ISP Bandwidth Costs

The bandwidth probably costs them $2

It's laying the fiber that's the expensive part, and there is a $300 fee to pay for that. In terms of marginal cost, it really doesn't cost them anything to serve another 5MB/1MB connection. They want to get you hooked so you'll want to upgrade later.

Because bandwidth is cheap and people don’t use very much of it on average.The one-time fee is for covering the expense of the faster optic.The only expensive thing is the fiber optic line to your house. As long as that’s paid for, bandwidth usage is small potatoes.

Because almost all of the cost of the network does not depend on usage?

They have to pay for the bandwidth!

Bandwidth and networking stuff is famously expensive there

They over charge.Their cost is less than .01 cents per gb and look at their published pricing for customers.And I’m including networking equipment as well as head count in my cost, not just the cost of pipes.

Somebody pays for that bandwidth though?

The cost of transferring more data on current infrastructure is negligible. However, ISPs have a maximum capacity that's well below their number of users multiplied by the user's maximum bandwidth. They're just making a bet that not everyone will use all their bandwidth most of the time. At some point, average utilization goes up, and they have to buy more infrastructure to handle it, which is what costs money.

How about if the offer was $1000 plus $10 per Mb/s and the maximum is 10Mbps ?You would switch because you've imagined this service is magically cheaper and better, but now I say it'll be expensive and worse are you still enthusiastic?Providing network service is a utility, and so yes razor thin margins are typical and that's too bad. It does make very high capital investment (such as launching huge numbers of satellites every few years) difficult to stomach though.T