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

  • From: Matthew Moyle-Croft
  • Date: Sun Jan 20 07:13:40 2008



Simon Leinen wrote:
While I think this is basically a sound approach, I'm skeptical that
*slightly* lowering prices will be sufficient to convert 80% of the
user base from flat to unmetered pricing. Don't underestimate the
value that people put on not having to think about their consumption.
As long as the companies convince people that the "cap" is large enough to be essentially the same as unmetered then most people won't care and will take the savings. The other angle is to convince the 95% of customers that caps will actually deliver them a faster speed as the "evil 5%ers" won't be slowing them down by hogging the bandwidth.

Having a cap and slowing down afterward (64kbps or 128kbps are typical) is what worked here in Oz. It also removes a whole lot of credit related issues. Consumers get a product where they know what they're getting - it's fast upto a point and then it slows down.

--
Matthew Moyle-Croft - Internode/Agile - Networks
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"The difficulty lies, not in the new ideas, but in escaping from the old ones" - John Maynard Keynes