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I get capped once a month after my International bandwidth runs out. I was wondering exactly how Telkom, the monopoly broadband service provider in my country achieve this. Technically, how do they limit bandwidth to local only, while providing service to my router?

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The routers and switches ISPs use to manager their network come with this feature. There are several pieces that come together to make it possible:

  1. Identifying you. They can do this because they know which phone line you're connecting from. The same way they know to assign certain services to your phone and not your neighbour's.
  2. Counting your bandwidth usage. Having identified you, they keep a running count of how much data you send, all the time, and always check whether you've exceeded your allowance before letting more traffic through from your line.
  3. Identifying international destinations. IP addresses technically are not tied to geographical locations, however, they seldom move. As as result they've been mapped, and figuring out which country your destination traffic is in, is facilitated by using an IP address mapping database.
  4. Policies. The telco establishes network polices for its users. These are the rules who is allowed access to which parts of the network, and at what time.

It works like this. You make a connection to an international IP address. The telco router identifies you and looks up your service contract to see what you've paid for and what the limits are. It then checks if the destination is international. In this example it is, so then it checks to see if you've exceeded your international bandwidth quota. If so, the connection is refused. If not, then you're allowed to connect to the destination.

That's a non-technical explanation. As an aside, if you make your connections through a domestic proxy server, then you can trick the router into letting your connections through.

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They would configure the routers that pass traffic out of their network to not pass IP packets with your address as the source IP.

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