Somehow I didn't get Bengt's message quoted below but I'll comment
both messages below.
Investing in a network is, AFAIK, done continually. You replace and
upgrade, lay out new cables also. People want more bandwidth to more
places. I don't think the customer is the only one who would want
Gordon compares with things like TV, magazines, etc. but those are
produced at a fixed cost and then always distributed to the customer
regardless of whether the customer consumes 0% or 100% of the product.
Bandwidth, on the other hand, is a limited resource that everyone shares,
like electricity or water.
I can buy the argument that bandwidth is getting cheaper by the day and
that usage-based billing introduces overhead that makes it less appealing
but let me put the question like this: how long will it take until every
home has more bandwidth than they can consume if we go on billing like we
do today? How long would it take if we introduced usage-based billing?
On Fri, 24 Jan 2003, Gordon Lennox wrote:
> Probably mostly right.
> But the customer is a slightly more complex beast than that. They may want
> to pay as little as possible. They may want to think they are getting good
> value (and not being ripped off). But they may also be happy to pay for
> something they don't intend to fully use. They may also be happy to pay a
> premium to get certainty in billing.
> A lot of things are not paid for on a usage (resource consumption) basis:
> posting a letter (don't tell me that it costs more to post a letter across
> the country than it costs to send one across town<g>), a magazine
> subscription (when you don't always read the magazine), a TV license or
> cable subscription (during those magic weeks when you are on holiday away
> from the box), local phone calls (at least in one country we know<g>). My
> ISPs (yes more than one) fit in with that group. My telco / mobile operator
> does not and maybe that is why I keep trying to restrict usage.
> I do not have the figures anymore but the cost breakdown of a mobile call
> still probably shows a surprisingly large chunk devoted to tracking who did
> what with whom and where and for how long. Basic bandwidth is going to carry
> on getting cheaper and cheaper and cheaper (Moore's law of telecoms or
> whatever). If a business has the choice then I do not see the choice being
> to invest heavily in detailed billing of something whose price is dropping
> so fast. You could be quite vulnerable in the market to somebody who decides
> instead to invest in providing much more bandwidth. What you want is to
> encourage usage to maintain/grow revenues.
> Tariff classes (and maybe profiling) - OK. Micro-billing - no.
> And so I leave it to Partik to discuss how to manage the tariff
> -----Original Message-----
> From: Bengt Gördén [mailto:[log in to unmask]]
> Sent: 24 January 2003 10:49
> To: [log in to unmask]
> Subject: Re: IP-tel
> I'm not sure that the reasoning behind this actually holds. The
> transit (TIER1) provider have invested in a network. That network
> already have a fixed cost. That means that the provider need to charge
> for that ,+ 100% (or another huge percentage), to be able to
> survive. The write off (don't know the name of that in English,
> Swedish: avskrivning) is at least 15 years for international
> networks. So the customer is not paying for the amount of traffic in
> the network but rather the investment. So paying for traffic is just
> wrong (you could read bullshit if you like but I wouldn't dare to
> write such foul language :-). It's all about maximizing income and
> minimizing cost and getting the customer to belive "I'm just paying
> for what I use".
> - Bengan -----------------------------------------------------------
> - KTHNOC/SUNET/NORDUnet | http://www.sunet.se/~bengan | 08-7906586 -