reply to rradina
Re: He forgot a level.
said by rradina:I hope you realize that in some areas they do not charge for water by the gallon, because as you seem to understand it does not make sense when they have plenty of water.
Why do you keep drawing distinctions based on whether or not the product is physical or some kind of service?
Does a water company have usage costs? Don't they build to a capacity like ISPs and whether or not they deliver 100 million gallons or 100 billion gallons, the raw material they use is free? Do their sanitation costs really rise that much when they clean a lot more or are they relatively fixed sans minor linear relationships in power consumption and chemical treatment costs?
They charge everyone a water fee on their property taxes so you have unmetered water and all the fixed costs are paid for.
Water can be billed much better by the fixed costs than by usage unless your someone that barely uses water then you would rather have a by the gallon so you do not have to actually pay your fair share of the water system.
A retail store could never operate on a fixed fee where you can just take whatever you want as the costs are based on what you buy or use.
The costs for an ISP is not based on what you use thus the UBB does not work.
What you speak of is not a rule and does not make sense for an ISP. Why would you base your billing on something that has virtually nothing to do with your costs???
UBB is not legitimate if you based the usage prices off of something that has nothing to do with the actual costs.
For UBB to work you need to base it on usage that is actually directly tied to the costs.
I'd change the word "work" to the phrase "make sense". That is, for UBB to make sense to the rest of us, it should be based on something tied to the costs. That doesn't stop them from billing in a manner that doesn't make sense and UBB does work even when usage isn't truly tied to incremental costs.
In my area, I get charged based on how much water I use and then the sewer company bases their monthly bill by looking at the quarterly inbound water consumption. The idea is that's the amount you send into the sanitary sewer system since we don't water lawns, gardens, fill swimming pools or wash cars in the winter quarter.
Whether or not billing like this makes sense, they still do it even though both systems are built to a certain capacity and have few incremental costs.
You keep saying UBB doesn't work for ISPs but it does. Whether or not it makes sense or is a raw deal for who receive the bill is entirely different question.
Regarding the retail example, at one point I believe you claimed that UBB would cause ISPs to never make money. I wholeheartedly disagree. As I said, every day a retailer takes the risk that they won't cover their fixed caused with their variable sales. Why is it different for an ISP just because they have limited or no incremental costs? I agree that a retailer can never offer all you want for a flat fee. (They could but the flat fee would be so high, there would be no buyers.) It just doesn't work for them because they have mostly incremental costs. Just because an ISP doesn't have significant incremental costs, why do you think that invalidates a UBB model?
The only thing that invalidates a UBB model is if it's not feasible to measure the usage by which you bill. For instance, charging someone for every hour they wear a pair of sunglasses. It could be done but it's impossible to determine such a metric short of hiring someone to watch you 24 hours a day. Obviously that kills UBB for the sunglasses industry.
I suppose there is one other thing that invalidates a UBB model. If there's competition and it offers a better deal with their flat-rate plans. This is what torpedoed AT&T when it divested the baby bells and was left with the LD business. Competition stepped in and folks realized they'd been getting screwed for years and AT&T was a rotting corpse until it's child yanked it out of the nursing home and asked it to come live with it.