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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: Pay-As-You-Use High-Speed Internet?
On Mon, 17 May 2004, Stephen Sprunk wrote: > One can take an important lesson from the telcos... When the incremental > cost of usage was high compared to their fixed costs, usage-based billing > made sense. However, today incremental costs are negligible but fixed costs > are high, so logically the telcos are migrating to extracting a fixed income > (to cover their fixed costs) and little if any usage charges for the typical > consumer. I'm curious where others think we are on that progression, or if > it even applies to ISPs. What should be used is a fairly high fixed cost and then a low per-usage cost on top of that. Preferably a quite sizable chunk of usage should be included in the initial fee. What you want to accomplish is to make 80-90% of your users only pay the flat fee, then the 10% that uses 70% of your traffic (usually ends up to that 10% of the users use 50-90% of the traffic) you either want to pay more or scare away. Ideal is to make this a token system so that you include a certain amount of traffic and if the customer goes above this, you lower the access speed. You then offer the customer to pay a certain price to get another chunk of traffic at the high speed, or stay at the low speed and continue downloading. With the above model you can offer a very high access speed to everybody, and only penalise the people who actually take advantage of the access speed, rather than to penalise everybody with low access speed. This gives the low-usage people a quick and nice service at a low price. One might also incur a spatial component in this, to make it free to download during the low-usage nighttime, and incur a higher fee during peak hours. For instance, with ADSL there is no benefit to limit people to 512k, the technical cost at the same actual usage is the same for 512k access speed and for full auto 8M speed. The only difference with 8M is when people actually take advantage of it and download more than your business model was calculated for. People want to be able to control their cost, limiting speed when hitting the high-water mark and then making the customer pay a token puts the customer in complete control of the costs. -- Mikael Abrahamsson email: [email protected]
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