| Pure Flat Rate is Dumb... ...except for low end (grandparents email) and high end (24x7x31 100% use) and both need to be priced accordingly.
For everyone in the middle, ISPs need to transition to a model with 3 components: average use, peak use and time of day. I suspect that all those TV users in the evening don't compare to daytime business use, but who knows? Peak TOD could be 8AM-10AM.
Speed is nothing more than a proxy for bandwidth use and it's one that doesn't work very well. |
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| There's still probably going to be some sort of flat rate even if they adopt this method. I can see them charging 15-20 for the service and charges that include 5GB of traffic and then charge per GB after that... |
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Sammer
join:2005-12-22
Canonsburg, PA | reply to travelguy
said by travelguy:...except for low end (grandparents email) and high end (24x7x31 100% use) and both need to be priced accordingly. For everyone in the middle, ISPs need to transition to a model with 3 components: average use, peak use and time of day. I suspect that all those TV users in the evening don't compare to daytime business use, but who knows? Peak TOD could be 8AM-10AM. Speed is nothing more than a proxy for bandwidth use and it's one that doesn't work very well. You just stated the reason there will never be a pure per byte rate. Providers need a predictable revenue stream as well as a way to charge the bandwidth hogs more. |
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| said by Sammer:You just stated the reason there will never be a pure per byte rate. Providers need a predictable revenue stream as well as a way to charge the bandwidth hogs more. Right! Except that I think there is a valid model...
ISPs are a classic example of a business where the fixed costs are the majority of the expense and the variable costs are minimal. Just like the airlines, when times are good margins are fantastic, and when times are bad, margins suck. The difference is that ISPs do not have to deal with a huge capital investment.
So, you structure a pricing scheme that covers your administrative costs plus a share of the fixed (ie pipeline costs to upstream providers and peers). Base it on an average bandwidth use per month. Peak hours (however you want to define them) get a per byte surcharge. Exceed your average (i.e. monthly quota), get hit with some additional charges or take a low flow lifeline until the end of the month. Exceed an hourly amount, get another charge.
Given that kind of pricing model, connection speed is immaterial. In fact, it would be in the ISPs best interest to get everyone the fattest pipe possible as it increases the potential the users will generate more revenue. |
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