I'm not sure if they really "pay" at all. Basically the ISPs have to do 2 major things that I'm aware of. First is dig fiber lines between major cities, and then to everyone's house. As you could probably imagine, digging wires to millions of houses isn't exactly the cheapest thing. Think of this almost as a loan, they pay all the money to bury the wires, and then we pay to use them each month.
The other thing they have to do is route all the data they receive. For example, when we type in a website, there are routers that tell our request what city to go to and what server and all that. You probably have a small router in your house, ISP's just have really big ones.
Most of the cost involved is burying cables. Manufacturing the cables is expensive, and then the labor involved in digging them. Plus, this slower cables need replacing.
To answer your question about data capping, its pretty much just because they "can". The average person doesn't reach the caps, and even if they do, its usually a pain to switch ISPs. Remember when the iPhones came out and you could get unlimited data for like $100, but some people went over their limit and spend $1000? This is an example.
answered Apr 23 '11 at 00:00
General rule of thumb is a penny per gigabyte, for data originating from a geographic location close to its end destination.
answered Apr 22 '11 at 23:57
The amount of money an ISP spends on data will vary depending on many factors. Speakeasy.net owns their backbone consisting of a dedicated fiber ring that circles the continental United States with major points of presence (i.e. POP) in Seattle, San Francisco, Los Angeles, Dallas, Atlanta, Washington D.C., New York, and Chicago. From the POP to the customers premises a third party vendor is contracted to provide data layer connectivity. This is known in networking as the 'last mile'. In the case of Speakeasy, the data-link protocol used is ATM rather than PPPoE or Frame Relay in case of T1's.
After all is said & done, the ISP Data Costs divided by the number of customers will be their bottom line.
ISPs don't pay for data. The Internet is simply lots of computers connected together. ISPs simply run and own the major cables that interconnect us all. They require maintanece and substations and so forth. My dad designed the Fibre Optic Broadband system for Saudi Telecoms, so they own that system. What people are paying for really is access to the system and then maintenance costs and building/designing costs and so forth. Data itself is not a commodity, simply an interconnected system or computers.
They cap it so they can use more bandwidth. At home of you have many devices conected to the Internet at the same time your Internet speeds go down, this applies to huge fibre optic cables run by the ISPs, they cap it so they don't have to expand their already existing network AND so they can make an extra buck.
answered Apr 23 '11 at 00:18
Well you can't really tell how much exactly it costs your ISP since they are the only ones that know and they won't tell.
ISPs costs usually include:
The ISPs built their own network of fiber cables and to save money other ISPs pay to use their infrastructure. For instance Verizon owns the network of fiber cables where I live. Other ISPs pay Verizon for to be able to use their cables because it's cheaper than adding their own fiber cables. In other parts of the country AT&T or the cities owns the cables and Verizon pays them to be able to use them.
So it varies from place to place exactly how much it costs your ISP. Especially when you factor in distance. It will cost them more to transfer data to and form other countries for example.
answered Apr 23 '11 at 01:10