In article <19980528100840.19859@scfn.thpl.lib.fl.us>, "Jay R. Ashworth" <jra@scfn.thpl.lib.fl.us> wrote:
On Wed, May 27, 1998 at 10:34:18PM +0000, Michael Shields wrote: [...]
Why are you assuming that the Internet will continue to have non-distance-sensitive pricing, when it clearly has distance- sensitive costs (ultimately)?
Because that has been the primary driver to date of the kind of growth the Internet has undergone.
Mature markets and new markets behave differently. $19.95 unlimited dialup was a big factor in 1995 and much less so now.
That it has distance sensitive costs only matters if you're trying to be a nationwide ultra-backbone.
Actually I was thinking about international ultrabackbones. I don't see any theory or evidence that they are going away or being marginalized. You will always have to deal with them. It's in their interest to be sure that the pricing is fair. I think pricing based on the actual destination makeup of your traffic is more fair than pricing based on the assumption that your traffic is like everyone else's. I could be wrong, and I'd be happy to be shown why. But I think distance-pricing has a sound basis, even if it never materializes in the market. The major reason I see that it might not happen is that customers would tend to remain fairly similar to each other in terms of their locality; just as when customers have similar bandwidth usage, circuits tend to be sold unmetered. If I were an Australian ISP, I'd look very seriously at pricing transoceanic packets different from intracontinental packets. From what I understand the market there would be accepting; and unless there is a flaw in the reasoning of my message yesterday, you can collect that data cheaply with today's technology.
and the "big 5" would be _really_ pissed off. Good.
You think ultrabackbones are doomed? Why? -- Shields, CrossLink.
Michael Shields writes:
I think pricing based on the actual destination makeup of your traffic is more fair than pricing based on the assumption that your traffic is like everyone else's.
So, this is an issue of perceived morality and not a technical issue? I think its only fair that everyone pay for the matchbooks they use. The fact that matchbooks are generally given away these days, instead of having people charged for them on a usage basis, is grossly unfair. I think it is only fair that everyone pay for the television they watch on a metered basis. If you watch for ten hours, you should be paying twice as much as for five hours, right? Its only FAIR!!!!! I think it is only fair that you should pay twice as much for a Fedex package going twice the distance, and I'm MAD THAT THEY DON'T CHARGE THAT WAY, DAMNIT! Now that we've all figured out how silly this sounds... Mr. Shields, "Fair" has nothing to do with it. The business case in all telecom markets is going towards distance insensitive pricing, and even flat rate pricing. The cost of providing service is very low, and not particularly traffic or distance sensitive in reality. For your average dialup ISP, the cost of payroll way outswamps the cost of your connectivity -- cost of equipment and payroll together makes connectivity look small. I would not be particularly surprised to find the equation is similar on larger providers, although I have insufficient experience there to know for sure. Certainly, however, as time goes on, the cost of the data on the wire is not per se the source of expense. The cost of providing detailed billing -- especially detailed by destination -- is very high. Not only do you need to waste cycles counting where every packet is going to and from, but you also need to transmit that data, store it for years lest you have billing disputes, produce software to create detailed bills, operate a much more advanced billing and collections department which has to handle things like inevitable disputes, etc. All this so that you can divvy up what is, in fact, not even your biggest cost in most cases? All this while your competitors are offering a service people prefer, namely flat rate pricing? Where is the business case for this, Mr. Shields? Why on earth would anyone be stupid enough to want any of that crap? We've had "burstable" T1 and T3 service metering for years, and in this very restricted domain (charging a fairly small number of bulk users for their consumption) there has been something of an economic case for that billing model, especially given that many such users are resellers. What you are proposing is far beyond even this case, however.
I could be wrong, and I'd be happy to be shown why. But I think distance-pricing has a sound basis, even if it never materializes in the market.
"Sound" is a measure of what the market wants. If the market never accepts something, the notion that it was "sound" is somewhat specious. Perry
Michael Shields writes:
I think pricing based on the actual destination makeup of your traffic is more fair than pricing based on the assumption that your traffic is like everyone else's.
So, this is an issue of perceived morality and not a technical issue?
I think its only fair that everyone pay for the matchbooks they use. The fact that matchbooks are generally given away these days, instead of having people charged for them on a usage basis, is grossly unfair.
I think it is only fair that everyone pay for the television they watch on a metered basis. If you watch for ten hours, you should be paying twice as much as for five hours, right? Its only FAIR!!!!!
I think it is only fair that you should pay twice as much for a Fedex package going twice the distance, and I'm MAD THAT THEY DON'T CHARGE THAT WAY, DAMNIT!
Now that we've all figured out how silly this sounds... Mr. Shields, "Fair" has nothing to do with it.
What the hell kind of straw man is this? Yes, it sounds absolutely foolish, but you are attacking an argument I did not make. Perry, I am *not* a flake. I don't think that distance-insensitive pricing is immoral; or that it is going away; or that backbones should adopt it; or even that I know or care what sort of pricing models people have. All I said was that distance-sensitive pricing is feasible. What place it has in the market, if any, I don't know, and it is absolutely 100% pointless to argue about it. You think it has no place in the market, and I think it could be worthwhile for some niches. Neither of our opinions matter; the market will figure it out. I don't care to argue about it. It doesn't matter. The market will figure it out. By "fair" I don't mean "moral", I mean "pricing more accurately reflecting costs". I am sorry if you see this as a loaded term. In fact, "fair" is exactly the word used by connect.com.au, the first Australian ISP whose web page I looked at, to decribe their three- tiered pricing model -- intra-network, web cached, and external. This sounds to me like a coarse attempt at distance-sensitive pricing for an area of the world where bandwidth *is* a major cost. So, is it technically viable or not? I posted a method that I think will work, using existing netflow data, i.e. no significant extra router load. Is something wrong with it? -- Shields, CrossLink.
On Fri, May 29, 1998 at 06:58:06AM +0000, Michael Shields wrote:
Because that has been the primary driver to date of the kind of growth the Internet has undergone.
Mature markets and new markets behave differently. $19.95 unlimited dialup was a big factor in 1995 and much less so now.
WHat the number is is less so, but I think the mass inxodus (opposite of exodus, no? :-) to AOL when they wen tflat rate gives the lie to this theory.
I don't see any theory or evidence that they are going away or being marginalized. You will always have to deal with them. It's in their interest to be sure that the pricing is fair. I think pricing based on the actual destination makeup of your traffic is more fair than pricing based on the assumption that your traffic is like everyone else's.
It may well be "more fair", but that doesn't mean it will be more popular. People are used to a flat rate internet, at whatever level, at least in the US, and while I'm aware that that's a horribly Americocentric view, a) we do have the hight penetration on the planet, by a wide margin, and b) this _is_ _NA_NOG. It's also worth noting that the penetration of the Internet at the retail dial up level is much higher in areas with flat rate local service.
I could be wrong, and I'd be happy to be shown why. But I think distance-pricing has a sound basis, even if it never materializes in the market.
Didn't say I didn't think it was sound... but see my next reply.
and the "big 5" would be _really_ pissed off. Good.
You think ultrabackbones are doomed? Why?
Frankly, I think that they violate some of the fundamental architectural principles on which the Internet is based, because it is in their commercial best interests to do so. If they connected lots of little local exchanges, I'd be happier, but the way things are now, all the packets end up on the shelf at one of the 4 naps... But I've banged this drum enough this week, I'm told. ;-) Cheers, -- jra -- Jay R. Ashworth jra@baylink.com Member of the Technical Staff Unsolicited Commercial Emailers Sued The Suncoast Freenet "Two words: Darth Doogie." -- Jason Colby, Tampa Bay, Florida on alt.fan.heinlein +1 813 790 7592 Managing Editor, Top Of The Key sports e-zine ------------ http://www.totk.com
participants (3)
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Jay R. Ashworth -
Perry E. Metzger -
shields＠crosslink.net