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RE: An Attempt at Economically Rational Pricing: Time Warner Trial

  • From: Rod Beck
  • Date: Sun Jan 20 13:05:26 2008

Title: RE: An Attempt at Economically Rational Pricing: Time Warner Trial

Hi Marshall,

I think the point is that you need to get buyers to segregate themslevesinto two groups - the light users and the heavy users. By heavy users I mean the 'Bandwidth Hogs' (Oink, Oink) and a light user someone like myself for whom email is the main application. Afterall the problem with the current system is that there is no segregation - everyone is on basically the same plan.

The pricing plan needs to be structure in a way that light users have an incentive to take a different pricing plan than do the heavy users.

Similar to the way that insurance companies require high premiums for better coverage and more benefits.

There must be incentives for the heavy user to reveal him or herself as a heavy user.

I am just a dumb sales pushing point-to-point capacity ... So I don't have a good idea of how to do it.

Roderick S. Beck
Director of European Sales
Hibernia Atlantic
1, Passage du Chantier, 75012 Paris
http://www.hiberniaatlantic.com
Wireless: 1-212-444-8829.
Landline: 33-1-4346-3209.
French Wireless: 33-6-14-33-48-97.
AOL Messenger: GlobalBandwidth
rod.beck@xxxxxxxxxxxxxxxxxxxx
rodbeck@xxxxxxxxx
``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.



-----Original Message-----
From: Marshall Eubanks [mailto:tme@xxxxxxxxxxxxxxxxx]
Sent: Sun 1/20/2008 2:37 PM
To: Rod Beck
Cc: Scott McGrath; Rod Beck; owner-nanog@xxxxxxxxx; Patrick W. Gilmore; nanog@xxxxxxxxx
Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial


On Jan 19, 2008, at 3:25 PM, Rod Beck wrote:

> If service is metered, it doesn't imply 25 cents a minute. It would 
> probably be based on bytes transferred and would probably be less 
> expensive for the bulk of users than the current flat rate pricing. 
> If the cable companies are telling the truth, roughly 5% of their 
> customers generate 50% of the traffic. That implies that the bulk 
> of users are effectively subsidising the five percent of heavy users.
>
> So any sort of well crafted usage-based pricing, would lower the 
> amount paid by the vast majority of users and raise it dramatically 
> for the five percent of heavy users.
>
>

Dear Rod;

This does not match my experience of the world. Raise the price for 
the 5%, sure. Lower prices for the rest, probably not. What I would 
really expect to result from this are very complicated bills full of 
obscure fees that effectively raise almost everyone's monthly charge 
to well above what they advertise on TV. This is, after all, the 
common pattern on phone service, and I would expect "plans" where you 
get so much bandwidth but if you exceed your limit you are suddenly 
paying some exorbitant rate per GB. Soon to come would be TV 
commercials talking about weekend Gigabytes and daytime Gigabytes and 
how you can carry your unused Gigabytes over from one month to the next.

Regards
Marshall

> Usage-based pricing would give the cable companies and telephony 
> incumbents an incentive to upgrade infrastructure and actually 
> compete for the heavy users. The heavy users would be the most 
> profitable customers. New technologies would be welcomed instead of 
> discouraged.
>
> Ironically, the Net Neutrality debate is about the access providers 
> trying to impose usage-based pricing through the backdor - on the 
> content providers. It goes without saying I oppose it. It's the end 
> users who decide what they view and hence ultimately generate the 
> traffic flows. So the end users should be subject to the usage-
> based pricing.
>
> Regards,
>
> Roderick S. Beck
> Director of European Sales
> Hibernia Atlantic
> 1, Passage du Chantier, 75012 Paris
> http://www.hiberniaatlantic.com
> Wireless: 1-212-444-8829.
> Landline: 33-1-4346-3209.
> French Wireless: 33-6-14-33-48-97.
> AOL Messenger: GlobalBandwidth
> rod.beck@xxxxxxxxxxxxxxxxxxxx
> rodbeck@xxxxxxxxx
> ``Unthinking respect for authority is the greatest enemy of 
> truth.'' Albert Einstein.
>