Hank Nussbacher <hank@ibm.net.il> wrote:

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On Thu, 29 Aug 1996 01:47:38 -0700 Vadim Antonov wrote: Generally speaking, at least 70% of users already have metered access of that kind (in form of per-hour connect time charges), so in this sense Internet is metered already, and was like that for years. Obviously that's not "metering" Metcalfe et al are calling for.

I think you are confusing dialup and leased line capacity planning models. They are inherently different. If I have a POP in City A with a T1 to my backbone, I pretty much know how many dialups I can support.

If you do even minimal statistics on leased lines you'll know what customers use and how their utilization grows over time. When you have a provider which runs thousands of leased lines it becomes no more of guesswork than dialup.

Just look at the example of the NANOG poster who had to move ISPs since his thruput was high enough to double his costs so he moved to a flat rate ISP. Those flat rate ISPs will quickly load up with these thruput heavy users and in the end either lose money every year or go bankrupt.

It is no different from local telco pricing in US where you can get metered access if you're low-volume, or flat-rate if you're willing to guarantee payment for some usage. As for "losing money" -- i've seen SprintLink's balance sheets. It's not going bankrupt any time soon. In fact, the lack of differentiation between classes of customers is what made Sprint one of the top players in the field -- most small ISPs liked the pricing. I guess your view is different because of difference between pricing of leased lines. If you have a hugely expensive international private line, you have to sell its capacity for prices which make customers unlikely to buy flat-rate. It's not like that in US.

The trend is for flat rate dialup and usage based rates for leased line.

Sorry, this does not correspond to what i've seen. People who buy a T-1 usually have enough traffic to fill it. Faster WWW access encourage faster browsing, that's it.

Those ISPs that ignore that trend will not last. The kicker is Cable/VSAT. A consumer that is offered 2Mb-10mb to the home via cable or DirecPc (bidirectional) for say $50 flat rate will single-handedly be able to overrun the backbone line of the POP.

This is back to the situation when "exterior" link is small as compared to "interior". In this situation usage-based pricing makes a lot of sense. Until first customers get slapped with $1k bills for gee-whiz automatic loading of some movies off the Web. The rule of backbone engineering is that you have to have some ratio (usually about 1:3) of backbone capacity to customer access capacity. If that ratio is 1:1000 (as in 10Mbps customer access to everybody in neighbourhood, with OC-3 backbone) it is bound to create problems, to say it mildly. That's why xDSL and cable Internet customer access remains largely a joke.

But when I specify usage based rates I am referring to a simple meter like the gas company, not a complex meter like the phone company.

Then we're in agreement on that. However to introduce pricing sensitive to resource allocation in backbones, like Metcalfe advocates you will need telco-style end-to-end billing. It is not access capacity which is in shortage, it is backbone capacity.

As someone else stated, telco's are approaching 50% costs for billing due to their overwhelming complexity between local, long distance, international, time of day, length of call, services used, etc.

It's not complexity of computations, it is the fact of collection and archiving per-call data which makes that expensive. (BTW, if you charge per connection you'll have to keep records about that connection for at least half a year, as an evidence in case of payment disputes -- if you don't do that anybody will simply be able to say "i didn't make that call").

Gas and most electric companies charge a flat rate per usage, no matter what time of day you use it.

Ah, again, they can accumulate resources to smooth out demand. (It's a bit harder with electricity, but there's such thing as accumulating power stations).

Their billing costs are far less than telcos.

They don't have to generate itemized bills, and their entire usage records on you contain 48 bytes per year.

ISPs, in order to survive, had best not follow the telco model of billing complexity, but instead follow the utility company model of simple billing. KISS.

All of them do, to my knowledge. It's Metcalfe et al who are calling for change in the direction of resource reservation and per-connection charging. --vadim