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Re: MFS WorldCom/WilTel/LDDS

  • From: Jeffrey D. Wheelhouse
  • Date: Thu Aug 29 13:25:34 1996

At 09:37 PM 8/28/96 -0700, you wrote:
>Interestingly enough, I switched primary
>providers a few months ago because my provider at the time was
>switching from a flat rate scheme to a metered one.  The end result
>was that at my current usage level, my monthly rate would more than
>double.

Yep.  This seems to be the biggest problem with metered pricing.  
At some point in the "we need to go to metered pricing" discussion,
people heads go funny and they start to think "now we will make 
the big bucks!" and drive the pricing scale off the map.  Models
where the highest "tier" is at or possibly a little higher than
current flat-rate costs (depending the costs, which obviously vary).
If, like Matt's example, the rates suddenly double (as they frequently)
do, it's a sign that the provider is either 

a) not good with cost analaysis, or
b) soaking the customer

Neither type is going to be a long term player.  If someone is using 
a full T1, you need to be able to afford that much bandwidth just
for them all the way through your network ("duh," says everyone),
whether you're letting the low-usagers cover costs on the high-usagers
in a flat-rate scheme, or they're paying (somewhat) more for metered
rates.

For the last couple of years everyone's been sucked into the flat-rate
versus hourly rate argument for dialup.  This is the same thing with
bigger numbers.  Flat rate seems to have won there, often with some
kind of limits.  Perhaps some kind of price penalty for those who
drive their connection to the wall all the time...  Perhaps pricing
schedules with tiers a whole lot more doglegged would be more 
acceptable to the consumer.

Not to say that everyone is doing this wrong.  Dave Siegel is doing some
(good) work in this area (good enough to sell me a line), and I'm sure
there are others too.  Hopefully it will be enough to keep the
moneygrabbers at bay over the long run.

Later,
Jeff

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