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

  • From: Tomas L. Byrnes
  • Date: Fri Jan 18 15:37:47 2008

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.

One of the things about usage based pricing in the Internet is that the
system doesn't have the facilities to do that built into it by design,
so you have to add a lot of equipment and software to do it. This tends
to cost more than the incremental revenue, especially when you consider
the additional customer service costs and churn (there's always a
competitor who pops up offering flat-rate pricing).

The problem in the ISP industry isn't lack of usage based pricing. It's
that the going rate for basic connectivity was driven below that which
is economically sustainable by the ILECs when they engaged in predatory
pricing to drive the CLECs out of business in the late 90s. Now that
they own the market, they find that, having driven the prices down, they
can't raise them, so they are engaging in various subterfuges that are
designed to cover up the basic thing they are doing: trying to charge
more for the exact same service.


> -----Original Message-----
> From: [email protected] [mailto:[email protected]] On 
> Behalf Of Jeff Shultz
> Sent: Friday, January 18, 2008 11:38 AM
> To: NANOG list
> Subject: Re: An Attempt at Economically Rational Pricing: 
> Time Warner Trial
> Mikael Abrahamsson wrote:
> > 
> > On Fri, 18 Jan 2008, Rod Beck wrote:
> > 
> >>
> > 
> > So, anyone but me think that this will end in disaster? I think the 
> > model where you get high speed for X amount of bytes and 
> then you're 
> > limited to let's say 64kilobit/s until you actually go to 
> the web page 
> > and buy another "token" for more Y more bytes at high speed? We 
> > already have this problem with metered mobile phones, which 
> of course 
> > is even more complicated for users due to different rates 
> depending on 
> > where you might be roaming.
> > 
> > Customers want control, that's why the prepaid mobile phone 
> where you 
> > get an "account" you have to prepay into, are so popular in some 
> > markets. It also enables people who perhaps otherwise would not be 
> > eligable because of bad credit, to get these kind of services.
> > 
> > I'm also looking forward to the pricing, all the per-byte 
> plans I have 
> > seen so far makes the ISP look extremely greedy by overpricing, as 
> > opposed to "we want to charge fairly for use" that is what 
> they say in 
> > their press statements.
> > 
> I think that all those people who think their kids spend a 
> fortune on their Cell Phones are in for a very rude 
> awakening... when their "plan" 
> runs out of bandwidth on the 6th of the month.
> Flat rate text messaging was created for a reason... this is 
> fighting that reason.
> --
> Jeff Shultz