New research from UK analyst firm Plum Consulting, which was commissioned by the BBC, Blinkbox, Channel 4, Skype and Yahoo! (i.e. internet content providers), has described broadband ISP claims that their network costs are ballooning, usually as a result of increasing internet traffic, as being little more than a "myth".

Apparently data traffic related costs are just a "small percentage of the total connectivity revenue" and steady increases in capacity over fibre has helped to mitigate any rise in data use by consumers. Allegedly studies in Canada and in the UK put the incremental cost of fixed network traffic at around £0.008-0.025 (€0.01-0.03) per GB (GigaByte).



The figures appear to be miles apart from the £1-£3 per GB that some ISPs charge end-users for extra usage, although it should be said that by the time an internet provider has purchased the capacity then it's usually had to go through several additional channels (everybody adds a profit margin, not unlike petrol).

Separately mobile networks were found to differ from fixed ISPs in that the radio access network is shared by users and the costs of adding capacity are thus "significantly higher than they are for fixed networks". But the report discovered that mobile operator costs are in fact "well below existing smartphone data tariffs of around [£8.63] €10 per GB", and future technology upgrades (e.g. LTE) could in fact "lower average costs per GB carried".

In reality many of us are enjoying cheap broadband access and partly because data capacity costs are low, which is one of the reasons why so many ISPs have such tiny profit margins. What we should really take away from this report is that data capacity looks set to keep pace with demand and will thus hopefully keep prices under control.

The open internet – a platform for growth (PDF)
http://www.plumconsulting.co.uk/pdfs/Plum_October2011_The_open_internet_-_a_platform_for_growth.pdf