Extensive evidence of the phenomenon Mike describes (inexpensive, frequently used things moving towards flat rate, expensive and rare ones towards sophisticated schemes a la "Saturday night stop-over fares") is presented in my paper "nternet pricing and the history of communications," Computer Networks 36 (2001), pp. 493-517, available at http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf It also explains some of the mechanisms behind this tendency, drawn both from conventional economics (bundling, etc.) and behavioral economics (willingness to pay more for flat rates). This tendency can indeed reverse in cases of extreme asymmetry of usage. But one has to be careful there. Heavy users are often the most valuable. (In today's environment they are often the ones who provide the P2P material that attracts other uses to the network. And yes, there is a problem there, in that you don't need such heavy users to be on YOUR network for them to be an attraction in signing up new subscribers.) Andrew

On Sat Jan 13, Mike Leber wrote:

On Sat, 13 Jan 2007, Sean Donelan wrote:

On Fri, 12 Jan 2007, Stephen Sprunk wrote:

...

There is no technical challenge here; what the pirates are already doing works pretty well, and with a little UI work it'd even be ready for the mass market. The challenges are figuring out how to pay for the pipes needed to deliver all these bits at consumer rates, and how to collect revenue from all the viewers to fairly compensate the producers -- both business problems, though for different folks.

Will the North American market change from using speed to volume for pricing Internet connections? Web hosting and other markets around the world already use GB/transferred packages instead of the port speed.

The North American market started with charging per GB transfered and went away from it because the drop in cost per Mbps for both circuits and transit made costs low enough so that providers could statistically multiplex their user base and offer "unlimited" service (unlimited for marketing departments is being able to offer something to 99 percent of your customer base, which explains all residential service clauses that state unlimited doesn't really mean unlimited). You can see this repeatedly for all sorts of products as costs have come down in the long view. For example, consumer Internet dialup, long distance calling plans, local phone service plans, some aspects of cell phone service, it might be happening with online storage right now (i.e. google gmail/gfs and the browser plugins that let you store files in your gmail account). What might or might not be trending is a digression, the "unlimited" service is a marketing condition that seems to occur when 99 percent of your customer base uses less than the cost equal to the benefit of offering "unlimited" service. Mike. +----------------- H U R R I C A N E - E L E C T R I C -----------------+ | Mike Leber Direct Internet Connections Voice 510 580 4100 | | Hurricane Electric Web Hosting Colocation Fax 510 580 4151 | | mleber@he.net http://www.he.net | +-----------------------------------------------------------------------+