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Re: Pay-As-You-Use High-Speed Internet?
Thus spake "Jonathan M. Slivko" <email@example.com> > Personally, I would like to see a senario where everyone just pays for > what they use - it would be a much better system for allowing people who > don't neccessarily need to get on the Internet at high-speed, get on > high-speed which will not only increase revenue for the ISP's, but also > for the customer who can now use DSL/T1 access in a much more effective way. > > Questions? Comments? Suggestions? One major disadvantage of usage-based billing is that your revenue is unpredictable. With flat-rate service, possibly tiered, you know ahead of time how much revenue you'll bring in that month and therefore can budget more effectively (and deliver consistent returns to shareholders). Another factor is that usage-based billing tends to attract people who use less than average and repel people who use more than average, at least when your competitors offer flat-rate billing. Depending on how you build your pricing model, this can hurt a lot more than you'd expect. One can take an important lesson from the telcos... When the incremental cost of usage was high compared to their fixed costs, usage-based billing made sense. However, today incremental costs are negligible but fixed costs are high, so logically the telcos are migrating to extracting a fixed income (to cover their fixed costs) and little if any usage charges for the typical consumer. I'm curious where others think we are on that progression, or if it even applies to ISPs. S Stephen Sprunk "Stupid people surround themselves with smart CCIE #3723 people. Smart people surround themselves with K5SSS smart people who disagree with them." --Aaron Sorkin