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rradina

join:2000-08-08
Chesterfield, MO
reply to talz13

Re: He forgot a level.

But that car won't last forever just like an ISPs network won't last forever. Eventually the customer will want another car and just like the ISPs network, the car manufacturers property, plant, equipment and deals with suppliers will all have to be maintained so they can make you a new car. The feedback loop is just in a time warp in that it's much, much slower.

It doesn't matter if their per unit of product costs are zero. They still have to deliver it and they can measure what you use and develop average usage and divide their network maintenance costs + profit by those average usages and establish what they need to charge per metered unit.

I'm just not convinced they cannot take their total bytes served (for residential), divide that into their expenses + some profit margin and derive what each byte costs. Now all you have to do is put a meter on everyone and multiply by the per byte cost.

If that's unfair, you develop a tiered approach where the first 10GB is at the top rate and it drops every 10GB after that until reaching some minimum no matter how much more you use. You could look at this as the opposite of our progressive tax system.

For the life of me I just don't understand why this won't work. Perhaps it's not fair or optimal but why do we think these businesses are so damn special because there are no variable costs per unit served?

Is a rental company the same? They charge by the hour but their variable costs are also zero. Why do they meter costs? Why not just let you keep the damn thing as long as you want for one low price? Granted, there are some temporal problems with that analogy because it cannot be in two places at once but networks aren't that dissimilar. Only their speed provides the illusion that everyone works at the same time.

What about water companies? Why do they meter their product? It seems that they don't have variable costs or minimal variable costs.

In fact the sewer district in my area used to charge flat fees based on the size of your house and acreage. They switched to basing your waste bill off of your inbound water usage in the winter quarter.


Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL
said by rradina:

I'm just not convinced they cannot take their total bytes served (for residential), divide that into their expenses + some profit margin and derive what each byte costs. Now all you have to do is put a meter on everyone and multiply by the per byte cost.

Then there is no guarantee for the ISP to make enough money to pay for their expenses. Bandwidth usage is not predictable and vary widely for each user.
What will happen is those that use their connection more pay for the costs of those that use their connection less which is unfair. Those that use their connection less do not pay enough money to the ISP to cover the expenses. It makes no sense to charge by the byte.
Should auto manufactures just charge yearly fees to use cars based on mileage so those that use their car less get a car below cost and those that use their car more then pay way more than the cost???? Is that fair?

If your goal is to pay expenses and be profitable, then why not just skip the BS and charged a fixed rate so you are guaranteed to pay your expenses and to profit?

rradina

join:2000-08-08
Chesterfield, MO
Forest for the trees? I agree with you. I've been taking the other side only because true UBB would work better than the twisted hybrid UBB companies operate today. Whether either of these models vs. flat-rate all-you-can-eat models is better depends on who benefits. Clearly, today's UBB is better for ISPS. True UBB and flat-rate models are better for consumers (unless you are an egregious hog).

My main complaint is that we don't have either. My current cell plan charges me $45 for the first 4GB and then $10/GB over that. At this price, apparently $5 is the overhead they need to earn from me to cover their fixed costs.

Of course we know this isn't true but the math is there.

What I'd prefer is that AT&T just charge me $5 for the first byte and then another $10 each time I crest the next GB. My current usage for this month (last day of billing cycle) is 1.9GB. That means I would have paid $25 for my connection this month instead of $45. Of course many believe the extra $20 is a tethering fee but it doesn't matter when I hit my cap, from then on it's $10/GB. I can reduce that somewhat if I agree to an even higher plan (with a higher cap) and lower per GB charges.

What's BS is for $25 I get 2GB but I cannot tether. Why do they care how I use my GBs?


Oh_No
Trogglus normalus

join:2011-05-21
Chicago, IL
said by rradina:

(unless you are an egregious hog).

There is no such thing as a hog.

Also you can always tether. ATT has no right to limit the features of your phone that you own.
If ATT wants to limit the phones/features you can use they should not use GSM where you connect any phone you want.

They dont care about how much GBs you use. All they care about is they set a price that they feel will give them way more money than the fixed rate billing, while letting them pretend they have lower prices up front and those that go over the limits are "hogs" and "evil" and deserve to pay more.