The question, as a carrier, is *where* do you set the flat rate so as to make sure that you've ramped your income up commensurately with the requirements for build out -- which is two almost completely different questions depending on whether you're considering hotspot/wired economics or wireless WAN economics.
Or so it seems to me.
Yes, you can do that but you are dealing with a value that has no direct connection what the cost of what you are selling. You fiddle the number until it looks right and the bottom line looks OK but if some new app pops up over the horizon that changes the bandwidth requirement behavior of your users, you just might be toast.
With usage-based pricing if the bandwidth requirement suddenly spikes so does cashflow and that cash can be directly diverted into more resources to deal with the problem. If you are flat-rate and it spikes, where does the money come from to deal with the problem? Are your customers going to smile and nod their heads when you tell them you are raising your rates to deal with the new bandwidth requirements? Not hardly!
Packet switching is about as cooperative an environment as you're going to get for flat-rating -- the incremental overhead is so much lighter.
The overhead is not the issue, capacity is. There is a glut of
backbone?
Yes.
bandwidth in terms of fiber right now in the US but many people are still behind relatively slow links (T1/xDSL).
If you mean the *houses* are, and you can call T1 slow with a straight face, then I'll agree with you. :-)
All things are relative. Frankly, I think T1 is just fine for almost anything I do. But sharing is another story. There are only two things I want that would exceed the capacity of a T1: SACD PCM audio and MPEG-2 video. Even poor anemic CD audio is getting close. So when everyone is trying to pull down a disk's worth of CD audio (MP3 is not even approaching hi-fi and need not apply but I will take lossless compression) then the impact on the network will be, ahem, substantial.
OTOH, live behind DS-3/T3 or OC-3 to a major backbone node and you will think you are in hog heaven. Been there a couple of times. It is quite nice.
Much of that judgement depends on what you're doing, of course, but I share a 256K slice with about 5 other people fairly frequently and for surfing, it's not bad at all. RoadRunner's better of course.
I count on that. Statistically a user browsing the web requires an average of about 40-50 Kbps regardless of how fast the link is. This means that something like a T1 can support 30-40 concurrent users without them perceiving any real slowdown.
If you're talking about the concentrator network, of course, T-1 is staggeringly slow these days.
As you say, it all depends on what you are doing.
Heck, I am behind a 1Mbps VSAT down here. The local telco gets $350/mo for 1Mbps ADSL to businesses.
"telco" is the important word. Do you get David Isen's SMART letter? ;-)
No. I was not aware of it. Pointer?
Regardless, the telco down here, named "Innovative Communications" (hehehehehehe), is so clue-challenged (down at the quantum level even) that it is more funny than anything. The word "service" is *not* a part of their lexicon. You have to question a service that is so bad that the customers will throw away money to get out of it. I have talked to several businesses that have purchased hardware, paid substantial start-up costs ($600), and substantial monthly cost ($250+) for DSL service only to find that their throughput and reliability is approximately equal to dial-up. I am getting good consulting gigs with businesses to set up automatic fail-over to VSATs when (not if) the DSL fails. They want the low latency of DSL with the high reliability of VSAT so I try to work out a mix. Doing the policy routing and priority queueing to achieve their goals is fun and challenging.
We are relatively bandwidth starved (which doesn't make a darned bit of sense since St. Thomas is the major fiber nexus for much of the Caribbean and Central America).
See above. :-)
Pointer?
I want users to keep their usage down so that the capacity available will go as far as possible.
I used to handle 40 modem on a 256K FR backhaul to a Texas uplink in addition to 30 more on a 64K link to me, in about 1996... everyone was pleased as punch with the throughput... until IPhone arrived.
Never was a term more aptly coined than "killer ap".
Usage-based billing will do that. Flat rate encourages overconsumption because you get more bang for your buck if you overconsume.
If you are in *control* of your usage. For *internet access*, I don't mind per hour billing (though *I* wouldn't take it), but I can't deal with *per KB* billing -- which is what you'd have to do in the wireless milieu about which we're prattling here.
I know. It is offensive. I wouldn't like it either. But it *IS* the most direct connection between what you are selling and what they are buying. Of course the price has to be set right.
Regardless, I recognize the marketing necessity of flat-rate billing.
Ah, so I'm *not* nuts. Cool; thanks. :-)
I never said you were. I was just trying to talk about the reality of the whole thing from the other side. Too many people forget the other side and that the provider has to make a profit in order to keep delivering that service you want. When they go belly-up, your service goes away. If we learned nothing else from the dot-com "massacre" (that term feels more right than "revolution") it is that businesses must be profitable to survive. The old joke, "I lose money on each one but I make it up in volume," was never more apt than in telecommunications.
BTW, after all my blathering, I charge flat-rate by the day, week, or month. See http://www.greenflashnetworks.com. It is being a [W]ISP again but at least I get to live on my boat and drink fruity rum drinks with little parasols in them while doing it. (http://www.lloyd.com)
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Brian Lloyd 6501 Red Hook Plaza, Suite 201 [EMAIL PROTECTED] St. Thomas, VI 00802 +1.340.998.9447 - voice +1.360.838.9669 - fax GMT-4
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