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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On 19/01/2008, at 6:41 AM, Michael Holstein wrote: My guess is the market will work this out. As soon as it's implemented, you'll see AT&T commercials in that town slamming cable and saying how DSL is "really unlimited".
That'll have some pretty obvious and inevitable effects: * TWC's cost of operations will drop because they won't have to
provision bandwidth and infrastructure for people downloading
billions of terabytes per month (slight exaggeration :-) * TWC's perceived performance will increase in some neighborhoods
because their coax local loops won't be congested anymore. That'll
make their customers happy. * TWC's competitors who still offer "all you can eat" broadband
will find themselves attracting the customers who can't afford to
use TWC anymore, i.e., the heavy users who cost zillions of dollars
to support. That'll push their cost base sky-high, even as they
send out triumphant press releases bragging about their fantastic
growth rates (customer headcount: Growing! Transit requirements:
Growing! Revenues: Growing, a little bit)* Because TWC's competitors won't be able to afford infrastructure upgrades to match the usage habits of their newfound customers, over time they'll become congested and start turning down the screws on their DPI boxes and/or putting their prices up. All their newfound customers will say, "You've changed, man," as they dis 'em in the marketplace. TWC's competitors' customers will be sad. * Over time, TWC's competitors will decide that the path of least
resistance is to switch to usage based pricing just like TWC has.For these reasons, I'm pretty sure that it only takes one player with significant market share in any given economy to switch to usage based pricing to eventually force all the others to eventually switch to usage based pricing as well. In .au, where this is commonplace (and has been since the mid '90s), we occasionally get naive providers starting up who offer "unlimited Internet". They invariably instantly attract all the heavy P2P users, their performance goes down the toilet, and they run out of money in about six months. Then a new "unlimited Internet" company springs up, lather, rinse, repeat. The P2P users don't care, they treat each new ISP as a thing to be used to feed their habit. As long as they can leave each carcass behind after they've sucked it dry they're happy enough. The more sensible end of town pays about $80 per month for about 40 Gbytes of quota, give or take, depending on the ISP. After that they get shaped to 64 kbps unless they want to pay more for more quota. Bytecounts are retrieved via SNMP (for business customers) or Radius (for DSL, dial, ISDN, etc). When transit is costing $250 per megabit per month, there aren't many other options. - mark -- Mark Newton Email: [email protected] (W) Network Engineer Email: [email protected] (H) Internode Systems Pty Ltd Desk: +61-8-82282999 "Network Man" - Anagram of "Mark Newton" Mobile: +61-416-202-223
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