The more sensible end of town pays about $80 per month for about 40 Gbytes of quota, give or take, depending on the ISP. After that they get shaped to 64 kbps unless they want to pay more for more quota.
I replied offlist to Andrew with some ideas, but I have been thinking more about the econometric model of Australian connectivity, and how interesting it is.
When transit is costing $250 per megabit per month, there aren't many other options.
Having a cap and slowing down afterward (64kbps or 128kbps are typical) is what worked here in Oz.
The grass is always greener of course, but when I think about why ISPs in the UK have to cap fairly aggressively (bear in mind I pay the figure Andrew cited is typical for internet access in AU, and have a smaller quota !), there are aspects of the Australian problem that I am envious of.
Australia has a relatively small population (c. 20m) which would act as a small ceiling for demand, but the vast majority of the population live in relatively close proximity. Density is highest in coastal regions which makes it ideal for fiber landing ! I will trust Andrew's numbers of $80 for a 40GB cap.
The UK has a population of c. 60m, and population density is high (12k people per square mile in London). I'm more likely to pay less than $10/Mbit for global transit. The small country and concentration of POPs in key metropolitan areas makes interconnection cheap. Exchange membership and participation is hugely popular (>600 networks peer in London, 415 peer exclusively in the UK). And yet I pay US$70 to my ISP for residential connectivity and my cap is 30GB. Why is this ? Thanks to the pricing model imposed on last-mile connectivity imposed by the incumbent, it costs an ISP US$471/Mbit to send data to my customer. Maybe the same data that's just come all the way from Oz through my transit for US$10.
It used to be the case that global transit was very expensive wherever deployed in the world. As pricing fell, this fueled innovation and created demand for connectivity at every level - domestic, data centre, enterprise, carrier ... The price of connectivity to Australia is likely to fall, because as the opportunity to sell connectivity increases, so should the number of fibers running to Australia (if we were all in the same room, this is the point that Rod would wave his arms, leap out of his seat, and announce that he's already half the way there and would get there first, so noone else needs to try ). And as economies way off to the west of the country grow and stabilise, then the options for sea routes to the country will grow.
In the mean time, that $250 figure is a market price. Attempt to modify the market conditions will change the price. But perhaps there are commercial activities that could stimulate demand for consumer IP services - here's some ideas for thought
- What's my traffic to south Asia and the other apnic regions ? Can I save some money buying *partial* routes from a large player in this region. Or is the problem that actually it's the transport to *anywhere* out of Australia ?
- Am I peering widely enough ? Should I actually be stuffing a switch under the floor in my employer's suite and letting my buddies plug in ? Peeringdb knows about eight exchanges in a developed economy of 20 million people. We have more than eight in single cities of Europe.
- So transit pricing sucks. But that's one of my costs as an operator. What's the pricing of a footprint in carrier hotels ? Are there enough carrier hotels ? How much am I paying for power ? If real estate and power is cheap in AU, then shouldn't content network operators in places where power and space is expensive already be planning how to pop up in Australia ?
- What about local content ? Why is so much traffic leaving the country ? Does someone need to be extremely plucky and offer bargain basement content hosting in the continent ? If AU entrepreneurs are ignoring the online channel for retail and entertainment, then who wants to jump on a plane and turn this situation around with me ?
- OK, how about we proxy certain types of content unless our users opt out. Any cache hits don't contribute to their 40GB monthly download. If transit is the problem, then offer financial incentives to your users to help you not pay for it. If you're peering IP, why not start "peering" your top cache hits between providers too ?
- P2P is probably a problem for AU networks. Contrary to most policy makers, there are services which use p2p as a transport, that don't involve the distribution of copyright material without consent. The next generation services that use p2p as a transport, e.g. Joost, have said to be trying to build proximity awareness into their p2p implementation. Peering widely will help here. As for the file sharers, then (I really, really hate to say it) but can you just make sure you're picking up the seedier parts of usenet binaries over peering instead, and hope people use that ? Sad to think in these terms, but if we're being pragmatic ...
I'd love to hear the opinions of AU operators on these issues, and think that there's lessons for everyone - if AU operators can show us how they deploy more cost effective connectivity products, then there are some regional ISPs in the rest of the world who would also benefit.
 £1,758,693 ($3.5m) PA for a 622Mbit BT Central, (so in bandwidth terms, equates to $471/Mbit per month - if the central is maxxed out) - I posted this to Nanog in October.