On Thu, 29 Aug 1996, Dick St.Peters wrote:
What research into the growth of telephone, telegraph, and train systems immediately reveals is usage-based pricing generating revenue to pay for the infrastructure to handle the growing traffic.
It also reveals that pay-per-message (telegraph) is not as successful a model as pay-per-month (telephone). The same things could be said about trains (pay-per-trip) and cars (basically flat-rate). Of course neither cars nor telephone are purely flat-rate models but then, neither is any ISP that I am aware of.
The people with a clue are those who can tell the difference between predicting the death of the net and predicting the end of the free lunch.
The economic models of telephone systems are very complex and it is difficult to figure out what true costs are to provide service. No doubt this is because generations of telco employees have been working on obfuscating the whole thing in order to justify the widespread use of metered rates. But one thing is certain. It costs more money to meter and to bill based upon metering than it does to bill flat rates. Perhaps this is why the CEO of Canada's largest telco conglomerate chose the following quote from an economist article to open a recent talk The significance of the issues in play was summed up as follows in a major feature on telecommunications in the Economist last September [1995]: The death of distance as a determinant of the cost of communications will probably be the single most important economic force shaping society in the first half of the next century. It will alter the decisions about where people live and work; concepts of national borders; patterns of international trade. Its effects will be as pervasive as those of the discovery of electricity. IMHO the phrase "death of distance" is another way of saying that the current metered billing infrastructure collapses. And if this happens how can we be sure that metering itself will survive? Already the costs of billing are becoming close to 50% of a telco's expenses due to the plummeting costs of switching gear and other hard goods used in telecommunications. The best the future could hope for is that metering survives alongside flat rates but only for higher quality services. This could mean that metering is only found outside the public global Internet. You can read the talk by Red Wilson of Bell Canada Enterprises and some comments by an industry consultant at http://www.angustel.ca/future/fut.html Michael Dillon - ISP & Internet Consulting Memra Software Inc. - Fax: +1-604-546-3049 http://www.memra.com - E-mail: michael@memra.com