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
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.
I disagree.
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
