The other thing that everyone has their business plan built on is an average utilization of X. If the average utilization grows to 2*X or 3*X then the business plan usually does not work. Usage base measuring is a no-brainer, most providers measure their customers' loops today. Much of the discussion so far has mistaken usage based measuring/pricing with the style of accounting the telcos use for phone calls which certainly is not the only usage accounting model available. Usage based accounting can also be used to lower the barrier some customers might have in terms of connecting to the Internet. If their usage is low, they pay LESS. If they can get really cheap high speed local loop, they might pay A LOT LESS. How many people want to surf the web vs how many people want to host a big web site on their ISDN lines. The model I like is where they both are always "connected" but one group pays less (per month) than the other. It seems intuitive to me and I suspect it is intuitive to most consumers of Internet which probably makes it easier to sell. If I have a fixed number of dollars would I rather buy a really high speed pipe and pay for what I use or buy a really narrow pipe (that is provisioned on top of a really high speed pipe of which most of it I can not use) and pay for what I use and what I don't use? Empirically, it is hard for me to buy into the "usage based accounting kills the market" argument as long as the telephone business continues to grow (not to mention a whole lot of other usage based pricing businesses). In the end, there needs to be a set of business models (probably more than one) that are good for both the customers and the providers. I believe usage based models will be there for the reasons cited above, and the fixed rate schemes will be employed where there are broad averages that can be exploited (the customer likes the flat predictable rate, the provider believes the average usage still allows him/her to make money). Cheers, peter
Peter writes...
In the end, there needs to be a set of business models (probably more than one) that are good for both the customers and the providers. I believe usage based models will be there for the reasons cited above, and the fixed rate schemes will be employed where there are broad averages that can be exploited (the customer likes the flat predictable rate, the provider believes the average usage still allows him/her to make money).
However to ground this discussion into a hard reality the fact is that there are precisely these business models already in existence on the Internet today. Typically you see metered accounting structure where there is multiplexing of the resource (modem ports or high speed trunk bandwidth) and flat rates where averaging can be used. Of course quite frankly even flat rate schemes worked off access bandwidth are metered. Its just a big meter bucket. a 64K access pipe can deliver some 21G per month. So charging a flat rate for a 64K access is equivalent to charging for a 21G volume of traffic (or part thereof). So another spin on this is that the issue may not be one of metered or unmetered, but simply a discussion on the size of the metered unit. Geoff
Geoff Huston writes:
bandwidth are metered. Its just a big meter bucket. a 64K access pipe can deliver some 21G per month. So charging a flat rate for a 64K access is equivalent to charging for a 21G volume of traffic (or part thereof).
Not quite. 21 Gigs delivered in less than an hour over a DS3 link costs much more than delivering it over a month on a 64K link. ClockRate/Usage based tiered pricing accomodates volume, sustained use and burst requirements more readily than a pure volume based model.
So another spin on this is that the issue may not be one of metered or unmetered, but simply a discussion on the size of the metered unit.
Or its definition ..
Geoff
--pushpendra Pushpendra Mohta pushp@cerf.net +1 619 455 3908 Director, CERFnet http://www.cerf.net +1 619 455 3995 (FAX)
participants (3)
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Geoff Huston
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Peter Ford
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Pushpendra Mohta