On December 5, 1998 at 15:05 dts@senie.com (Daniel Senie) wrote:
Barry Shein wrote:
One possible positive effect (for the consumer) of "per-bit" pricing is the opportunity to buy larger pipes but only pay for what you use.
Right now flat-rate pricing mostly assumes you're going to, within some statistical model, actually use the bandwidth you get, or certainly that someone buying a DS3 is going to use a lot more bandwidth, on average, than someone with a DS1. [Rest of post deleted for brevity]
I wonder if the northeast is more expensive than elsewhere, but from my recent shopping for T1's for myself and my clients, I find the cost of the service over a T1 isn't the budget buster. For one location, all T1 circuits (before buying IP service, just the telco charge) is $613 a month. To another location, the circuits are $900 to $1500 a month. Adding $500 to $1000 on top of that for full-rate service, vs. adding $200-$500 on top of that for "burstable" service just doesn't generate much excitement.
I don't think the model becomes very exciting until you model it for DS3 and beyond, as you say below that there's not enough money involved to get excited about. But even at around $1K/mo for a T1 flat-rate, simple extrapolation puts a 1gb line at $1 million per mo, even if there's a 50% discount for that, $500K/mo, the customer base would be somewhat limited. Even a 155Mb/s ATM calculates to around $100K/mo using straight extrapolation. Being able to get an atm line in for, say, $10K/mo and then paying the burstable rate might seem very attractive to some.
Until the base telco circuit prices are lowered dramatically, the pricing of packet service over them, while not "noise," is certainly less interesting.
This is certainly true, and no doubt something someone in Sidgemore's position is considering since Worldcom does local loop or is certainly capable of affecting local-loop pricing.
Now, if the whole circuit, T1 and IP packet service, were all priced on the basis of traffic, that'd be interesting. An underutilized T1 would incur some small base charge, plus traffic/usage increments beyond that. That'd be quite attractive, though I doubt the phone companies would think so.
Exactly my point. -- -Barry Shein Software Tool & Die | bzs@world.std.com | http://www.world.com Purveyors to the Trade | Voice: 617-739-0202 | Login: 617-739-WRLD The World | Public Access Internet | Since 1989 *oo*