Uncapped ADSL: why throttle?

The Internet Service Providers’ Association (Ispa) recently dismissed a complaint lodged against Mweb for sudden changes it made to the way it enforced its acceptable use policy (AUP) in August/September 2013.

Mweb sent out letters to a portion of its user-base in August 2013, warning them that they would be throttled due to “excessive usage patterns”. This was a controversial move that resulted in a tremendous backlash from users at the time.

Responding to complaints, Mweb argued that it was simply enforcing its acceptable use policy (AUP) to ensure a high quality of service for all its subscribers, albeit in a slightly different way.

Where Mweb had previously shaped certain traffic and intervened manually when they picked up on excessive usage, in September 2013 it implemented an automated system that would look at subscribers’ usage over a 30-day rolling window.

Rolling windows are nothing new, with many Internet service providers (ISPs) using this as a bandwidth management technique for their uncapped products in the past.

However, ISPs such as Web Africa and Afrihost have said that they dropped the plain rolling window for bandwidth management policies that take other factors into consideration.

Uncapped broadband business model

The reason ISPs implement these bandwidth management policies is to try and ensure the integrity of both their network and business model.

Essentially there are two basic ways an ISP can turn a profit on selling uncapped broadband packages:

1. Have those that consume less bandwidth subsidise those that consume more; or
2. Keep uncapped users below the usage limit where the ISP would break even.

The second option would not make for a particularly attractive fixed-line broadband product in South Africa thanks to the fairly high wholesale cost of ADSL.

In September 2013, MyBroadband reported that the cost to provide a Gigabyte (GB) of data is between R5 and R6.

The majority of that cost is driven by Telkom’s wholesale ADSL product, IP Connect (IPC), which contributed about R4.25/GB.

This calculation assumed the lowest possible tariff for IPC at the time, which a well-placed source said was R920 per Megabit per second (Mbps) if you bought at least 25,000Mbps¹ (25Gbps) of IPC capacity from Telkom.

It also assumed that an ISP used its links close to their maximum capacity most of the time. Though this may be an unrealistic assumption it was (and is) useful for this comparison as it helps establish a lower bound for the cost of ADSL bandwidth in South Africa.

The R5-R6/GB price also didn’t take into account any other costs, including staff, equipment, hosting, support, and profit.

If those factors are included, the cost breakdown of providing an ADSL account is roughly as indicated in the graph below.

This graph was drawn based on feedback provided by prominent ISPs which have their own IPC. It clearly shows that IPC is the major cost component of an ADSL data service.

ADSL cost breakdown

Since the details above were published, Telkom has announced two adjustments to IP Connect prices, which for many ISPs resulted in an effective decrease of 15% in costs.

This would reduce the lower bound on the IPC cost component of ADSL to about R3.60/GB.

However, a number of ISPs are offering capped ADSL data below R3/GB on their capped products. Vox and Web Africa capped prices are around R2.97/GB (excluding any late-night bonus data).

Afrihost is currently running a promotion until the end of September 2014 that has it offering prices of just under R2/GB, but it is understood that this price is below cost.

For a simple comparison, the table below shows how the thresholds on Mweb’s uncapped ADSL accounts stack up to capped accounts that offer prices of R2/GB and R3/GB.

A table with a larger variety of price points that looks at the uncapped products of Afrihost, Mweb, Telkom, Vox and Web Africa, is included towards the end of the article.

Making uncapped work

Keeping in mind that Mweb’s AUP thresholds listed above are not cut-offs, but the point at which users are throttled, the table illustrates how high-usage uncapped subscribers are cross-subsidised.

Another way to express the above argument is in terms of the way ISPs actually buy their bandwidth: by capacity (or speed).

An ISP receives a certain amount of money from its subscribers, a portion of which is spent on the capacity needed to offer its services.

It must then allocate this capacity to users as they need it. Unfortunately, because it can’t just set aside dedicated capacity for every user, ISPs have to set up contention schemes to build an affordable product.

For example, using the cost price for IPC of R920/Mbps, applying the 15% discount, and adding the latest estimate we have for the cost of international bandwidth, means that a clean 4Mbps connection will cost R4,728 per month, minimum.

That excludes all the other operational expenses that an ISP incurs, and assumes that the ISP uses only free local peering and does not need to buy additional national transit.

Shaping vs throttling

One way to manage the contended bandwidth is by limiting certain kinds of traffic when an ISP’s network starts becoming congested. This happens when demand on the available capacity starts exceeding supply.

When an ISP detects congestion on its network it may then implement traffic shaping rules to throttle the throughput of certain protocols, usually beginning with peer-to-peer technologies such as BitTorrent which typically consume a lot of bandwidth.

Now imagine that a small number of an ISP’s userbase (3%, according to Mweb) cause its network to be in a constant state of congestion.

Those comparatively few subscribers are essentially making it impossible for any other user on the network to get full throughput on shaped protocols should they occasionally want to download something.

Simply buying more capacity is not always financially viable. Also consider that there can sometimes be significant delays in ISPs receiving their IPC capacity upgrades from Telkom.

How does an ISP solve this problem while trying to be fair to those users who do not put the network under as much strain?

Most ISPs have opted for usage-based shaping or throttling.

In other words, users are categorised based on their historical usage and shaped or throttled more aggressively if they used up significantly more bandwidth than others in the past.

Mweb has opted for a binary system; after you hit a certain threshold your whole connection is throttled down to a fraction of its original speed.

Web Africa on the other hand, implements the Star Rating system from Internet Solutions, its upstream (wholesale) service provider. Depending on your data consumption you get given a star rating of between 5 stars (best) and 1 star (worst).

It combines this usage-based star rating system with its four bandwidth priority profiles, which range from Silver to Platinum.

Why should consumers care?

Of course, many consumers don’t really care whether an ISP’s uncapped business is sustainable or not – and why should they? What matters in the end is whether users get the service they expect from a company.

“Uncapped is uncapped!” is the tautological cry often seen in article comments and forum threads when the topics of shaping and throttling come up.

The issue of advertising shaped and throttled uncapped ADSL connections has landed before the Advertising Standards Authority of South Africa (ASA) a number of times, with the ASA siding with ISPs.

Most recently, in a complaint involving Mweb, the ASA offered the following definitions:

Capped refers to packages that allow you a predetermined amount of data, but terminate connection once you reach this predetermined limit.

Uncapped refers to packages where your connection is never terminated, irrespective of how much data you use. However, it is accepted that instances of throttling or shaping may well occur at some threshold levels to ensure sustainability of the service for all customers.

Unlimited refers to instances where there are literally no limits, i.e. no throttling or shaping and no restrictions on use.

Assuming that ISPs won’t simply be able to stop throttling, or even shaping on uncapped accounts, what should they be called?

Telkom Internet has previously used the term “soft cap” to refer to capped accounts that don’t necessarily cut you off when you hit your limit, but at any point thereafter.

It has since redefined the term (as per its terms & conditions) to mean:

SoftCap Internet Usage Product: refers to a metered usage service with a customer selected usage limit, usually in GB. Once the soft cap has been reached, the internet speed will be throttled to a proportion of the ADSL port speed. Bandwidth intensive websites and / or protocols, namely peer-to-peer protocols and websites with video streaming will be significantly restricted.

Should uncapped and throttled, and uncapped and shaped services be called something different? Does the term “uncapped” create an expectation on which a throttled or shaped product does not deliver?

Give your ideas in the comments or linked forum discussion.

¹ This article uses the metric decimal values for unit conversions, as is commonly used when referring to bandwidth, rather than the JEDEC or IEC binary values.

Related network shaping and throttling articles

Afrihost ADSL capacity increase delay

Mweb uncapped ADSL claims win at ASA

Are you killing your ADSL ISP?

True cost of a GB of ADSL data

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