AT&T elects to charge you for 15GB/month: ($60+$5000(10GB overage))*12(months)*2(years). *That's $121,440 folks. That's 2800% markup.* Thats a 30 year mortgage.

That's a bargain. It's a fraction of the cost of the spectrum needed to deliver that much bandwidth. Remember, companies like AT&T bid up to $3 million on tiny 5 MHz slivers of spectrum, which one user could consume completely by downloading data 24x7.

Then neither AT&T nor anybody else could make money by selling that _first_ 50GB for $60/month. They would be losing money the way GM is, and soon be out of business, or at least out of the ISP business.

I think Brett's mistake is mixing up the cost of _cellphone_ bandwidth with the cost of transporting bits by other means. Understandable, because Brett _is_ in the wireless ISP business.

But most large ISPs aren't wireless. They have large cable plants, either for deliver phone service (Telcos) or for delivering cable TV (cablecos). While those cable plants cost a lot to build, most of them are already partly or totally amortized by the existing telephone or cable business model. (I'm almost sure that some of them have been completely "depreciated" by now, especially in the largest and densest cities.)

Similarly with the cost of transporting those bits between ISPs. Most large ISPs are _already_ "tier 1" providers and peer with other Tier 1 providers, either without settlements or with settlements at a much lower rate than the cost of cellphone bandwidth.

I suspect most of the traffic is carried by landlines of one sort or another. Or they are carried by microwave, but it doesn't use expensive frequency spectrum that covers an entire city. It uses some chunk of frequency spectrum from dish A to dish B, with essentially no interference to or from other users of the _same_ spectrum using dishes that are pointed somewhere else.

The only time the spectrum even starts to get scarce (and expensive) is if you have to go through a satellite (because the signal spreads out to about 2 degrees of longitude (or was that 2 minutes -- it's been a long time since I read the Cato Journal article on satellite scarcity) by the time you get to geostationary orbit).