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Re: An Attempt at Economically Rational Pricing: Time Warner Trial

  • From: Patrick W. Gilmore
  • Date: Fri Jan 18 14:59:45 2008

On Jan 18, 2008, at 1:57 PM, Mikael Abrahamsson wrote:
On Fri, 18 Jan 2008, Rod Beck wrote:

http://www.ecommercetimes.com/rsstory/61251.html

So, anyone but me think that this will end in disaster?

Possibly. But I do not think it for the same reason you do.


I think the model where you get high speed for X amount of bytes and then you're limited to let's say 64kilobit/s until you actually go to the web page and buy another "token" for more Y more bytes at high speed? We already have this problem with metered mobile phones, which of course is even more complicated for users due to different rates depending on where you might be roaming.

Right. And mobile phones, which you admit are more difficult to understand and manage, have clearly been a disastrous failure. By your analogy, we should expect this to be a slightly less disastrous failure. (Would that Time Warner were so lucky. :)


Customers want control, that's why the prepaid mobile phone where you get an "account" you have to prepay into, are so popular in some markets. It also enables people who perhaps otherwise would not be eligable because of bad credit, to get these kind of services.

This seems like a non sequitor to me. What has bad credit got to do with the discussion at hand?


I'm also looking forward to the pricing, all the per-byte plans I have seen so far makes the ISP look extremely greedy by overpricing, as opposed to "we want to charge fairly for use" that is what they say in their press statements.

Well, at least let them price it before you damn them for being greedy.


Anyway, I think it will "end in disaster" because the customers in that small town have friends who are not in that small town. If they talk to each other, the test subjects will be jealous of the unlimited plans in other areas.

Of course, there are ways around this, such as pricing the "base GB" below the unlimited plans. Then parents who surf the web for 20 minutes a day might beat their kids into turning off eDonkey and save some cash. Suddenly _everyone_ is happy - except the kids. But since they don't pay cable bills, no one cares.

--
TTFN,
patrick