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Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008, at 3:06 PM, Tomas L. Byrnes wrote:
I always find it interesting that people with a telco background keep trying to go back to the ma bell days and ways, even as the telcos themselves are abandoning those models for phone service.
I am not at all certain that is what is happening.
One of the things about usage based pricing in the Internet is that the
Pick a number. Any number. Offer broadband flatrate service at that number. I will show you at least 5% of your customer base who is either paying an order of magnitude too much, or getting an order of magnitude more than they paid for. And usually a lot more than 5%.
The problem is "flat rate" doesn't work when the thing being offered is a shared resource _and_ a single or a few users can use all the resources. On phone networks, flat rate kinda works because a single phone call is a very tiny fraction of the shared resource. No small set of users can harm the rest of the users. (It is still possible for a medium set of users to harm the rest, but the danger is low.) That is not true for Internet access, unless you plan to go back to Kbps speeds. I think that would be less well received than usage- based billing.
IOW: Usage-based billing makes sense commercially, whether you are a propeller-head or a bell-head.
And since Internet providers tend to be for-profit businesses, doing what "makes sense commercially" is kinda required.
Then again, I Am Not An Isp, so what do I know? If you think things are out of whack, sounds like a business opportunity to me! You should be able to take your superior knowledge and make a killing implementing a proper network.
-- TTFN, patrick