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Question about the billing system for internet services

  1. Aug 4, 2012 #1
    Why are text messages, phone calls and other data sent via the telephone billed based on the frequency of use while if the internet is used to transmit the same data, an unlimited amount of data can be uploaded and the user is billed a very cheap fixed rate? An example of this is Sky Internet in the UK. The maximum speed for their basic service is a very high 5Mbits/s (640KB/s), where a high definition video conference call can be sustained without buffering time lags, unlimited downloads can be made, and a compressed 700MB, 2 hour, DVD quality movie can be downloaded in only 18 mins., and despite all of these very sophisticated features, the bill amounts to only 10 pounds per month. While the fiber optic internet service at 40Mbits/s (5.12MB/s), where the same 700MB movie can be downloaded in only 2.3 mins., only costs 32.5 pounds per month.

    The links can be found below as evidence:

    http://www.sky.com/shop/broadband-talk/broadband-compare/

    http://www.sky.com/shop/broadband-talk/broadband-speeds/

    The question is; why is the internet service so fast, cheap and unlimited and the phone service so expensive, limited and slow?
     
    Last edited: Aug 4, 2012
  2. jcsd
  3. Aug 4, 2012 #2
    I'm no expert on the subject, but I believe the difference is rationalized in terms of capitalist strategies for developing markets. New markets are traditionally left largely unregulated and may even receive tax benefits in order to encourage rapid growth and technological advancement. However, eventually they are regulated to prevent monopolies from establishing themselves and ruining all that hard won progress. Cellphones are a new market and, thus, allowed to charge by the byte for internet access, while ISPs have been refused the same kind of laze fare privileges in part due to concerns over companies controlling the internet.

    An analogy might be broadcast TV and radio verse cable. Imagine if broadcast networks could charge individuals by the program or channel. That might sound like a stretch, but there is no technical reason it couldn't be done. The resulting monopolies and censorship would be a disaster for both the public and the industry. There are plenty of other similar examples in the business world where governments have learned from long hard experience not to allow certain business practices in mature markets. For example, companies "dumping" products at below cost just to drive out all the competition so they can monopolize the market and then raise prices through the roof.
     
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