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Re: Pay-As-You-Use High-Speed Internet?

  • From: Jonathan M. Slivko
  • Date: Fri May 14 18:46:48 2004


Steve,

As for your point of the major cost for an ISP would be support. That is where I beg to differ, in my own experience working for this company on this project, it has required very little time to do actual support work to the end-user, provided that the Internet connection actually works.

Steve Gibbard wrote:

For an idea to catch on, it often helps for there to be a clear benefit to
doing things the new way rather than the old way (or at least, it needs
some good marketing...).
The benefit would be better bandwidth management for the ISP. For example, in our building where we're lit, we have 50 apartments currently running this exact type of scenario on an Ethernet platform to a T1 going into the building.
In this case, it's not clear to me where the benefit is.  A lot of the
cost of residential connections is in support, and in the cost of the
physical connection, whether it's used or not.  From the ISP's
perspective, even if the average customer's use were to drop considerably,
it probably wouldn't lead to a huge reduction in their costs, so they
wouldn't be able to lower the base price of an unused circuit much below
what it already is.  While it might be nice to be able to get more than
they're currently getting from customers who are heavy users, the heavy
users would be unlikely to pay more, given that they could get service for
the same flat rate from the ISP's competitors.
As for your point of the major cost for an ISP would be support. That is where I beg to differ, in my own experience working for this company on this project, it has required very little time to do actual support work to the end-user, provided that the Internet connection actually works.

But, to a heavy user, a faster connection (greater than 1.5Mbps downstream, with a higher upstream than most DSL companies provide in their residential packages)would also be worth paying for.

For example, would an office with 100 employees rather work on a single T1 line for which they are paying $1000/month whether they use it or not. Or, would they want to buy bandwidth for the 8-9 hours that they are actually there during the week. Currently, as I type this, the actual bandwidth market in the building is sitting (and has been sitting for quite awhile) at $1.22 per kbps sustained for a month. So, if you don't use it the whole entire month (as your billed in 5 minute increments of actual usage), then your cost becomes significantly less.

With our model, you wouldn't be paying for what you don't use. This has been the way that we lit the apartments in the building as well as how we operate our colocation market.

From the end users' perspective, we've got pretty much the same story.
They're unlikely to save more than a few dollars if they don't use the
connection at all, and they'll have to pay more if they do.  What's in it
for them?  If the end user is already paying the $30-50/month you suggest
that they would pay for the loop, then they're currently getting the
bandwidth for free.  Why would they want to start paying more?
I'm saying bandwidth at market rate + a constant fee for the T1 loop.
The situation for users of much bigger connections, where we're talking
bills of thousands or tens of thousands of dollars per month, instead of
$30-50, is quite different.  Metro ethernet and OC-whatever connections
generally are billed at 95th percentile utilization, which is a form of
pay as you use.
Yes, but as I wrote before, this is not a 95th percentile environment, it's actual usage. We are actually AGAINST 95th percentile. It seems to work quite well for the building that we've already wired with this technology.
-Steve
--
Jonathan M. Slivko
Network Operations Center
Invisible Hand Networks, Inc.
help@invisiblehand.net
1-866-MERKATO (USA)
1-812-355-5908 (Intl)
<http://www.invisiblehand.net>




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