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

  • From: Rod Beck
  • Date: Sat Jan 19 15:27:42 2008

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

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.

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.


Roderick S. Beck
Director of European Sales
Hibernia Atlantic
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``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.