Next message: Joe Greco: "Re: An Attempt at Economically Rational Pricing: Time Warner Trial"
Such caps, if they are high enough, may be a reasonable compromise.
As Mark Newton wrote a few days ago, about Australia,
The more sensible end of town pays about $80 per month for about
40 Gbytes of quota, give or take, depending on the ISP. After that
they get shaped to 64 kbps unless they want to pay more for more
quota. Bytecounts are retrieved via SNMP (for business customers)
or Radius (for DSL, dial, ISDN, etc).
When transit is costing $250 per megabit per month, there aren't
many other options.
Given Australia's level of Internet traffic (see http://www.dtc.umn.edu/mints/),
it seems that only a tiny fraction of the users will hit the 40 Gbytes of quota.
But if your transit costs $10 per megabit per month, other factors may dominate.
I have a discussion of these issues in the paper "Internet pricing
and the history of communications," published in Computer Networks
36 (2001), pp. 493-517, available at
http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf
Some of these issues are also dealt in the more recent paper with David
Levinson, "Too expensive to meter: The influence of transaction costs in
transportation and communication," Phil. Trans. Royal Soc. A, to appear,
http://www.dtc.umn.edu/~odlyzko/doc/metering-expensive.pdf
Overall, telecom policy makers, both inside service providers and in
regulatory bodies, have been fixated on a particular economic model
that denigrates flat rate plans. Now I am not a flat rate bigot,
and understand their limitations. But it seems imperative to appreciate
that there are several other factors that matter, discussed
in the papers mentioned above. One is that people are willing to pay
more for flat rates. Second is that flat rates stimulate usage,
something that I claim telcos should be striging to do, as transmission
capacity is growing. But few people appear willing to learn that lesson.
Andrew
> On Sun Jan 20, Matthew Moyle-Croft wrote:
Simon Leinen wrote:
> While I think this is basically a sound approach, I'm skeptical that
> *slightly* lowering prices will be sufficient to convert 80% of the
> user base from flat to unmetered pricing. Don't underestimate the
> value that people put on not having to think about their consumption.
>
As long as the companies convince people that the "cap" is large enough
to be essentially the same as unmetered then most people won't care and
will take the savings. The other angle is to convince the 95% of
customers that caps will actually deliver them a faster speed as the
"evil 5%ers" won't be slowing them down by hogging the bandwidth.
Having a cap and slowing down afterward (64kbps or 128kbps are typical)
is what worked here in Oz. It also removes a whole lot of credit
related issues. Consumers get a product where they know what they're
getting - it's fast upto a point and then it slows down.
--
Matthew Moyle-Croft - Internode/Agile - Networks
Level 3, 132 Grenfell Street, Adelaide, SA 5000 Australia
Email: Web: http://www.on.net
Direct: +61-8-8228-2909 Mobile: +61-419-900-366
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"The difficulty lies, not in the new ideas, but in escaping from the old ones" - John Maynard Keynes
