Rod Beck wrote:

Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing.

Concur. However, comma, if governments are charging taxes (such as the EU) it leads to the question of what people pay taxes *for* - and paying more taxes because they use the internet more would mean those that use more would pay more in usage fees and pay more in taxes - which runs completely against the stacks of documents written about equality on the internet. Not taking a side on that, but it is an interesting point to chew on - realistically, a balance would have to be struck. And, as an aside, the Network Neutrality issue affects the globe and is only being debated in one country. -- Taran Rampersad cnd@knowprose.com http://www.knowprose.com http://www.your2ndplace.com http://www.opendepth.com http://www.flickr.com/photos/knowprose/ "Criticize by Creating" - Michelangelo "The present is theirs; the future, for which I really worked, is mine." - Nikola Tesla

Patrick W. Gilmore wrote:

On Jan 19, 2008, at 4:25 PM, Taran Rampersad wrote:

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Rod Beck wrote:

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Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing.

Concur. However, comma, if governments are charging taxes (such as the EU) it leads to the question of what people pay taxes *for* - and paying more taxes because they use the internet more would mean those that use more would pay more in usage fees and pay more in taxes - which runs completely against the stacks of documents written about equality on the internet. Not taking a side on that, but it is an interesting point to chew on - realistically, a balance would have to be struck.

Where are the "stacks of documents written about equality on the internet" that say "customers who use more should pay the same as customers who use less"?

I am not taking a position on NN here, but I don't believe either side of the debate has said anything remotely to that effect. Don't know what you're talking about with 'NN', I am referring to Digital Divide endeavors as well as Civil Society endeavors at Internet Governance levels, pre and post WSIS. If one side has, they are being quite silly.

Oh, and where do I plug my 10GE port in for $39.99/month? Considering I'm communicating with you over a 256K ADSL line because the country I reside in can't negotiate better pricing for bandwidth, I can

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And, as an aside, the Network Neutrality issue affects the globe and is only being debated in one country.

Perhaps you should change that? :) I'm doing my part. Perhaps you should too, though your commentary leads me to believe that you could care less. This, of course, is part of the inertia that must be worked against. If you want to talk about pricing of internet costs in anything other than a walled garden armchair discussion, you'll have to contend with the rest of the world. Considering China will have more internet users than the United States

No, no, consult the original: " stacks of documents written about equality on the internet". That is not the same as "customers who use more should pay the same as customers who use less". It is about making access to more people a reality; seeing internet access as a necessity for the future of dissemination of knowledge. The tax snowballs the price difference unless it is a scaled tax, which means that probably give you a few ideas where you can plug your 10GE port. It is the same problem on a national - and regional - scale. this year, as an example, businesses are going to want to crack those markets. And since global internet penetration has gone up to almost 20%, and more and more of the global market exists outside of the United States - yes, business pressure from within the US itself will put weight on the telecommunications industry within the next 5 years. Meanwhile, the digital divide in the United States is said to be growing. Indeed, perhaps you should change that. -- Taran Rampersad cnd@knowprose.com http://www.knowprose.com http://www.your2ndplace.com http://www.opendepth.com http://www.flickr.com/photos/knowprose/ "Criticize by Creating" - Michelangelo "The present is theirs; the future, for which I really worked, is mine." - Nikola Tesla

Frank Bulk writes:

Except if the cable companies want to get rid of the 5% of heavy users, they can't raise the prices for that 5% and recover their costs. The MSOs want it win-win: they'll bring prices for metered access slightly lower than "unlimited" access, making it attractive for a large segment of the user base (say, 80%), and slowly raise the unlimited pricing for the 15 to 20% that want that service, such that at the end of the day, the costs are less AND the revenue is greater.

While I think this is basically a sound approach, I'm skeptical that *slightly* lowering prices will be sufficient to convert 80% of the user base from flat to unmetered pricing. Don't underestimate the value that people put on not having to think about their consumption. So I think it is important to design the metered scheme so that it is perceived as minimally intrusive, and users feel in control. For example, a simple metered rate where every Megabyte has a fixed price is difficult, because the customer has to think about usage vs. cost all the time. 95%ile is a little better, because the customer only has to think about longer-term usage (42 hours of peak usage per month are free). A flat rate with a usage cap and a lowered rate after the cap is exceeded is easier to swallow than a variable rate, especially when the lowered rate is still perceived as useful. And there are bound to be other creative ways of charging that might be even more acceptable. But in any case customers tend to be willing to pay a premium for a flat rate. -- Simon.

Simon Leinen wrote:

While I think this is basically a sound approach, I'm skeptical that *slightly* lowering prices will be sufficient to convert 80% of the user base from flat to unmetered pricing. Don't underestimate the value that people put on not having to think about their consumption.

As long as the companies convince people that the "cap" is large enough to be essentially the same as unmetered then most people won't care and will take the savings. The other angle is to convince the 95% of customers that caps will actually deliver them a faster speed as the "evil 5%ers" won't be slowing them down by hogging the bandwidth. Having a cap and slowing down afterward (64kbps or 128kbps are typical) is what worked here in Oz. It also removes a whole lot of credit related issues. Consumers get a product where they know what they're getting - it's fast upto a point and then it slows down. -- Matthew Moyle-Croft - Internode/Agile - Networks Level 3, 132 Grenfell Street, Adelaide, SA 5000 Australia Email: mmc@internode.com.au Web: http://www.on.net Direct: +61-8-8228-2909 Mobile: +61-419-900-366 Reception: +61-8-8228-2999 Fax: +61-8-8235-6909 "The difficulty lies, not in the new ideas, but in escaping from the old ones" - John Maynard Keynes

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As long as the companies convince people that the "cap" is large enough to be essentially the same as unmetered then most people won't care and will take the savings.

I don't agree. When we sold boatloads of dialup in the mid to late 90's, people did not like caps, no matter how high they were. We sold a product early on for $20/month which gave you 240 hours/month -- that was an average of 8 hours/day. However, most users never used more than 20 to 30 minutes a day -- but we often got told they were moving to other providers because they were 'unlimited.' So, we adapted. In any event, I've been watching this thread, and I'd have to say that going down the road of metered pricing will only cause other providers not to do this, and then market against TW. In fact, I'd bet on it. Am I the only one here who thinks that the major portion of the cost of having a customer is *not* the bandwidth they use?

If we define "customer" to be an average user of the provided service, and bandwidth to be transit pipe cost, then no, bandwidth is not the major cost of their service. However, if you're advertising an 'unlimited' service and want to keep your promises, you can't plan your network around the average user -- there will be people who will want to hold you to your 'unlimited' promise.

I don't agree again. The heavy usage customer would be included in your 'average customer base', just as they were in the dialup world. Yes, the average user was only for 20 to 30 minutes a day, but you certainly had users who logged in once a week, and some who stayed connected 24x7. In my experience in selling DSL, while what you count (bytes instead of minutes) has changed, the premise has not.

If you also call 'bandwidth cost' to include all the infrastructure costs required to provide that unlimited service, then yes, "bandwidth cost" would be a pretty major part of that customer's cost.

I dunno about that. You have to build a network either way, in any event. The incremental cost difference between building a network and building a bigger network is probably lost in the noise, somewhere around advertising, support, or your CEO going to Scores on the corporate card. Quickly scanning a reasonably sized MSO here in NJ, the numbers are that the operational cost of the network (what they call "Techincal and Operating", which likely includes support) was around 42% of revenue. First, I'd bet their network is not full, or anywhere near full, and that to make their dark fiber do 10ge instead of oc48 or whatever it is they use would be tiny. I am not saying that having an unlimited product would not have an effect on their network, but the answer might be 'who cares.'

(My point of view is Australia rather than the US, but I don't think 14Mbps of dedicated transit is $50/month even in the US).

If it isn't, it will be. And I'd be happy to sell it.

On Mon, 21 Jan 2008, Frank Bulk wrote:

You're right, the major cost isn't the bandwidth (at least the in the U.S.), but the current technologies (cable modem, DSL, and wireless) are thoroughly asymmetric, and high upstreams kill the performance of the first and third.

There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. I expect the same thing would happen with 100Mbps symmetric versus 400Mbps/75Mbps asymmetric. Consumers would choose 400Mbps over 100Mbps.

Long-term, fiber avoids the upstream performance issues.

Asymmetric fiber technologiges exists too, and like other technologies gives you much more bandwidth than symmetric fiber (in one direction). The problem for wireless and cable (and probably PON) is using shared access bandwidth. Sharing the access bandwidth lets you advertise much bigger numbers than using dedicated access bandwidth; as long as everyone doesn't use it. The advantage of dedicated access technologies like active fiber (or old fashion T-1, T-3) is your neighbor's bad antics don't affect your bandwidth. Remember the good old days of thicknet Ethernet and what happened when a single transceiver went crazy, the 10Mbps ethernet coax slowed to a crawl for everything connected to it. The token ring folks may have been technically correct, but they lost that battle. There was a reason why IT people replaced shared thicknet/thinnet coax Ethernet with dedicated 10Base-T pairs and switches replaced hubs.

Which of the telecom service providers is moaning about being a provider? This conversation started with Time Warner's metered trial, and they aren't doing it in response to people complaining -- I'm pretty sure there was a financial/marketing motive here. There are some subscribers who complain about asymmetrical speeds, and some members of this listserv who fall into that category, but I would hazard a guess that less than 5% of the entire N.A residential subscriber base would actually pay a premium to have higher upstream speeds (we provide that option with our service today for an extra $10 and very few take it). And for that small base, an operator isn't about to rebuild or overbuild their network. Oh, they'll keep it in mind as they upgrade and enhance their network, but upstreams speeds aren't an issue that cause them to lie awake at night. I think FiOS as a competitive factor will move them more quickly to better their upstreams, though. So I don't think telecom providers think they are in the ghettos, and neither do most customers. As for creative technology, I'll let someone else buy DOCSIS 3.0 first and drive down prices with their volumes -- I'll join them in 3-5 years. On the DSL side, the work on VDSL2 demonstrates the greatest benefits on short loops. I haven't see any technology that serves fantastic upstream speeds at 1, 2 and 3x a CSA. Frank -----Original Message----- From: owner-nanog@merit.edu [mailto:owner-nanog@merit.edu] On Behalf Of michael.dillon@bt.com Sent: Monday, January 21, 2008 5:36 PM To: nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial

There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction.

For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer.

Seems to me that Internet SERVICE Providers have all turned into telecom companies and the only thing that matters now is providing IP circuits. If P2P is such a problem for providers who supply IP circuits over wireless and cable, why don't they try going up a level and provide Internet SERVICE instead? For instance, every customer could get a virtual server that they can access via VNC with some popular P2P packages preinstalled. The P2P software could recognize when it's talking over "preferred" circuits such as local virtual servers or over peering connections that aren't too expensive, and prefer those. If the virtual servers are implemented on Linux, there is a technology called FUSE that could be used to greatly increase the capacity of the disk farm by not storing multiple copies of the same file. Rather than moaning about the problems of being a telecom provider, people could apply some creative technology to get out of the telecom ghetto. --Michael Dillon

You're right, the major cost isn't the bandwidth (at least the in the U.S.), but the current technologies (cable modem, DSL, and wireless) are

asymmetric, and high upstreams kill the performance of the first and

Your points about the marketing and usage value of higher asymmetric is right on. Not only are the higher numbers attractive, they generally reflect a residential subscriber's usage pattern (there are some on this listserv who have pointed out that those with very high symmetrical speeds, 100 Mbps, for example, do have higher upstream, but I think that's because they are more attractive P2P nodes) and so residential broadband networks have been designed for asymmetric service. One of the reasons that business broadband is more expensive is that they not only use their 'pipe' more heavily than a typical user provisioned with the same speeds (i.e. bandwidth costs are more), they also prefer a symmetrical connection for their e-mail server and web traffic which requires different (lower volume and more expensive) equipment and/or they consume more of that shared upstream link. BPON/GPON is also asymmetric, as you point out, but because the marketed highest-end speeds are a fraction of the standards' capabilities, the asymmetry and potential oversubscription are easily overlooked. This works to Verizon FiOS' advantage while marketing its symmetrical plans. I personally prefer Active Ethernet-based fiber solutions for the reasons you allude to -- they more closely match enterprise network architectures (that's why we see Cisco in this space (i.e. Amsterdam's fiber network) and so networks of this type can leverage that equipment, volumes, and pricing): symmetrical in speed and switched. The challenge with the Active Ethernet architecture is that most often active electronics need to be placed in the field, while many PON solutions can use passive optical splitters. Frank -----Original Message----- From: Sean Donelan [mailto:sean@donelan.com] Sent: Monday, January 21, 2008 4:47 PM To: Frank Bulk Cc: nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial On Mon, 21 Jan 2008, Frank Bulk wrote: thoroughly third. There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. I expect the same thing would happen with 100Mbps symmetric versus 400Mbps/75Mbps asymmetric. Consumers would choose 400Mbps over 100Mbps.

Long-term, fiber avoids the upstream performance issues.

Asymmetric fiber technologiges exists too, and like other technologies gives you much more bandwidth than symmetric fiber (in one direction). The problem for wireless and cable (and probably PON) is using shared access bandwidth. Sharing the access bandwidth lets you advertise much bigger numbers than using dedicated access bandwidth; as long as everyone doesn't use it. The advantage of dedicated access technologies like active fiber (or old fashion T-1, T-3) is your neighbor's bad antics don't affect your bandwidth. Remember the good old days of thicknet Ethernet and what happened when a single transceiver went crazy, the 10Mbps ethernet coax slowed to a crawl for everything connected to it. The token ring folks may have been technically correct, but they lost that battle. There was a reason why IT people replaced shared thicknet/thinnet coax Ethernet with dedicated 10Base-T pairs and switches replaced hubs.

Hi Marshall, I think the point is that you need to get buyers to segregate themslevesinto two groups - the light users and the heavy users. By heavy users I mean the 'Bandwidth Hogs' (Oink, Oink) and a light user someone like myself for whom email is the main application. Afterall the problem with the current system is that there is no segregation - everyone is on basically the same plan. The pricing plan needs to be structure in a way that light users have an incentive to take a different pricing plan than do the heavy users. Similar to the way that insurance companies require high premiums for better coverage and more benefits. There must be incentives for the heavy user to reveal him or herself as a heavy user. I am just a dumb sales pushing point-to-point capacity ... So I don't have a good idea of how to do it. Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth rod.beck@hiberniaatlantic.com rodbeck@erols.com ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein. -----Original Message----- From: Marshall Eubanks [mailto:tme@multicasttech.com] Sent: Sun 1/20/2008 2:37 PM To: Rod Beck Cc: Scott McGrath; Rod Beck; owner-nanog@merit.edu; Patrick W. Gilmore; nanog@merit.edu Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial On Jan 19, 2008, at 3:25 PM, Rod Beck wrote:

If service is metered, it doesn't imply 25 cents a minute. It would probably be based on bytes transferred and would probably be less expensive for the bulk of users than the current flat rate pricing. If the cable companies are telling the truth, roughly 5% of their customers generate 50% of the traffic. That implies that the bulk of users are effectively subsidising the five percent of heavy users.

So any sort of well crafted usage-based pricing, would lower the amount paid by the vast majority of users and raise it dramatically for the five percent of heavy users.

Dear Rod; This does not match my experience of the world. Raise the price for the 5%, sure. Lower prices for the rest, probably not. What I would really expect to result from this are very complicated bills full of obscure fees that effectively raise almost everyone's monthly charge to well above what they advertise on TV. This is, after all, the common pattern on phone service, and I would expect "plans" where you get so much bandwidth but if you exceed your limit you are suddenly paying some exorbitant rate per GB. Soon to come would be TV commercials talking about weekend Gigabytes and daytime Gigabytes and how you can carry your unused Gigabytes over from one month to the next. Regards Marshall

Usage-based pricing would give the cable companies and telephony incumbents an incentive to upgrade infrastructure and actually compete for the heavy users. The heavy users would be the most profitable customers. New technologies would be welcomed instead of discouraged.

Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage- based pricing.

Regards,

Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth rod.beck@hiberniaatlantic.com rodbeck@erols.com ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.