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RE: More Sidgemore on per-bit pricing

  • From: Peter Ford
  • Date: Sat Dec 05 00:41:58 1998

Let's see:

You accect per piece pricing and identify that it is existing practice.

Sounds like you object to the units?  Should the units be in terms of T-1s
(as you accept as exiting practice), DS-0 (probably the prominent per piece
model in use today) or what?

So is your complaint that that units might not be in terms of T-1s?   Or is
it that the units are soft/virtual instead of hard as defined by the Telco
physical hierarchy?

If Sidgemore's experience matches others in the ISP business I suspect he is
considering/planning such service plans because several of his important
customers are asking for it.  And I am sure he has the ability/mechanisms to
retain those customers who demand flat/predictable billing by offering that
as an option ...  

chaeers,

peter


-----Original Message-----
From: Pete Kruckenberg [mailto:pete@kruckenberg.com]
Sent: Friday, December 04, 1998 9:43 AM
To: nanog@merit.edu
Subject: More Sidgemore on per-bit pricing


Sidgemore talks again: 

http://www.news.com/News/Item/0,4,29533,00.html?st.ne.fd.gif.a

I'm sure this subject has been discussed at length here, but I still fail
to see any benefit for per-piece pricing other than to the seller's
revenue stream. I think it's always interesting that discussions of
per-piece pricing always fail to mention the fundamental issue: provide a
disincentive to the consumer to use the service.

There is already per-piece pricing:  1.544Mbps of traffic costs $500 to
$2000+/mo, depending upon how much the provider is counting on you to not
use the service. However, in this case the burden is placed on the ISP to
balance closing the sale with making money off of how much the customer
actually uses the service. 

The thing I most distrust about people who talk about per-piece pricing is
that in spite of the fact that it should end up costing lower-use
customers less, for some reason it always ends up costing everyone more. 
Look at UUNet's pricing now (for 256K ASU, or something like that), versus
the flat-rate price available from equivalent NSP's. Is that where things
are going? 

Pete. 




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