Date: Sat, 5 Dec 1998 11:26:45 -0500 From: "Jay R. Ashworth" <jra@scfn.thpl.lib.fl.us> To: "'nanog@merit.edu'" <nanog@merit.edu> Subject: Re: More Sidgemore on per-bit pricing [...] Well, we'll see. The problem is suits who don't understand that billing by the byte, rather than by the router port, usually has higher costs than it does revenue enhancement. If I assert that I'm trying to reduce customer's billings, then, as a CEO of a publicly held company, I'd better have something up my sleeve that will actually enhance revenue, or I'll be out of a job, real quick.
I suspect that "it's too hard and/or expensive to bill by byte (or kilo-byte or mega-byte)" may become one of the great myths of the Internet. It should be noted that phone companies, particularly LECs, are probably better than anybody at billing in very fine usage-basee increments. "Suites" often understand costs and pricing very well. Suites often also understand competitive advantage. I wonder if John Sidgemore is thinking that offering fine-grained usage-based billing is something that he can do well (if he leverages the billing skills of other parts of WorldComm) and that his competitors won't be able to replicate, (e.g., the thousands of ISPs who seem to think that sending out one fixed-rate bill a month is a sizable burden). Beyond suspecting that fine-grained usage-based billing in the Internet will be introduced by those that can do it well, I haven't a clue what the long term future is... -tjs
On December 5, 1998 at 14:19 salo@networkcs.com (Tim Salo) wrote:
I suspect that "it's too hard and/or expensive to bill by byte (or kilo-byte or mega-byte)" may become one of the great myths of the Internet.
I agree 100%, it's one of the great "truisms" which has been repeated over and over since the early '80's at least on lists like these. In my experience it rests on largely a moralistic view rather than an economic model. For example, the underlying presumption is that it's somehow "wrong" to charge for the cost of billing (why?), and worse yet to charge cost+profit on just the billing activity (why?) Yet in essence every business which bills customers sells billing services at a profit or they're not in business very long, if you want to look at it like that. I can certainly understand why someone would like to pay only for the actual service or product and not pay for being billed, who wouldn't? But if service+billing, where the billing is a larger percentage than some other billing model, still is competitive (e.g. because it reduces the cost of the service even more) then it's a potential winner. How the underlying charge pie-charts out in terms of cost-factors is really of little concern to the customer if their final deal is better. But that's basically what this "billing costs too much" argument is often trying to say, that increasing the pie-chart slice of billing is unreasonable, independent of how that affects the other slices or the total cost (of course if the rest stays the same then yes, it's probably a loser.) -- -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*
On Sat, Dec 05, 1998 at 03:35:19PM -0500, Barry Shein wrote:
In my experience it rests on largely a moralistic view rather than an economic model. For example, the underlying presumption is that it's somehow "wrong" to charge for the cost of billing (why?), and worse yet to charge cost+profit on just the billing activity (why?) Yet in essence every business which bills customers sells billing services at a profit or they're not in business very long, if you want to look at it like that.
Not at all, Barry. My assertion rests on two things: 1) Routers are too damned busy as it is; too busy, we're told, to run the filters that would keep much of the crap off the net. It's unlikely the money made by packing more customers into a given amount of uplink would outweigh the costs of gathering and processing the information at that fine a granularity. 2) The telcos currently control the local loop, and are pricing that on a flat rate basis, mostly, frame and ATM notwithstanding (there's _still_ a flat cost, somewhere). I don't at all object to "usage-sensitive" pricing, burstable T's and the like; I'm looking at one right now. It's this "slap a byto-meter on it" mentality that demonstrated, I feel, a fundamental misunderstanding of the net. But then, I expect that from telco suits. Cheers, -- jra -- Jay R. Ashworth jra@baylink.com Member of the Technical Staff Buy copies of The New Hackers Dictionary. The Suncoast Freenet Give them to all your friends. Tampa Bay, Florida http://www.ccil.org/jargon/ +1 813 790 7592
participants (3)
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Barry Shein -
Jay R. Ashworth -
Tim Salo