For years, internet service providers have been raising the costs of broadband internet service due to what they call “increasing demand for service.” Both fixed and mobile internet providers recently claimed that increasing demand is leading to “ballooning” costs, which made price increases necessary. They even went as far to say that companies such as the BBC should be helping to foot the bill.
All of this was brought to a halt by a study from Plum Consulting. The study, which was paid for by Yahoo, Skype, BBC and others, discovered the the cost of data is only a small fraction of the operating costs of an internet service provider. The study showed that each gigabyte of data cost approximately €0.01-0.03 to the provider. It is even claimed that 4G technologies will significantly reduce these already low costs in the near future.
On a smartphone, €10 per gigabyte is about the norm. This is a healthy profit when the data you are paying €10 for only cost the provider €.01-.03.
This statement was released by Plum Consulting after the survey: “Traffic-related costs are a small percentage of the total connectivity revenue, and despite traffic growth, this percentage is expected to stay constant or decline.”
Of course there are still operating expenses such as maintaining the lines, employing a workforce, and paying for other business expenses such as office space and utilities. Until now, however, ISPs maintained that their biggest cost came from the increasing demand for data service.