More Sidgemore on per-bit pricing
David P. Maynard
dpm at flametree.com
Sun Dec 6 02:04:10 UTC 1998
> > One possible positive effect (for the consumer) of "per-bit" pricing
> > is the opportunity to buy larger pipes but only pay for what you use.
> The other possible effect is that you buy one of these, and then someone
> launches a DOS attack at you and you get the bill for it.
We have used usage-based pricing for collocated customers since SMARTNAP
(now IXC Austin NAP) opened it's doors nearly two years ago. That allows
us to hand people a 100Base-TX port and let them pay for the bandwidth
they actually use. We don't bill per byte. Instead, we use the 95%
sustained utilization model that bills for your peak utilization in
Mbit/sec after throwing out 5% of the 5-minute samples for the month. The
5% amounts to about 36 hours of "free" bandwidth. That means you have to
be a pretty serious smurf target before attacks will affect your bill
significantly. Both we and our customers have been very happy with the
95% utilization model for this type of service. It lets us set pricing
based on a metric that closely follows the amount of backbone bandwidth we
have to provision to support a customer. UUNET uses the same metric for
their usage-based T3 lines. I believe other providers also use it.
Having said that, the 95% model isn't the end-all of usage billing. Some
people want to use high bandwidth for a short period of time (e.g. a video
conference) and just want to pay for that period of time. In the 95%
model they either win big or they lose big depending on whether their
high-bandwidth usage fits in the 5% window.
There are still some customers concerned about the lack of control they
have over their bill. Presumably, they will have a business model that
provides them with additional revenue if their traffic increases. It
still makes people nervous though. Using bandwidth-limiting mechanisms
can alleviate that concern at the cost of reducing their available peak
> The economic impact of this should not be underestimated. Per-bitrate
> pricing is a problem as long as the receiver pays for the receipt of
> transmissions they may not have solicited.
The 95% model makes a fairly primitive, but fairly effective attempt at
addressing that issue. The issue will be more of a concern if
finer-grained usage-based billing becomes more common.
David P. Maynard, Flametree Corporation
EMail: dpm at flametree.com, Tel: +1 512 670 4090, Fax: +1 512 251 8308
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