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How many actually costs traffic gigabyte? (In the worst case)

Development of the Internet and various cloud services leads including to emergence of interesting questions. In 2011 providers of the USA and Canada (ISP) were going to set a monthly limit of consumption of Internet traffic for users. For exceeding of this volume it is necessary to pay in addition at the rate of $1 for gigabyte. This their desire provokes polemic about that how many actually there is (and has to cost) an Internet access?

The founder of the HowStuff Works project Marshall Breyn (Marshall Brain) wrote in the blog material with calculations of cost of access to a network on the example of the most expensive African Internet in the world.

Beginning


As an example we will consider by determination the most expensive access in the world – what is received by inhabitants of Africa. This article contains some interesting data on this question. In particular, the following facts are given in material:

In 2011 the submarine telecommunication cable to Africa was started — in the message of MTN (Mobile Service Provider) it was called "the biggest and most extended communication channel in the world".

The fiber optic line belonging to the West African cable systems 14 thousand kilometers long, reaches the South African cape, having connected providers of this continent directly to servers in Europe. The cable provides high-quality access to a network for regions most until now backward in this respect.

The cable begins in London and goes through 15 points on the western coast of Africa, MTN which invested $90 million (63 million euros) in the project reports. All sum of investments made $650 million.

We learn several important points from the text on the link:

  • cable cost – $650 million;
  • power – 5120 gigabytes per second;
  • 15 access points on the western coast of the continent;
  • extent – 14 thousand kilometers (this distance from Los Angeles to New York multiplied by three).

How much is Internet


We can make several assumptions to calculate the total cost of access:

We mortgage funds for its depreciation. For this purpose we will round $650 million to $1 billion to cover costs.

Over time the equipment will become outdated. At intensive operation and, considering development of technologies, it will occur in 10 years.
Investors intend to get profit on this project. Let it will be 200% a profit from initial attachments, or 20% a year. Thus, having enclosed 1 billion, investors would wish to gain $3 billion as a result.

Considering structure of distribution of capacities and that fact that the cable can provide speed in the 5th terabyte per second, or about 500 gigabytes/sec., we will ask a question: how many in this system will cost 1 gigabyte?

If the total cost of ensuring access in a year makes $300 million if the flow capacity of system is equal 500 gigabytes/sec. (we multiply by 3600 seconds, 24 hours, 365 days, we receive 15,7 billion gigabytes), then the price of gigabyte will be: $300 million / 15,7 one billion = 1,9 cents.

1,9 cents in the most expensive fiber optic line in the world! At the same time we already mortgaged profit on investments of 200%. But even, if investors are overwhelmed by greed, and they will want to throw to it with another 100%, only 3,8 cents will turn out. In other words, the traffic costs little indecently. Literally pennies for one gigabyte. And it, once again we will repeat, for the most expensive provider network in the world.

Whether reflect these calculations the actual average cost of gigabyte of a traffic? It is rather not, than yes. Because consumption of a traffic during the day unequal. In certain hours there is its repeated exceeding. If users really connected to the web evenly for days, then actual cost would be close to digit of 1,9 cents for gigabyte. In reality around the 4th night of power of system stand idle. In other hours consumption grows many times.

Today most of all traffic is consumed by such online services as Netflix and Hulu, and its volumes significantly increase in the evening. Let's consider the worst scenario at which online services are the most serious headache of providers.

According to the article Detailing Netflix's Streaming Costs: Average Movie Costs Five Cents To Deliver, average rate of coding for video through Xbox360 makes about 2000 kbps. It means what for viewing of the 2-hour movie will be required to 1,8 GB of a traffic. For video with higher resolution this speed will make 3200 kbps, or 3 GB of a traffic.

Let's assume that all users watch at the same time film through Netflix. Let's complicate a task: let on each dedicated line of such users will be a little, family members watch each movie. Now it will be necessary for us approximately 10mb/sec. for each user. Within about 3-4 hours every evening. Obviously, this circumstance will overload possibilities of the African cable allowing to carry out the 5th terabyte per second.

At such conductivity of its power are expected 500 thousand users. This number has to pay back as a result attachments in system within 10 years, or 120 months.

$3 billion / 120 months / 500 one thousand users = $50 as payment for each user in a month.

This digit considers the worst of possible deals, proceeding from actual volumes of consumption of a traffic which allows each of users to enjoy daily at the same time three movies in high quality. Thus what cable capacities it allow to make, and the profit as a result will make 200%. It will be the most expensive traffic in the world.

Taking into consideration all these maximum parameters (10 MB/sec. for each user within 6 hours a day, 21 GB a day or 600 GB a month at a subscriber fee of $50), the price of 1 gigabyte will be equal 8,3 cents. In other words, for these kopeks it is possible to get the high-quality access to a network considering worthy profit for providers.

Let's provide that we live in the rational world where providers do not want to heat users, and all of us try to use our resources effectively. Yes, Netflix/Hulu online services really lead to rise in price of a traffic because promote an overload of networks. But there is a mass of the opportunities capable it is rational to distribute flows, without allowing overloads. For example, in unclaimed hours use of the Internet can be made free, and in the most problem to take 10 cents for gigabyte.

At a similar deal many people would begin to use the access to a network more reasonably: to put files from torrents on loading at night. Online services could enter services in preloading of movies at which users want to look in the evening. People, proceeding from economy, selected versions of the favourite TV shows at the prime times which would weigh less. There would be new applications using benefits of free access in night and morning hours. In other words, the market independently would regulate rational use of a traffic for days, increasing quality of access, at the same time leading to decrease in its cost.

Dreams, dreams …

This article is a translation of the original post at habrahabr.ru/post/274735/
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