Michael Shields writes:
I think pricing based on the actual destination makeup of your traffic is more fair than pricing based on the assumption that your traffic is like everyone else's.
So, this is an issue of perceived morality and not a technical issue? I think its only fair that everyone pay for the matchbooks they use. The fact that matchbooks are generally given away these days, instead of having people charged for them on a usage basis, is grossly unfair. I think it is only fair that everyone pay for the television they watch on a metered basis. If you watch for ten hours, you should be paying twice as much as for five hours, right? Its only FAIR!!!!! I think it is only fair that you should pay twice as much for a Fedex package going twice the distance, and I'm MAD THAT THEY DON'T CHARGE THAT WAY, DAMNIT! Now that we've all figured out how silly this sounds... Mr. Shields, "Fair" has nothing to do with it. The business case in all telecom markets is going towards distance insensitive pricing, and even flat rate pricing. The cost of providing service is very low, and not particularly traffic or distance sensitive in reality. For your average dialup ISP, the cost of payroll way outswamps the cost of your connectivity -- cost of equipment and payroll together makes connectivity look small. I would not be particularly surprised to find the equation is similar on larger providers, although I have insufficient experience there to know for sure. Certainly, however, as time goes on, the cost of the data on the wire is not per se the source of expense. The cost of providing detailed billing -- especially detailed by destination -- is very high. Not only do you need to waste cycles counting where every packet is going to and from, but you also need to transmit that data, store it for years lest you have billing disputes, produce software to create detailed bills, operate a much more advanced billing and collections department which has to handle things like inevitable disputes, etc. All this so that you can divvy up what is, in fact, not even your biggest cost in most cases? All this while your competitors are offering a service people prefer, namely flat rate pricing? Where is the business case for this, Mr. Shields? Why on earth would anyone be stupid enough to want any of that crap? We've had "burstable" T1 and T3 service metering for years, and in this very restricted domain (charging a fairly small number of bulk users for their consumption) there has been something of an economic case for that billing model, especially given that many such users are resellers. What you are proposing is far beyond even this case, however.
I could be wrong, and I'd be happy to be shown why. But I think distance-pricing has a sound basis, even if it never materializes in the market.
"Sound" is a measure of what the market wants. If the market never accepts something, the notion that it was "sound" is somewhat specious. Perry