RE: An Attempt at Economically Rational Pricing: Time Warner Trial
I'm not struggling -- anyone else volunteer that they are? It costs to upgrade plant/equipment to meet traffic growth, but it's being done and no one is saying that their prices are going up. Even from the customer perspective, the bang for their buck has continued to rise. Frank -Original Message- From: Roderick Beck [mailto:[EMAIL PROTECTED] Sent: Tuesday, January 22, 2008 4:45 AM To: [EMAIL PROTECTED]; [EMAIL PROTECTED]; nanog@merit.edu Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial Hi Frank, My impression is that IP networks are struggling. Do you disagree? -R. Sent wirelessly via BlackBerry from T-Mobile. -Original Message- From: Frank Bulk [EMAIL PROTECTED] Date: Mon, 21 Jan 2008 19:21:08 To:[EMAIL PROTECTED], nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial Which of the telecom service providers is moaning about being a provider? This conversation started with Time Warner's metered trial, and they aren't doing it in response to people complaining -- I'm pretty sure there was a financial/marketing motive here. There are some subscribers who complain about asymmetrical speeds, and some members of this listserv who fall into that category, but I would hazard a guess that less than 5% of the entire N.A residential subscriber base would actually pay a premium to have higher upstream speeds (we provide that option with our service today for an extra $10 and very few take it). And for that small base, an operator isn't about to rebuild or overbuild their network. Oh, they'll keep it in mind as they upgrade and enhance their network, but upstreams speeds aren't an issue that cause them to lie awake at night. I think FiOS as a competitive factor will move them more quickly to better their upstreams, though. So I don't think telecom providers think they are in the ghettos, and neither do most customers. As for creative technology, I'll let someone else buy DOCSIS 3.0 first and drive down prices with their volumes -- I'll join them in 3-5 years. On the DSL side, the work on VDSL2 demonstrates the greatest benefits on short loops. I haven't see any technology that serves fantastic upstream speeds at 1, 2 and 3x a CSA. Frank -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL PROTECTED] Sent: Monday, January 21, 2008 5:36 PM To: nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. Seems to me that Internet SERVICE Providers have all turned into telecom companies and the only thing that matters now is providing IP circuits. If P2P is such a problem for providers who supply IP circuits over wireless and cable, why don't they try going up a level and provide Internet SERVICE instead? For instance, every customer could get a virtual server that they can access via VNC with some popular P2P packages preinstalled. The P2P software could recognize when it's talking over preferred circuits such as local virtual servers or over peering connections that aren't too expensive, and prefer those. If the virtual servers are implemented on Linux, there is a technology called FUSE that could be used to greatly increase the capacity of the disk farm by not storing multiple copies of the same file. Rather than moaning about the problems of being a telecom provider, people could apply some creative technology to get out of the telecom ghetto. --Michael Dillon
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
You're right, the major cost isn't the bandwidth (at least the in the U.S.), but the current technologies (cable modem, DSL, and wireless) are thoroughly asymmetric, and high upstreams kill the performance of the first and third. In the shorter-term, it's cheaper to find some way to minimize upstream so that everyone has decent performance that do the expensive field world to split the shared medium (via deeper fiber, more radios, overlaying frequencies, etc). Long-term, fiber avoids the upstream performance issues. Frank -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Alex Rubenstein Sent: Sunday, January 20, 2008 2:02 PM To: Taran Rampersad; nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial snip Am I the only one here who thinks that the major portion of the cost of having a customer is *not* the bandwidth they use?
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
On Mon, 21 Jan 2008, Frank Bulk wrote: You're right, the major cost isn't the bandwidth (at least the in the U.S.), but the current technologies (cable modem, DSL, and wireless) are thoroughly asymmetric, and high upstreams kill the performance of the first and third. There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. I expect the same thing would happen with 100Mbps symmetric versus 400Mbps/75Mbps asymmetric. Consumers would choose 400Mbps over 100Mbps. Long-term, fiber avoids the upstream performance issues. Asymmetric fiber technologiges exists too, and like other technologies gives you much more bandwidth than symmetric fiber (in one direction). The problem for wireless and cable (and probably PON) is using shared access bandwidth. Sharing the access bandwidth lets you advertise much bigger numbers than using dedicated access bandwidth; as long as everyone doesn't use it. The advantage of dedicated access technologies like active fiber (or old fashion T-1, T-3) is your neighbor's bad antics don't affect your bandwidth. Remember the good old days of thicknet Ethernet and what happened when a single transceiver went crazy, the 10Mbps ethernet coax slowed to a crawl for everything connected to it. The token ring folks may have been technically correct, but they lost that battle. There was a reason why IT people replaced shared thicknet/thinnet coax Ethernet with dedicated 10Base-T pairs and switches replaced hubs.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. Seems to me that Internet SERVICE Providers have all turned into telecom companies and the only thing that matters now is providing IP circuits. If P2P is such a problem for providers who supply IP circuits over wireless and cable, why don't they try going up a level and provide Internet SERVICE instead? For instance, every customer could get a virtual server that they can access via VNC with some popular P2P packages preinstalled. The P2P software could recognize when it's talking over preferred circuits such as local virtual servers or over peering connections that aren't too expensive, and prefer those. If the virtual servers are implemented on Linux, there is a technology called FUSE that could be used to greatly increase the capacity of the disk farm by not storing multiple copies of the same file. Rather than moaning about the problems of being a telecom provider, people could apply some creative technology to get out of the telecom ghetto. --Michael Dillon
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Your points about the marketing and usage value of higher asymmetric is right on. Not only are the higher numbers attractive, they generally reflect a residential subscriber's usage pattern (there are some on this listserv who have pointed out that those with very high symmetrical speeds, 100 Mbps, for example, do have higher upstream, but I think that's because they are more attractive P2P nodes) and so residential broadband networks have been designed for asymmetric service. One of the reasons that business broadband is more expensive is that they not only use their 'pipe' more heavily than a typical user provisioned with the same speeds (i.e. bandwidth costs are more), they also prefer a symmetrical connection for their e-mail server and web traffic which requires different (lower volume and more expensive) equipment and/or they consume more of that shared upstream link. BPON/GPON is also asymmetric, as you point out, but because the marketed highest-end speeds are a fraction of the standards' capabilities, the asymmetry and potential oversubscription are easily overlooked. This works to Verizon FiOS' advantage while marketing its symmetrical plans. I personally prefer Active Ethernet-based fiber solutions for the reasons you allude to -- they more closely match enterprise network architectures (that's why we see Cisco in this space (i.e. Amsterdam's fiber network) and so networks of this type can leverage that equipment, volumes, and pricing): symmetrical in speed and switched. The challenge with the Active Ethernet architecture is that most often active electronics need to be placed in the field, while many PON solutions can use passive optical splitters. Frank -Original Message- From: Sean Donelan [mailto:[EMAIL PROTECTED] Sent: Monday, January 21, 2008 4:47 PM To: Frank Bulk Cc: nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial On Mon, 21 Jan 2008, Frank Bulk wrote: You're right, the major cost isn't the bandwidth (at least the in the U.S.), but the current technologies (cable modem, DSL, and wireless) are thoroughly asymmetric, and high upstreams kill the performance of the first and third. There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. I expect the same thing would happen with 100Mbps symmetric versus 400Mbps/75Mbps asymmetric. Consumers would choose 400Mbps over 100Mbps. Long-term, fiber avoids the upstream performance issues. Asymmetric fiber technologiges exists too, and like other technologies gives you much more bandwidth than symmetric fiber (in one direction). The problem for wireless and cable (and probably PON) is using shared access bandwidth. Sharing the access bandwidth lets you advertise much bigger numbers than using dedicated access bandwidth; as long as everyone doesn't use it. The advantage of dedicated access technologies like active fiber (or old fashion T-1, T-3) is your neighbor's bad antics don't affect your bandwidth. Remember the good old days of thicknet Ethernet and what happened when a single transceiver went crazy, the 10Mbps ethernet coax slowed to a crawl for everything connected to it. The token ring folks may have been technically correct, but they lost that battle. There was a reason why IT people replaced shared thicknet/thinnet coax Ethernet with dedicated 10Base-T pairs and switches replaced hubs.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Which of the telecom service providers is moaning about being a provider? This conversation started with Time Warner's metered trial, and they aren't doing it in response to people complaining -- I'm pretty sure there was a financial/marketing motive here. There are some subscribers who complain about asymmetrical speeds, and some members of this listserv who fall into that category, but I would hazard a guess that less than 5% of the entire N.A residential subscriber base would actually pay a premium to have higher upstream speeds (we provide that option with our service today for an extra $10 and very few take it). And for that small base, an operator isn't about to rebuild or overbuild their network. Oh, they'll keep it in mind as they upgrade and enhance their network, but upstreams speeds aren't an issue that cause them to lie awake at night. I think FiOS as a competitive factor will move them more quickly to better their upstreams, though. So I don't think telecom providers think they are in the ghettos, and neither do most customers. As for creative technology, I'll let someone else buy DOCSIS 3.0 first and drive down prices with their volumes -- I'll join them in 3-5 years. On the DSL side, the work on VDSL2 demonstrates the greatest benefits on short loops. I haven't see any technology that serves fantastic upstream speeds at 1, 2 and 3x a CSA. Frank -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL PROTECTED] Sent: Monday, January 21, 2008 5:36 PM To: nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial There are symmetric versions for all of those. But ever since the dialup days (e.g. 56Kbps modems had slower reverse direction) consumers have shown a preference for a bigger number on the box, even if it meant giving up bandwidth in the one direction. For example, how many people want SDSL at 1.5Mbps symmetric versus ADSL at 6Mbps/768Kbps. The advertisment with the bigger number wins the consumer. Seems to me that Internet SERVICE Providers have all turned into telecom companies and the only thing that matters now is providing IP circuits. If P2P is such a problem for providers who supply IP circuits over wireless and cable, why don't they try going up a level and provide Internet SERVICE instead? For instance, every customer could get a virtual server that they can access via VNC with some popular P2P packages preinstalled. The P2P software could recognize when it's talking over preferred circuits such as local virtual servers or over peering connections that aren't too expensive, and prefer those. If the virtual servers are implemented on Linux, there is a technology called FUSE that could be used to greatly increase the capacity of the disk farm by not storing multiple copies of the same file. Rather than moaning about the problems of being a telecom provider, people could apply some creative technology to get out of the telecom ghetto. --Michael Dillon
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
I think a rate limited plan would appeal to most customers as it would give them a fixed monthly budget item. But I am pretty sure this will not happen in the US based on experiences with the broadband by cell providers who prefer a 'bill-by-byte' method with no mechanism to stop loss in the event of a runaway process or compromised host It seems the market has lost it's taste for a known revenue stream with known costs and profits in exchange for a Vegas go for broke growth at all costs mentality.And too often the vendor does go broke it seems the market has lost a degree of rationality to the point where ISP are 'firing' customers who are using 'too many' resources instead of trying to help them fix their issue or if they really are using all those bits finding a mutually beneficial method of profiting from them. Mark Foster wrote: The big advanatge of these plans is that the cost is fixed even if I've used up all my alotted transfer. This is the success of systems that implement rate limiting (not additional charging) once a specified ceiling has been reached. It provides some fiscal security that you're not going to blow out your upper limit. (I've seen some horrendous bills in the face of 'overage' caused by virus/drone infections, spammers hitting mailservers run on SME broadband links, etc etc.) Both .nz and .au have implemented this. No reason that .us can't do the same? Heck were I in the USA and I had to choose between 'flat rate' and some figure in the vicinity of 10-15GB/month then 'rate limiting' (especially then including the option to buy more bandwidth as a one-off), the latter would win hands down. Flat rate (in my world) often includes port-based and/or time based throughput limiting that's designed to prevent the ISP from being ground to a halt by P2P during peak hours, etc I'd rather have a (reasonable) monthly limit for an affordable price, thanks. Mark. (In .nz)
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 19, 2008, at 4:25 PM, Taran Rampersad wrote: Rod Beck wrote: Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage- based pricing. Concur. However, comma, if governments are charging taxes (such as the EU) it leads to the question of what people pay taxes *for* - and paying more taxes because they use the internet more would mean those that use more would pay more in usage fees and pay more in taxes - which runs completely against the stacks of documents written about equality on the internet. Not taking a side on that, but it is an interesting point to chew on - realistically, a balance would have to be struck. Where are the stacks of documents written about equality on the internet that say customers who use more should pay the same as customers who use less? I am not taking a position on NN here, but I don't believe either side of the debate has said anything remotely to that effect. If one side has, they are being quite silly. Oh, and where do I plug my 10GE port in for $39.99/month? And, as an aside, the Network Neutrality issue affects the globe and is only being debated in one country. Perhaps you should change that? :) -- TTFN, patrick
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 19, 2008, at 11:37 AM, Joe Greco wrote: Mikael Abrahamsson writes: 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. However, if you look, all the prepaid plans that I've seen look suspiciously like predatory pricing. The price per minute is substantially higher than an equivalent minute on a conventional plan. Picking on ATT, for a minute, here, look at their monthly GoPhone prepaid plan, $39.99/300 anytime, vs $39.99/450 minutes for the normal. If anything, the phone company is not extending you any credit, and has actually collected your cash in advance, so the prepaid minutes ought to be /cheaper/. I disagree. Ever heard of volume discounts? Picking on att again, a typical iPhone user signs up for 24 months @ ~ $100/month, _after_ a credit check to prove they are good for it or plunking down a hefty deposit. Compare that $2.4 kilo-bux to the $40-one-time payment by a pre-paid user. Or, to be more far, how about $960 ($40/month for voice only) compared to $40 one-time? Hell yes I expect more minutes per dollar on my long-term contract. Hrmm, wonder if someone will offer pay-as-you-go broadband @ $XXX (or $0.XXX) per gigabyte? -- TTFN, patrick
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Frank Bulk writes: Except if the cable companies want to get rid of the 5% of heavy users, they can't raise the prices for that 5% and recover their costs. The MSOs want it win-win: they'll bring prices for metered access slightly lower than unlimited access, making it attractive for a large segment of the user base (say, 80%), and slowly raise the unlimited pricing for the 15 to 20% that want that service, such that at the end of the day, the costs are less AND the revenue is greater. 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. So I think it is important to design the metered scheme so that it is perceived as minimally intrusive, and users feel in control. For example, a simple metered rate where every Megabyte has a fixed price is difficult, because the customer has to think about usage vs. cost all the time. 95%ile is a little better, because the customer only has to think about longer-term usage (42 hours of peak usage per month are free). A flat rate with a usage cap and a lowered rate after the cap is exceeded is easier to swallow than a variable rate, especially when the lowered rate is still perceived as useful. And there are bound to be other creative ways of charging that might be even more acceptable. But in any case customers tend to be willing to pay a premium for a flat rate. -- Simon.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Stupid typo in my last message, sorry. 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. [...] METERED pricing, of course. -- Simon.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
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 Level 3, 132 Grenfell Street, Adelaide, SA 5000 Australia Email: [EMAIL PROTECTED] Web: http://www.on.net Direct: +61-8-8228-2909Mobile: +61-419-900-366 Reception: +61-8-8228-2999 Fax: +61-8-8235-6909 The difficulty lies, not in the new ideas, but in escaping from the old ones - John Maynard Keynes
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 19, 2008, at 3:25 PM, Rod Beck wrote: If service is metered, it doesn't imply 25 cents a minute. It would probably be based on bytes transferred and would probably be less expensive for the bulk of users than the current flat rate pricing. If the cable companies are telling the truth, roughly 5% of their customers generate 50% of the traffic. That implies that the bulk of users are effectively subsidising the five percent of heavy users. So any sort of well crafted usage-based pricing, would lower the amount paid by the vast majority of users and raise it dramatically for the five percent of heavy users. Dear Rod; This does not match my experience of the world. Raise the price for the 5%, sure. Lower prices for the rest, probably not. What I would really expect to result from this are very complicated bills full of obscure fees that effectively raise almost everyone's monthly charge to well above what they advertise on TV. This is, after all, the common pattern on phone service, and I would expect plans where you get so much bandwidth but if you exceed your limit you are suddenly paying some exorbitant rate per GB. Soon to come would be TV commercials talking about weekend Gigabytes and daytime Gigabytes and how you can carry your unused Gigabytes over from one month to the next. Regards Marshall Usage-based pricing would give the cable companies and telephony incumbents an incentive to upgrade infrastructure and actually compete for the heavy users. The heavy users would be the most profitable customers. New technologies would be welcomed instead of discouraged. Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage- based pricing. Regards, Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Such caps, if they are high enough, may be a reasonable compromise. As Mark Newton wrote a few days ago, about Australia, 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. Given Australia's level of Internet traffic (see http://www.dtc.umn.edu/mints/), it seems that only a tiny fraction of the users will hit the 40 Gbytes of quota. But if your transit costs $10 per megabit per month, other factors may dominate. I have a discussion of these issues in the paper Internet pricing and the history of communications, published in Computer Networks 36 (2001), pp. 493-517, available at http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf Some of these issues are also dealt in the more recent paper with David Levinson, Too expensive to meter: The influence of transaction costs in transportation and communication, Phil. Trans. Royal Soc. A, to appear, http://www.dtc.umn.edu/~odlyzko/doc/metering-expensive.pdf Overall, telecom policy makers, both inside service providers and in regulatory bodies, have been fixated on a particular economic model that denigrates flat rate plans. Now I am not a flat rate bigot, and understand their limitations. But it seems imperative to appreciate that there are several other factors that matter, discussed in the papers mentioned above. One is that people are willing to pay more for flat rates. Second is that flat rates stimulate usage, something that I claim telcos should be striging to do, as transmission capacity is growing. But few people appear willing to learn that lesson. Andrew On Sun Jan 20, Matthew Moyle-Croft wrote: 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 Level 3, 132 Grenfell Street, Adelaide, SA 5000 Australia Email: [EMAIL PROTECTED] Web: http://www.on.net Direct: +61-8-8228-2909Mobile: +61-419-900-366 Reception: +61-8-8228-2999 Fax: +61-8-8235-6909 The difficulty lies, not in the new ideas, but in escaping from the old ones - John Maynard Keynes
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
However, if you look, all the prepaid plans that I've seen look suspiciously like predatory pricing. The price per minute is substantially higher than an equivalent minute on a conventional plan. Picking on ATT, for a minute, here, look at their monthly GoPhone prepaid plan, $39.99/300 anytime, vs $39.99/450 minutes for the normal. If anything, the phone company is not extending you any credit, and has actually collected your cash in advance, so the prepaid minutes ought to be /cheaper/. I disagree. Ever heard of volume discounts? Picking on att again, a typical iPhone user signs up for 24 months @ ~ $100/month, _after_ a credit check to prove they are good for it or plunking down a hefty deposit. Compare that $2.4 kilo-bux to the $40-one-time payment by a pre-paid user. Or, to be more far, how about $960 ($40/month for voice only) compared to $40 one-time? Hell yes I expect more minutes per dollar on my long-term contract. Hrmm, wonder if someone will offer pay-as-you-go broadband @ $XXX (or $0.XXX) per gigabyte? Actually, I was fairly careful, and I picked monthly recurring plans in both cases. The typical prepaid user is NOT going to pay a $40-one- time payment, because the initial cost of the phone is going to be a deterrent from simply ditching the phone after $40 is spent. The lock-in of contracts is typically done to guarantee that the cell phone which they make you buy is paid for, and it is perfectly possible (though somewhat roundabout) to get the cheaper postpaid plan without a long contract - assuming you meet their creditworthiness guidelines. Even without that, once you've gone past your one or two year commitment, you continue at that same rate, so we can still note that the economics are interesting. The iPhone seems to be some sort of odd case, where we're not quite sure whether there's money going back and forth between ATT and Apple behind the scenes to subsidize the cost of the phones (or I may have missed the news). So talking about your iPhone is pretty much like comparing Apples and oranges, and yes, you set yourself up for that one. To put it another way, they do not give you a better price per minute if you go and deposit $2400 in your prepaid account. You can use your volume discount argument once you come up with a compelling explanation for that. ;-) ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http://www.sol.net We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again. - Direct Marketing Ass'n position on e-mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Hi Andrew, I don't think it is obvious that it is too expensive to justify metering in today's environment. Such a claim was definitely true a few years ago when end users were mostly sending email, instant messages, and downloading web pages, but innovation has probably changed the outcome of the cost/benefit analysis so that metering can be justified for the heavy users. Regarding stimulating demand, the only obvious way to increase revenues and profits in a flat rate pricing scheme is to add more users or bundle more products (voice, voicemail, television, etc.). I would argue that the US has reached the point where further increases in broadband penetration probably require either subsidies or government fiat or pressure (Korea, Japan, etc.). And the large American underclass doesn't that help the broadband penetration cause either. Indeed, the virtue of metering is that it gives the provider an incentive to stimulate demand. Flat rate pricing is the worst model in terms of stimulating supply and investment. My humble two cents. PS: I'll take a look at your papers. Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Patrick W. Gilmore wrote: On Jan 19, 2008, at 4:25 PM, Taran Rampersad wrote: Rod Beck wrote: Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing. Concur. However, comma, if governments are charging taxes (such as the EU) it leads to the question of what people pay taxes *for* - and paying more taxes because they use the internet more would mean those that use more would pay more in usage fees and pay more in taxes - which runs completely against the stacks of documents written about equality on the internet. Not taking a side on that, but it is an interesting point to chew on - realistically, a balance would have to be struck. Where are the stacks of documents written about equality on the internet that say customers who use more should pay the same as customers who use less? No, no, consult the original: stacks of documents written about equality on the internet. That is not the same as customers who use more should pay the same as customers who use less. It is about making access to more people a reality; seeing internet access as a necessity for the future of dissemination of knowledge. The tax snowballs the price difference unless it is a scaled tax, which means that I am not taking a position on NN here, but I don't believe either side of the debate has said anything remotely to that effect. Don't know what you're talking about with 'NN', I am referring to Digital Divide endeavors as well as Civil Society endeavors at Internet Governance levels, pre and post WSIS. If one side has, they are being quite silly. Oh, and where do I plug my 10GE port in for $39.99/month? Considering I'm communicating with you over a 256K ADSL line because the country I reside in can't negotiate better pricing for bandwidth, I can probably give you a few ideas where you can plug your 10GE port. It is the same problem on a national - and regional - scale. And, as an aside, the Network Neutrality issue affects the globe and is only being debated in one country. Perhaps you should change that? :) I'm doing my part. Perhaps you should too, though your commentary leads me to believe that you could care less. This, of course, is part of the inertia that must be worked against. If you want to talk about pricing of internet costs in anything other than a walled garden armchair discussion, you'll have to contend with the rest of the world. Considering China will have more internet users than the United States this year, as an example, businesses are going to want to crack those markets. And since global internet penetration has gone up to almost 20%, and more and more of the global market exists outside of the United States - yes, business pressure from within the US itself will put weight on the telecommunications industry within the next 5 years. Meanwhile, the digital divide in the United States is said to be growing. Indeed, perhaps you should change that. -- Taran Rampersad [EMAIL PROTECTED] http://www.knowprose.com http://www.your2ndplace.com http://www.opendepth.com http://www.flickr.com/photos/knowprose/ Criticize by Creating - Michelangelo The present is theirs; the future, for which I really worked, is mine. - Nikola Tesla
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 20, 2008, at 12:06 PM, Joe Greco wrote: However, if you look, all the prepaid plans that I've seen look suspiciously like predatory pricing. The price per minute is substantially higher than an equivalent minute on a conventional plan. Picking on ATT, for a minute, here, look at their monthly GoPhone prepaid plan, $39.99/300 anytime, vs $39.99/450 minutes for the normal. If anything, the phone company is not extending you any credit, and has actually collected your cash in advance, so the prepaid minutes ought to be /cheaper/. I disagree. Ever heard of volume discounts? Picking on att again, a typical iPhone user signs up for 24 months @ ~ $100/month, _after_ a credit check to prove they are good for it or plunking down a hefty deposit. Compare that $2.4 kilo-bux to the $40-one-time payment by a pre-paid user. Or, to be more far, how about $960 ($40/month for voice only) compared to $40 one-time? Hell yes I expect more minutes per dollar on my long-term contract. Hrmm, wonder if someone will offer pay-as-you-go broadband @ $XXX (or $0.XXX) per gigabyte? Actually, I was fairly careful, and I picked monthly recurring plans in both cases. The typical prepaid user is NOT going to pay a $40-one- time payment, because the initial cost of the phone is going to be a deterrent from simply ditching the phone after $40 is spent. The lock-in of contracts is typically done to guarantee that the cell phone which they make you buy is paid for, and it is perfectly possible (though somewhat roundabout) to get the cheaper postpaid plan without a long contract - assuming you meet their creditworthiness guidelines. Even without that, once you've gone past your one or two year commitment, you continue at that same rate, so we can still note that the economics are interesting. The iPhone seems to be some sort of odd case, where we're not quite sure whether there's money going back and forth between ATT and Apple behind the scenes to subsidize the cost of the phones (or I may have missed the news). So talking about your iPhone is pretty much like comparing Apples and oranges, and yes, you set yourself up for that one. According to a reverse engineering of the Apple Financial Statements, it's $ 18 / month (on average) - see http://bits.blogs.nytimes.com/2007/10/25/the-831-iphone/ Regards Marshall To put it another way, they do not give you a better price per minute if you go and deposit $2400 in your prepaid account. You can use your volume discount argument once you come up with a compelling explanation for that. ;-) ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http:// www.sol.net We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again. - Direct Marketing Ass'n position on e- mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Matthew Moyle-Croft wrote: 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. This makes a lot of sense. And if it worked in Oz... -- Taran Rampersad [EMAIL PROTECTED] http://www.knowprose.com http://www.your2ndplace.com http://www.opendepth.com http://www.flickr.com/photos/knowprose/ Criticize by Creating - Michelangelo The present is theirs; the future, for which I really worked, is mine. - Nikola Tesla
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Hi Marshall, I think the point is that you need to get buyers to segregate themslevesinto two groups - the light users and the heavy users. By heavy users I mean the 'Bandwidth Hogs' (Oink, Oink) and a light user someone like myself for whom email is the main application. Afterall the problem with the current system is that there is no segregation - everyone is on basically the same plan. The pricing plan needs to be structure in a way that light users have an incentive to take a different pricing plan than do the heavy users. Similar to the way that insurance companies require high premiums for better coverage and more benefits. There must be incentives for the heavy user to reveal him or herself as a heavy user. I am just a dumb sales pushing point-to-point capacity ... So I don't have a good idea of how to do it. Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein. -Original Message- From: Marshall Eubanks [mailto:[EMAIL PROTECTED] Sent: Sun 1/20/2008 2:37 PM To: Rod Beck Cc: Scott McGrath; Rod Beck; [EMAIL PROTECTED]; Patrick W. Gilmore; nanog@merit.edu Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial On Jan 19, 2008, at 3:25 PM, Rod Beck wrote: If service is metered, it doesn't imply 25 cents a minute. It would probably be based on bytes transferred and would probably be less expensive for the bulk of users than the current flat rate pricing. If the cable companies are telling the truth, roughly 5% of their customers generate 50% of the traffic. That implies that the bulk of users are effectively subsidising the five percent of heavy users. So any sort of well crafted usage-based pricing, would lower the amount paid by the vast majority of users and raise it dramatically for the five percent of heavy users. Dear Rod; This does not match my experience of the world. Raise the price for the 5%, sure. Lower prices for the rest, probably not. What I would really expect to result from this are very complicated bills full of obscure fees that effectively raise almost everyone's monthly charge to well above what they advertise on TV. This is, after all, the common pattern on phone service, and I would expect plans where you get so much bandwidth but if you exceed your limit you are suddenly paying some exorbitant rate per GB. Soon to come would be TV commercials talking about weekend Gigabytes and daytime Gigabytes and how you can carry your unused Gigabytes over from one month to the next. Regards Marshall Usage-based pricing would give the cable companies and telephony incumbents an incentive to upgrade infrastructure and actually compete for the heavy users. The heavy users would be the most profitable customers. New technologies would be welcomed instead of discouraged. Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage- based pricing. Regards, Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
To put it another way, they do not give you a better price per minute if you go and deposit $2400 in your prepaid account. Actually, ATT did (when I last looked at at least one of their prepaid plans a year or so ago for a friend). Deposit $100, get a $20 bonus. Or something like that. Personally, I do not know how the Time Warner trial will work out (for them, for the consumer, or for other providers), but I do give them credit for experimenting with a different model. Gary
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
I think the point is that you need to get buyers to segregate = themslevesinto two groups - the light users and the heavy users. By = heavy users I mean the 'Bandwidth Hogs' (Oink, Oink) and a light user = someone like myself for whom email is the main application. Afterall the = problem with the current system is that there is no segregation - = everyone is on basically the same plan.=20 Well, yes. The pricing plan needs to be structure in a way that light users have an = incentive to take a different pricing plan than do the heavy users.=20 Using the local cable company as an example, right now, I believe that they're doing Road Runner Classic for $40/mo, with Road Runner Turbo for $50/mo (approx). Extra speed for Turbo (14M/1M, IIRC) The problem is, Road Runner is delivering 7M/512K for $40/mo, which is arguably a lot more capacity than maybe 50-80% of the customers actually need. Ma Bell is selling DSL a *lot* cheaper (as low as $15, IIRC). So, does: 1) Road Runner drop prices substantially (keep current pricing for high bandwidth users), and continue to try to compete with DSL, which could have the adverse side effect of damaging revenue if customers start moving in volume to the cheaper plan, 2) Road Runner continue to provide service to the shrinking DSL-less service areas at a premium price, relying on apathy to minimize churn in the areas where Ma Bell is likely leafing every bill with DSL adverts, 3) Road Runner decide to keep the high paying customers, for now, and try to minimize bandwidth, and then deal with the growth of DSL coverage at a future date by dropping prices later? Option 1) is aggressive but kills profitability. If done right, though, it ensures that cable will continue to compete with DSL in the future. Option 2) is a holding pattern that is the slow path to irrelevancy. Option 3) is a way to maximize current profitability, but makes it difficult to figure out just when to implement a strategy change. In the meantime, DSL continues to nibble away at the customer base. The end result is unpredictable. I'm going to tend to view 3) as the shortsighted approach that is also going to be very popular with businesses who cannot see out beyond next quarter's profits. The easiest way to encourage light users to take a different pricing plan is to give them one. If Road Runner does that, that's option 1), complete with option 1)'s problem. On the flip side, if you seriously think that $40/month is an appropriate light pricing plan and high bandwidth users should pay more (let's say $80/), then there's a competition problem with DSL where DSL is selling tiers, and even the highest is at least somewhat cheaper. That means that the main advantages to Road Runner are: 1) Availability in non-DSL areas, 2) A 14M/1M service plan currently unmatched by DSL (TTBOMK). That latter one is simply going to act as a magnet to the high bandwidth users. Interesting. ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http://www.sol.net We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again. - Direct Marketing Ass'n position on e-mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. If I were the DSL companies, I would consider advertising with a commercial recalling the fable of the tortoise and the hare. You see a starting line, the rabbit jumps out early (8mb/s), and then crawls forward (64kb/s). The turtle starts a little slower (3mb/s), but just keeps going, beating the rabbit easily. Gary
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
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. I don't agree. When we sold boatloads of dialup in the mid to late 90's, people did not like caps, no matter how high they were. We sold a product early on for $20/month which gave you 240 hours/month -- that was an average of 8 hours/day. However, most users never used more than 20 to 30 minutes a day -- but we often got told they were moving to other providers because they were 'unlimited.' So, we adapted. In any event, I've been watching this thread, and I'd have to say that going down the road of metered pricing will only cause other providers not to do this, and then market against TW. In fact, I'd bet on it. Am I the only one here who thinks that the major portion of the cost of having a customer is *not* the bandwidth they use?
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
On Sun, 20 Jan 2008, Buhrmaster, Gary wrote: My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. If I were the DSL companies, I would consider advertising with a commercial recalling the fable of the tortoise and the hare. You see a starting line, the rabbit jumps out early (8mb/s), and then crawls forward (64kb/s). The turtle starts a little slower (3mb/s), but just keeps going, beating the rabbit easily. ... except that for the majority of users, the length of the racecourse is well and truly within the sprinting distance of the rabbit. Guys, this isn't exactly a new idea if you include parts of the world outside of the USA. For example, on my residential DSL service i've used 4.7G this month. With 1/3 of the month left, I have more than half of my self-selected 10Gig cap available. (And I grabbed at least two CD ISO's the other day.) The model works. What remains to be seen is whether it's actually feasible in a market where truly flat-rate services are hitting the market at margins where they can barely pay for themselves. Mark.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Sun, Jan 20, 2008 at 03:02:15PM -0500, Alex Rubenstein wrote: 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. I don't agree. When we sold boatloads of dialup in the mid to late 90's, people did not like caps, no matter how high they were. We sold a product early on for $20/month which gave you 240 hours/month -- that was an average of 8 hours/day. However, most users never used more than 20 to 30 minutes a day -- but we often got told they were moving to other providers because they were 'unlimited.' So, we adapted. In any event, I've been watching this thread, and I'd have to say that going down the road of metered pricing will only cause other providers not to do this, and then market against TW. In fact, I'd bet on it. Am I the only one here who thinks that the major portion of the cost of having a customer is *not* the bandwidth they use? If we define customer to be an average user of the provided service, and bandwidth to be transit pipe cost, then no, bandwidth is not the major cost of their service. However, if you're advertising an 'unlimited' service and want to keep your promises, you can't plan your network around the average user -- there will be people who will want to hold you to your 'unlimited' promise. If you also call 'bandwidth cost' to include all the infrastructure costs required to provide that unlimited service, then yes, bandwidth cost would be a pretty major part of that customer's cost. (My point of view is Australia rather than the US, but I don't think 14Mbps of dedicated transit is $50/month even in the US). - Matt
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 20, 2008 12:03 PM, Mark Foster [EMAIL PROTECTED] wrote: snip For example, on my residential DSL service i've used 4.7G this month. With 1/3 of the month left, I have more than half of my self-selected 10Gig cap available. (And I grabbed at least two CD ISO's the other day.) The model works. What remains to be seen is whether it's actually feasible in a market where truly flat-rate services are hitting the market at margins where they can barely pay for themselves. Mark. All of these discussions ignore the developments taking place in the consumer electronics marketplace. A quick glance at this years consumer electronics show in Vegas shows a HUGE variety of home, mobile and automobile consumer devices using IP services. These devices, AppleTV as an example, will require large bandwidth commitments. Add this to IP based telephony and you can't just shut off a users service after they reach a cap, you would be removing their emergency services access. Hopefully we won't be seeing basic internet services of a couple of gig per month and channel offerings of AppleTV, all you can eat as tier 2 plan, or other service as teir 3 plan. Alongside this discussion is ATT's direction of content censorship and its impact on end users. Our help desks are going to take a huge hit in the future as we start trying to troubleshoot issues where the general rule of I'll pass any packet I get becomes I will pass any packet I am payed for and have dissected for content, and after I have determined that the rest of the stream won't push my end user over his network cap this month. I have this picture in my mind of Google offering $99 one time cost Wireless routers that autolink with each other and Google's local data center. A few advertisments served up with your endless free networking. cheers Jeff J
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
In the Brave New World, the gap between the average user and the user whose peak demand determines upstream capacity needs, has widened. So the access providers will find that their infrastructure needs upgrading. In particular, the backhaul will need constant upgrading. And of course, more peering. :) More 10 gig waves across the Atlantic! Hahooh! Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein. -Original Message- From: [EMAIL PROTECTED] on behalf of Alex Rubenstein Sent: Sun 1/20/2008 8:02 PM To: Taran Rampersad; nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial 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. I don't agree. When we sold boatloads of dialup in the mid to late 90's, people did not like caps, no matter how high they were. We sold a product early on for $20/month which gave you 240 hours/month -- that was an average of 8 hours/day. However, most users never used more than 20 to 30 minutes a day -- but we often got told they were moving to other providers because they were 'unlimited.' So, we adapted. In any event, I've been watching this thread, and I'd have to say that going down the road of metered pricing will only cause other providers not to do this, and then market against TW. In fact, I'd bet on it. Am I the only one here who thinks that the major portion of the cost of having a customer is *not* the bandwidth they use?
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On 21/01/2008, at 7:53 AM, Jeff Johnstone wrote: All of these discussions ignore the developments taking place in the consumer electronics marketplace. A quick glance at this years consumer electronics show in Vegas shows a HUGE variety of home, mobile and automobile consumer devices using IP services. These devices, AppleTV as an example, will require large bandwidth commitments. Sure. But it isn't an ISP's job to provide below-cost infrastructure to subsidize the bandwidth requirements of Sony and Apple. Pricing should be set without reference to the application developers. If the application developers end up building applications which are too expensive to use, then that's their loss. Nobody in the service- provider industry should be going out of business because they can't afford the infrastructure needed to give their AppleTV users 20 Gbit/sec ports when Cupertino comes out with HD Video in a few years time. Add this to IP based telephony and you can't just shut off a users service after they reach a cap, you would be removing their emergency services access. Why can't you? We do it all the time. You shape to 64kbps, which is more than enough bandwidth to run a SIP session with a low-end CODEC. Phone calls still work, hardly anything else does. (performance on a Virtual-Access interface with a rate-limit on it is way worse than performance on a BRI interface without a rate-limit because rate-limits lead to tail-drops, which spooks TCP very, very badly. So 64kbps is actually worse than it sounds for TCP applications, but constant bitrate CODECs deal with it just fine) Hopefully we won't be seeing basic internet services of a couple of gig per month and channel offerings of AppleTV, all you can eat as tier 2 plan, or other service as teir 3 plan. You guys seem to be behaving as if this stuff hasn't happened before. No, you won't see basic internet on a couple of gig per month. You'll see basic internet on 40 - 60 Gbytes per month, which is more than most mortals use in any given 30 day period (like, ferchrissakes, who needs 2 Gbytes per day, day in day out? Grandma certainly doesn't use that much when she's checking her email...) Alongside this discussion is ATT's direction of content censorship and its impact on end users. No, the two issues are completely orthogonal. You're supposed to be a network operator, stop thinking like an end user. Our help desks are going to take a huge hit in the future as we start trying to troubleshoot issues where the general rule of I'll pass any packet I get becomes I will pass any packet I am payed for and have dissected for content, and after I have determined that the rest of the stream won't push my end user over his network cap this month. No, metering means the network neutrality debate undergoes gravitational collapse, and caring about what's inside a packet turns into a total waste of time. You don't need to care about whether a packet has been paid for because you know that every packet has been paid for. That's what metering delivers. Why do you think the DPI vendors haven't had much traction outside of Europe and North America? It isn't because the rest of the world can't afford them. It's because Europe and North America are where all the unlimited access services are sold, so they're the places where DPI is actually needed. Would you need to spend millions with Ellacoya or Sandvine if your customers imposed their own self-created backpressure against P2P usage? Again: Some of the significant economies on the Internet have done this already. The TWC paper isn't trailblazing, and every issue you can think of to explain why it'll be horrible and won't work has already been demolished by real-life day-to-day business in other countries. You guys who are behaving as if the sky will fall are going to have to explain why the Internet industry hasn't ceased to function in .au and .nz before you get on to explaining why its collapse would be inevitable in the USA. - 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
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
If we define customer to be an average user of the provided service, and bandwidth to be transit pipe cost, then no, bandwidth is not the major cost of their service. However, if you're advertising an 'unlimited' service and want to keep your promises, you can't plan your network around the average user -- there will be people who will want to hold you to your 'unlimited' promise. I don't agree again. The heavy usage customer would be included in your 'average customer base', just as they were in the dialup world. Yes, the average user was only for 20 to 30 minutes a day, but you certainly had users who logged in once a week, and some who stayed connected 24x7. In my experience in selling DSL, while what you count (bytes instead of minutes) has changed, the premise has not. If you also call 'bandwidth cost' to include all the infrastructure costs required to provide that unlimited service, then yes, bandwidth cost would be a pretty major part of that customer's cost. I dunno about that. You have to build a network either way, in any event. The incremental cost difference between building a network and building a bigger network is probably lost in the noise, somewhere around advertising, support, or your CEO going to Scores on the corporate card. Quickly scanning a reasonably sized MSO here in NJ, the numbers are that the operational cost of the network (what they call Techincal and Operating, which likely includes support) was around 42% of revenue. First, I'd bet their network is not full, or anywhere near full, and that to make their dark fiber do 10ge instead of oc48 or whatever it is they use would be tiny. I am not saying that having an unlimited product would not have an effect on their network, but the answer might be 'who cares.' (My point of view is Australia rather than the US, but I don't think 14Mbps of dedicated transit is $50/month even in the US). If it isn't, it will be. And I'd be happy to sell it.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Another view from OZ. I've got a plan that is labeled as Unlimited (12G) Cable. 12G/M (12:00:00-23:59:59) 24G/M (00:00:00-12:59:59) (Disappears if the base 12G is used up) Once the 12G is used up it drops to 64k. Every 4th month is free as I also have a telephone with this provider. The cost actually dropped this month which is a free month. Previously the alotted transfer has gone up twice (from memory) with no fee increase. When I got the initial plan there wasn't a differentiation between AM and PM and the the allowance was for the whole 24 hour period. There are plans above and below this one. I can move up at any time in the month and have it take effect straight away (untested) and move down at the end of the current billing cycle. If I have the choice on when to do a high volume operation I do it in the AM (24G period). My father has a 200MB plan which gives him 600MB. His use is basically email only and software updates. The later is what can cause him problems if he doesn't manage his usage correctly. I've a friend that works for the provider in question and he is on their highest plan. He has 4 children and a wife who are all active users and does max out his plan on occasions. The big advanatge of these plans is that the cost is fixed even if I've used up all my alotted transfer. Mark
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
There's a missing piece here. You'd need a way to go from the 1-gige interfaces that commodity hardware can keep up with to the 10gige-plus interfaces that the backbone requires. Or you could stick with 1G circuits and rely on wavelengths and laying more fiber to take up the slack. Not to mention the fact that commoditization of the infrastructure allows more backbone networks to be built. This is definitely not an instant revolution, just a way to evolve the network in a different direction. And I do think that a company trying this will need electronics engineers who can design innovative hardware as well as just assembling cards and boxes from the open market. And too, the notion of a Linux routing cluster is undeniably hot. :) Yep. --Michael Dillon
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Yes there are P2P pigs out there but a more common scenario is the canonical Little Old Lady in a Pink Sweater with a compromised box which is sending spam at a great rate. Should she pay the $500 bill when it arrives or would a more prudent and rational approach be like some universities do. So, does usage-based pricing come along with some kind of legal liability if the provider does not keep their network botnet-free? After all, by encouraging botnets (meaning by understaffing security and abuse desks) they are actually artificially pumping up their bottom line. The flip-side of this is how many people would be happy to switch to usage-based pricing if they felt that doing so increased the overall security of the Internet, and reduced their personal risk of being victims of fraud and identity theft? --Michael Dillon
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
The big advanatge of these plans is that the cost is fixed even if I've used up all my alotted transfer. This is the success of systems that implement rate limiting (not additional charging) once a specified ceiling has been reached. It provides some fiscal security that you're not going to blow out your upper limit. (I've seen some horrendous bills in the face of 'overage' caused by virus/drone infections, spammers hitting mailservers run on SME broadband links, etc etc.) Both .nz and .au have implemented this. No reason that .us can't do the same? Heck were I in the USA and I had to choose between 'flat rate' and some figure in the vicinity of 10-15GB/month then 'rate limiting' (especially then including the option to buy more bandwidth as a one-off), the latter would win hands down. Flat rate (in my world) often includes port-based and/or time based throughput limiting that's designed to prevent the ISP from being ground to a halt by P2P during peak hours, etc I'd rather have a (reasonable) monthly limit for an affordable price, thanks. Mark. (In .nz)
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Because the industry needs to attract capital, which is difficult when the payback period on capital expenditures continunes to climb and hence the rate of return continues to fall. The incumbents love to talk about what a great quarter they had selling DSL. But very few (if any) will disclose a profit and loss or cash flow statement for their broadband services. The incumbents provide very little visibility and one reason might be the underlying picture is UGLY. Regards, Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein. -Original Message- From: [EMAIL PROTECTED] on behalf of David Conrad Sent: Fri 1/18/2008 11:06 PM To: Scott McGrath Cc: North American Network Operators Group Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial On Jan 18, 2008, at 2:00 PM, Scott McGrath wrote: Why does the industry as a whole keep trying to drag us back to the old days of Prodigy, CompuServe, AOL and really high rates per minute of access. Because they want to make more money and not be a provider of a commodity (see: NGN)? Regards, -drc
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
No we do not however we are allocated a invariant budget to deliver services for a fixed period of time.We cannot 'raise' prices as the pot of funds needs to be allocated to scholarship, teaching, housing and all the other things which make up a university we provide a service which must be available 7x24 for a fixed amount of funds.So even though we do not face a profit/loss calculus cost control is a key driver for us as every dollar not spent for IT can be redirected into scholarships for deserving students. Our problem on the residential networking side is finding the balance between unfettered access which is untenable and providing a service which allocates the available pool of bits fairly among the average customers and trying to accomodate the large users who are downloading the latest Ubuntu ISO's without causing undue pain for either.For instance at Columbia resnets implement the same policy I posited in my initial response. But I REALLY dont want to go back to the days of .25cts/minute access to the internet if we do that the entire thing will collapse due to the financial uncertainty and the internet will go back to being a curiosity for Education and Government as it will be deemed 'too expensive' by the masses. But it just seems that the telco's just cannot give up the concept of metered access for instance I use DSL at home which is PPPoE which means many 'broadband' devices are unusable here sure it terminates on a PIX but the PIX does not have a finger to press the reset button on the 'required by contract' access device sure I could directly terminate it but since I live in a rural area I need my ISP more than the ISP needs me hence devices which need 'always on' access are a pipe dream as my service is 'on most of the time'. Roderick Beck wrote: Universities don't face a profit calculus. And universities are also instituting rationing as well. -R. Sent wirelessly via BlackBerry from T-Mobile. -Original Message- From: Scott McGrath [EMAIL PROTECTED] Date: Fri, 18 Jan 2008 17:00:19 To:Patrick W. Gilmore [EMAIL PROTECTED] Cc:nanog@merit.edu Subject: Re: An Attempt at Economically Rational Pricing: Time Warner Trial Why does the industry as a whole keep trying to drag us back to the old days of Prodigy, CompuServe, AOL and really high rates per minute of access. I am old enough to remember BOSc202202 return The 'Internet' only took off in adoption once flat rate pricing became the norm for access. Yes there are P2P pigs out there but a more common scenario is the canonical Little Old Lady in a Pink Sweater with a compromised box which is sending spam at a great rate.Should she pay the $500 bill when it arrives or would a more prudent and rational approach be like some universities do. i.e. Unthrottled pipe until you hit some daily limit like 1-2 gb and then your pipe drops to something like 64k until midnight or so.This keeps the 'pigs' in line and you might want to add a SUPER tier which would allow truly unlimited use of the pipe for $200-300 because for some people it would be worth it for them. It's human nature to desire a degree of predictability in day to day affairs and as another poster noted that's why prepaid phones are popular now. Further with the compromised system analogy I purchased a prepaid phone for my wife who is a teacher so in the event it was stolen at school the financial loss would be limited to the prepaid balance, no multi-thousand dollar bill for overseas calls. You used the minutes (bandwidth) didn't you?. Ultimately there is no option but to build out the network as we have found on the university side of the house as digital instructional materials and entertainment delivery over the net will become the norm instead of sending bits of plastic through the mail (except for luddites like me ;-}). Patrick W. Gilmore wrote: On Jan 18, 2008, at 3:11 PM, Michael Holstein wrote: The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, and it appears they don't see working to accommodate the other 5% as cost-effective. I seriously doubt it the coax that is the problem. And even if that is a limitation, upgrading the last mile still will not allow for unlimited use by a typical set of users these days. Backhaul, peering, colocation, etc., are not free, plentiful, or trivial to operate. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. I do not doubt that. But do you honestly expect the att DSL line to provide faster / more reliable access? Hint
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Condensing a few messages into one: Mikael Abrahamsson writes: 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. However, if you look, all the prepaid plans that I've seen look suspiciously like predatory pricing. The price per minute is substantially higher than an equivalent minute on a conventional plan. Picking on ATT, for a minute, here, look at their monthly GoPhone prepaid plan, $39.99/300 anytime, vs $39.99/450 minutes for the normal. If anything, the phone company is not extending you any credit, and has actually collected your cash in advance, so the prepaid minutes ought to be /cheaper/. Roderick S. Beck writes: Do other industries have mixed pricing schemes that successfully = coexist? Some restuarants are all-you-can-eat and others are pay by = portion. You can buy a car outright or rent one and pay by the mile.=20 Certainly. We already have that in the Internet business, in the form of business vs residential service, etc. For example, for a residential circuit where I wanted to avoid a disclosed (in the fine print, sigh) monthly limit, we instead ordered a business circuit, which we were assured differed from a T1 in one way (on the usage front): there was no specific performance SLA, but there were no limits imposed by the service provider, and it was explicitly okay to max it 24/7. This cost all of maybe $15/month extra (prices have since changed, I can't check.) Quinn Kuzmich writes: You are sadly mistaken if you think this will save anyone any cash, even light users. Their prices will not change, not a chance. Upgrade your network instead of complaining that its just kids downloading stuff and playing games. It is certainly true that the price is resistant to change. In the local area, RR recently increased speeds, and I believe dropped the base price by $5, but didn't tell any of their legacy customers. The pricing aspect in particular has been somewhat obscured; when I called in to have a circuit updated to Road Runner Turbo, the agent merely said that it would only cost $5/month more (despite it being $10/ more, since the base service price had apparently dropped $5). They seemed hesitant to explain. Michael Holstein writes: The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, Absolutely. If you can do that, you're good to go. Except that you run into this dynamic where someone else comes in and picks the fruit. In Road Runner's case, they're going to be competing with ATT who is going to be trying to pick off those $35-$40/mo low volume customers into a less expensive $15-$20/mo plan. and it appears they don't see working to accommodate the other 5% as cost-effective. Certainly, but only if they can retain the large number of high-paying customers who make up that 95%. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. Especially if ATT can make it really unlimited. Their speeds do not quite compete with Road Runner Turbo, but for 6.0/768 here, ATT Y! is $34.99/mo, while RR appears to be $40(?) for 7.0/512. The difference is that's the top-of-the-line legacy (non-U-verse) ATT DSL offering; there are less expensive ones. Getting back to what Roderick Beck said, ATT is *effectively* offering mixed pricing schemes, simply by offering various DSL speeds. ... JG -- Joe Greco - sol.net Network Services - Milwaukee, WI - http://www.sol.net We call it the 'one bite at the apple' rule. Give me one chance [and] then I won't contact you again. - Direct Marketing Ass'n position on e-mail spam(CNN) With 24 million small businesses in the US alone, that's way too many apples.
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
If service is metered, it doesn't imply 25 cents a minute. It would probably be based on bytes transferred and would probably be less expensive for the bulk of users than the current flat rate pricing. If the cable companies are telling the truth, roughly 5% of their customers generate 50% of the traffic. That implies that the bulk of users are effectively subsidising the five percent of heavy users. So any sort of well crafted usage-based pricing, would lower the amount paid by the vast majority of users and raise it dramatically for the five percent of heavy users. Usage-based pricing would give the cable companies and telephony incumbents an incentive to upgrade infrastructure and actually compete for the heavy users. The heavy users would be the most profitable customers. New technologies would be welcomed instead of discouraged. Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing. Regards, Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Rod Beck wrote: Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing. Concur. However, comma, if governments are charging taxes (such as the EU) it leads to the question of what people pay taxes *for* - and paying more taxes because they use the internet more would mean those that use more would pay more in usage fees and pay more in taxes - which runs completely against the stacks of documents written about equality on the internet. Not taking a side on that, but it is an interesting point to chew on - realistically, a balance would have to be struck. And, as an aside, the Network Neutrality issue affects the globe and is only being debated in one country. -- Taran Rampersad [EMAIL PROTECTED] http://www.knowprose.com http://www.your2ndplace.com http://www.opendepth.com http://www.flickr.com/photos/knowprose/ Criticize by Creating - Michelangelo The present is theirs; the future, for which I really worked, is mine. - Nikola Tesla
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Except if the cable companies want to get rid of the 5% of heavy users, they can't raise the prices for that 5% and recover their costs. The MSOs want it win-win: they'll bring prices for metered access slightly lower than unlimited access, making it attractive for a large segment of the user base (say, 80%), and slowly raise the unlimited pricing for the 15 to 20% that want that service, such that at the end of the day, the costs are less AND the revenue is greater. Frank From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Rod Beck Sent: Saturday, January 19, 2008 2:25 PM To: Scott McGrath; Rod Beck Cc: [EMAIL PROTECTED]; Patrick W. Gilmore; nanog@merit.edu Subject: RE: An Attempt at Economically Rational Pricing: Time Warner Trial If service is metered, it doesn't imply 25 cents a minute. It would probably be based on bytes transferred and would probably be less expensive for the bulk of users than the current flat rate pricing. If the cable companies are telling the truth, roughly 5% of their customers generate 50% of the traffic. That implies that the bulk of users are effectively subsidising the five percent of heavy users. So any sort of well crafted usage-based pricing, would lower the amount paid by the vast majority of users and raise it dramatically for the five percent of heavy users. Usage-based pricing would give the cable companies and telephony incumbents an incentive to upgrade infrastructure and actually compete for the heavy users. The heavy users would be the most profitable customers. New technologies would be welcomed instead of discouraged. Ironically, the Net Neutrality debate is about the access providers trying to impose usage-based pricing through the backdor - on the content providers. It goes without saying I oppose it. It's the end users who decide what they view and hence ultimately generate the traffic flows. So the end users should be subject to the usage-based pricing. Regards, Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Some restuarants are all-you-can-eat and others are pay by portion. None of the nice ones. Then again, the nicer restaurants have a portion size that reflects the higher cost. The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, and it appears they don't see working to accommodate the other 5% as cost-effective. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. Cheers, Michael Holstein Cleveland State University
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008, at 4:01 PM, Patrick W. Gilmore wrote: On Jan 18, 2008, at 3:11 PM, Michael Holstein wrote: My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. P.S. Perhaps they picked that market specifically because they were the only broadband provider there? :) -- TTFN, patrick
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008, at 3:11 PM, Michael Holstein wrote: The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, and it appears they don't see working to accommodate the other 5% as cost-effective. I seriously doubt it the coax that is the problem. And even if that is a limitation, upgrading the last mile still will not allow for unlimited use by a typical set of users these days. Backhaul, peering, colocation, etc., are not free, plentiful, or trivial to operate. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. I do not doubt that. But do you honestly expect the att DSL line to provide faster / more reliable access? Hint: Whatever your answer, it will be right or wrong for a given time in the near future. -- TTFN, patrick
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008 2:53 PM, Patrick W. Gilmore [EMAIL PROTECTED] wrote: IOW: Usage-based billing makes sense commercially, whether you are a propeller-head or a bell-head. And since Internet providers tend to be for-profit businesses, doing what makes sense commercially is kinda required. Then again, I Am Not An Isp, so what do I know? If you think things are out of whack, sounds like a business opportunity to me! You should be able to take your superior knowledge and make a killing implementing a proper network. -- TTFN, patrick I'll be honest, when this thread first started the first thing I thought was I should find out how my local municipal fiber co-op is coming along with their buildout. For customers, going from unlimited to constrained is always painful (vs the opposite). My academic question is, where are costs killing consumer ISPs? Is it the last mile? Transit? Under-capacity peering points? -brandon
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008, at 2:00 PM, Scott McGrath wrote: Why does the industry as a whole keep trying to drag us back to the old days of Prodigy, CompuServe, AOL and really high rates per minute of access. Because they want to make more money and not be a provider of a commodity (see: NGN)? Regards, -drc
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Fri, 18 Jan 2008, Patrick W. Gilmore wrote: On Jan 18, 2008, at 3:11 PM, Michael Holstein wrote: The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, and it appears they don't see working to accommodate the other 5% as cost-effective. I seriously doubt it the coax that is the problem. And even if that is a limitation, upgrading the last mile still will not allow for unlimited use by a typical set of users these days. Backhaul, peering, colocation, etc., are not free, plentiful, or trivial to operate. To elaborate on what Patrick said, consider what the access providers are up against here. We've spent the last several years in a state where bandwidth between major American, European, and East Asian cities seemed free and unlimited. There was a huge glut of fiber, interface speeds kept getting faster, and what users were downloading was mostly web sites. We've now got 40 Gb/s backbones, which would have seemed like a staggering speed just a few years ago. But look at the content that's being pushed hard now. People have gone from downloading web pages with a few pictures to downloading TV shows and full-length movies. To use Apple's iTunes video as an example, a 40 minute TV show represents half a gigabyte of data. A two hour movie represents 1.5 Gigabytes. In terms of Internet bandwidth, that's two megabits per viewable second. Assuming video downloading continues to grow, that people are still going to want to watch movies and TV in Prime Time, those 40 Gb/s backbone links don't look so big anymore. One of those super-fast backbone links can handle 20,000 simultaneous users, which isn't very many in the grand scheme of things. Real HDTV data rates are considerably higher than current iTunes video data rates, so the number of viewers that can be supported by a 40 Gb/s backbone link is likely to fall further. There are a number of things the ISPs could do about this, as far as getting content closer to the users and the like, and backbone links will certainly continue to get faster. Still, it also seems likely that the era of capacity being so plentiful that it's not worth charging for will come to an end. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. In a commodity market, which Internet access is, charging more than a competitor for the same service is difficult. If ATT is selling unlimited service, and Time Warner is selling metered service at the same speed, Time Warner's base rate will likely have to be a bit lower than ATT's to compete. But once they've got that lower base rate, they may have an easier time drawing in those who just want to check their mail or look at web pages, which are the easy customers for them to support. If the really demanding customers go elsewhere, they may even see that as advantageous. Anyhow, if a customer really wants to be able to download lots of video, they may prefer to be charged extra than to get sent random TCP resets, which seems to be becoming the current way of handling such things. -Steve
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008 4:16 PM, [EMAIL PROTECTED] wrote: Sooner or later, somebody is going to try to apply Google's approach to hardware in a network backbone. Imagine a network backbone with no Cisco or Juniper boxes in it, just lots of commodity boxes with triple-redundancy everywhere (quintuple in NFL cities). Michael, There's a missing piece here. You'd need a way to go from the 1-gige interfaces that commodity hardware can keep up with to the 10gige-plus interfaces that the backbone requires. Suppose you build 10-gige mux/demuxes for $2000 each so that you can break the backbone data rates down to 1gbps. The mux/demux would have one 10-gige port and 12 1-gige ports. Packets received on the 1-gige ports would be transmitted on the 10-gige port in the order received. Packets received on the 10-gige port would be transmitted on the 1-gige ports in a more or less round-robin fashion. Two of the 1-gige ports would always be configured as backups with the carrier held low until a piece of equipment attached to one of the active ports failed. You could then build a highly available 3 x 10gige port plus 22x1-gige port router with the following components: 3 $2000 10gige mux/demuxes 10 $3000 1U servers (packet forwarders, 5 gig-e ports each) 1 $3000 1U server (BGP route manager, 2 gig-e ports) 2 $3000 1U servers (hot spares, 5 gig-e ports each) 2 $2000 24-port gig-e switch (interlink the 13 servers with redundancy) 62 gig-e cables 18 rack units $50,000 total. But you can start to get Cisco and Juniper routers with 3 10-gige interfaces in the neighborhood of $50k and they neither take up 18 rack units nor consume as much electricity as those 13 servers. On the other hand, commodity memory is cheap. You could expand those 1-gige software-based forwarders to handle 100M routes in the FIB for maybe another $10k. Since the theoretical limit for the count of prefixes /24 and shorter is less than 34M, that could be handy. A similar expansion in Cisco or Juniper big iron is not just expensive, its hard. And too, the notion of a Linux routing cluster is undeniably hot. :) Regards, Bill Herrin -- William D. Herrin [EMAIL PROTECTED] [EMAIL PROTECTED] 3005 Crane Dr.Web: http://bill.herrin.us/ Falls Church, VA 22042-3004
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
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. You are sadly mistaken if you think this will save anyone any cash, even light users. Their prices will not change, not a chance. Upgrade your network instead of complaining that its just kids downloading stuff and playing games. Q
RE: An Attempt at Economically Rational Pricing: Time Warner Trial
Do other industries have mixed pricing schemes that successfully coexist? Some restuarants are all-you-can-eat and others are pay by portion. You can buy a car outright or rent one and pay by the mile. Roderick S. Beck Director of European Sales Hibernia Atlantic 1, Passage du Chantier, 75012 Paris http://www.hiberniaatlantic.com Wireless: 1-212-444-8829. Landline: 33-1-4346-3209. French Wireless: 33-6-14-33-48-97. AOL Messenger: GlobalBandwidth [EMAIL PROTECTED] [EMAIL PROTECTED] ``Unthinking respect for authority is the greatest enemy of truth.'' Albert Einstein.
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Why does the industry as a whole keep trying to drag us back to the old days of Prodigy, CompuServe, AOL and really high rates per minute of access. I am old enough to remember BOSc202202 return The 'Internet' only took off in adoption once flat rate pricing became the norm for access. Yes there are P2P pigs out there but a more common scenario is the canonical Little Old Lady in a Pink Sweater with a compromised box which is sending spam at a great rate.Should she pay the $500 bill when it arrives or would a more prudent and rational approach be like some universities do. i.e. Unthrottled pipe until you hit some daily limit like 1-2 gb and then your pipe drops to something like 64k until midnight or so.This keeps the 'pigs' in line and you might want to add a SUPER tier which would allow truly unlimited use of the pipe for $200-300 because for some people it would be worth it for them. It's human nature to desire a degree of predictability in day to day affairs and as another poster noted that's why prepaid phones are popular now. Further with the compromised system analogy I purchased a prepaid phone for my wife who is a teacher so in the event it was stolen at school the financial loss would be limited to the prepaid balance, no multi-thousand dollar bill for overseas calls. You used the minutes (bandwidth) didn't you?. Ultimately there is no option but to build out the network as we have found on the university side of the house as digital instructional materials and entertainment delivery over the net will become the norm instead of sending bits of plastic through the mail (except for luddites like me ;-}). Patrick W. Gilmore wrote: On Jan 18, 2008, at 3:11 PM, Michael Holstein wrote: The problem is the inability of the physical media in TWC's case (coax) to support multiple simultaneous users. They've held off infrastructure upgrades to the point where they really can't offer unlimited bandwidth. TWC also wants to collect on their unlimited package, but only to the 95% of the users that don't really use it, and it appears they don't see working to accommodate the other 5% as cost-effective. I seriously doubt it the coax that is the problem. And even if that is a limitation, upgrading the last mile still will not allow for unlimited use by a typical set of users these days. Backhaul, peering, colocation, etc., are not free, plentiful, or trivial to operate. My guess is the market will work this out. As soon as it's implemented, you'll see ATT commercials in that town slamming cable and saying how DSL is really unlimited. I do not doubt that. But do you honestly expect the att DSL line to provide faster / more reliable access? Hint: Whatever your answer, it will be right or wrong for a given time in the near future.
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 ATT commercials in that town slamming cable and saying how DSL is really unlimited. Meanwhile, on TWC where downloading the entire Internet over bittorrent every month is expensive, the disproportionately high users will have migrated to other ISPs. 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
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
As many universities found out long ago after installing Centrex lines in dormitory rooms, the quote below is not correct. Only, in telco-land, extended call duration was what used up the available connection paths. No, I don't know how many Erlangs. On Jan 18, 2008, at 3:53 PM, Patrick W. Gilmore wrote: On phone networks, flat rate kinda works because a single phone call is a very tiny fraction of the shared resource. James R. Cutler [EMAIL PROTECTED]
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Jan 18, 2008, at 3:06 PM, Tomas L. Byrnes wrote: I always find it interesting that people with a telco background keep trying to go back to the ma bell days and ways, even as the telcos themselves are abandoning those models for phone service. I am not at all certain that is what is happening. One of the things about usage based pricing in the Internet is that the system doesn't have the facilities to do that built into it by design, so you have to add a lot of equipment and software to do it. This tends to cost more than the incremental revenue, especially when you consider the additional customer service costs and churn (there's always a competitor who pops up offering flat-rate pricing). The problem in the ISP industry isn't lack of usage based pricing. It's that the going rate for basic connectivity was driven below that which is economically sustainable by the ILECs when they engaged in predatory pricing to drive the CLECs out of business in the late 90s. Now that they own the market, they find that, having driven the prices down, they can't raise them, so they are engaging in various subterfuges that are designed to cover up the basic thing they are doing: trying to charge more for the exact same service. I disagree. Pick a number. Any number. Offer broadband flatrate service at that number. I will show you at least 5% of your customer base who is either paying an order of magnitude too much, or getting an order of magnitude more than they paid for. And usually a lot more than 5%. The problem is flat rate doesn't work when the thing being offered is a shared resource _and_ a single or a few users can use all the resources. On phone networks, flat rate kinda works because a single phone call is a very tiny fraction of the shared resource. No small set of users can harm the rest of the users. (It is still possible for a medium set of users to harm the rest, but the danger is low.) That is not true for Internet access, unless you plan to go back to Kbps speeds. I think that would be less well received than usage- based billing. IOW: Usage-based billing makes sense commercially, whether you are a propeller-head or a bell-head. And since Internet providers tend to be for-profit businesses, doing what makes sense commercially is kinda required. Then again, I Am Not An Isp, so what do I know? If you think things are out of whack, sounds like a business opportunity to me! You should be able to take your superior knowledge and make a killing implementing a proper network. -- TTFN, patrick
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Fri, 18 Jan 2008, Patrick W. Gilmore wrote: 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. :) No, it's easier to understand that by making a call where you're physically abroad you're charged more. Otoh unlimited wireless plans are common here and now people are discovering that if you're close to the border of another country you're all of a sudden roaming and instead of free wireless broadband, you're paying several dollars per megabyte transferred (without you noticing it). This is not what people expect. This is why some people really really want tokens or prepaid and then have their account severely limited or shut off when their account is empty, instead of being charged per-usage without upper limit. If the cheap flatrate broadband were to go away and be replaced by a metered one, we as an industry need to figure out how to do billing in a customer-friendly manner. We do not have much experience with this in many markets. -- Mikael Abrahamssonemail: [EMAIL PROTECTED]
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
If the cheap flatrate broadband were to go away and be replaced by a metered one, we as an industry need to figure out how to do billing in a customer-friendly manner. We do not have much experience with this in many markets. Us Aussies have PLENTY of experience and are willing to travel and consult at quite reasonable rates - especially to Europe :-) User pays is the reality here in Australia primarily because the cost of getting one gigabyte of data to a customers house is at least AU$1GB (excluding the actual cost of running your own network or the wholesale cost of a DSL port or helpdesk etc). It does also mean that we can afford to build networks and local loops with no congestion and no slow down during peak periods. Customers here expect high performance all the time and we (at least) try and deliver it to them. MMC -- Matthew Moyle-Croft - Internode/Agile - Networks Level 5, 150 Grenfell Street, Adelaide, SA 5000 Australia Email: [EMAIL PROTECTED] mailto:[EMAIL PROTECTED] Web: http://www.on.net Direct: +61-8-8228-2909 Mobile: +61-419-900-366 Reception: +61-8-8228-2999 Fax: +61-8-8235-6909 The difficulty lies, not in the new ideas, but in escaping from the old ones - John Maynard Keynes
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
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? 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. 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. 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. -- Mikael Abrahamssonemail: [EMAIL PROTECTED]
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
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
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
Mikael Abrahamsson wrote: 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. I see it more as an experiment driven by the P2P issues and the net neutrality arguments. If we have to throw away the established flat rate / oversubscription models due to P2P upload then something has to give - either per byte pricing arrives, traffic shaping becomes more common, upstream rates are reduced, or the entire last mile is replaced. P2P is not going to go away and it's hiding itself more every day. Rate limiting hurts all the customers while per byte pricing hurts only a few users. It took 20 years to build the existing last mile. I don't see it being replaced en mass. I'm going out on a limb here but per-byte is going to be the answer in the end - and marketing is going to have some work ahead of them in selling it. Now it becomes a game of chicken to see who blinks first. Mark
Re: An Attempt at Economically Rational Pricing: Time Warner Trial
On Fri, 18 Jan 2008, Mikael Abrahamsson wrote: If the cheap flatrate broadband were to go away and be replaced by a metered one, we as an industry need to figure out how to do billing in a customer-friendly manner. We do not have much experience with this in many markets. Caps/fair use plans are common in 20 out of 30 OECD countries. Although Sweden and the USA may not have much experience with it, it seems like other countries do have some experience. And more than likely the billing software vendors from other OECD countries would be more than happy to expand into a new market like the USA. Probably all you need to do is call up your favorite networking vendor sales person and ask them how do I do it. They probably already have a bunch of white papers and stuff you can buy. http://www.oecd.org/document/54/0,3343,en_2825_495656_39575670_1_1_1_1,00.html Large enterprise users have had 95/5, avg, peak, etc Internet billing for a decade. Although I think all carrier's billing systems are deliberately fubarred, it hasn't been an insurmountable problem.
