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Comment: Need some actual values to answer. (Score 1) 246

by Colvin Burgess (#5023628) Attached to: Breakdown of Bandwidth Costs?
The question of why you are charged more is a good question. However a few more details would help to give a satisfactory answer for your particular case.

With more information about the type of service purchased and the amount you paid in the first place the answers can be factual and easy to answer.

The posts to date explain that there is a cost in the order of a few thousand dollars per Mbps. Let's assume that the cost is $4K/Mbps when including routers, staff, marketing, electricty, etc.
Example 1
If you were being charged $20,000 per month for a 1:1 subscription ratio on an Internet connection at a fixed data rate (e.g. 5Mbps) then you would not expect to pay more if your site was slashdotted. Likewise, you would not expect a refund if you used no data. You were paying for a fixed price connection. Now if your link use has a duty cycle of 70% then the ISP is making about 30% margin.

Example 2
If you are only paying $20 per month (a thousand times less) then you would expect to be sharing the link with another 1000 users (1:1000) but factor in the staff required to support 1000 users then it is most likely you would be sharing with 2000 users in order to cover the costs of a connection and have humble profit margin. Then if you flatten an 5Mbps link for 2 days then the ISP is paying for 2 days exclusive use of an 5Mbps connection. This costs the ISP more than $20, so has to charge more.

The costs associated with a particular event can be different based on the usage. If the saturation of traffic came from local sources then the cost of data is low. From international sources then the data cost is high. Imagine how much it would have cost 5 years ago to have a dedicated 1Mbps connection to almost anywhere in the world. You can get this for $4000 per month! not bad.

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