The Great Exchange
Perry E. Metzger
perry at piermont.com
Wed May 27 22:45:19 UTC 1998
Michael Shields writes:
> In article <199805271744.NAA21312 at jekyll.piermont.com>,
> "Perry E. Metzger" <perry at piermont.com> wrote:
> > In the long run, why are we assuming there will be locality of
> > traffic?
> > It is true that the old PSTN has locality of traffic, but it doesn't
> > have flat rate pricing, or the usage patterns that the Internet has.
> Why are you assuming that the Internet will continue to have
> non-distance-sensitive pricing, when it clearly has distance-
> sensitive costs (ultimately)?
I'm assuming it for several reasons.
1) The price of metering packets by destination exceeds the cost of
providing the underlying service as it stands. This does not make me
think that distance sensitive pricing has a bright future.
2) Long distance carriers have essentially eliminated distance
sensitive pricing for domestic U.S. calls, and at the moment the price
on such calls is only a hair above the local carrier settlement costs
of 7 cents per minute (3.5 cents per side.) Cellular carriers are
getting into the act, eliminating long distance charges for a small
flat fee. International pricing is also plummeting. None of this leads
me to believe that the future for metered PHONE SERVICE is very
bright, and you're trying to argue that metered internet service has a
3) It does not appear that moves towards metered pricing have been
well recieved by consumers. ISPs are sticking to their current pricing
model, although they are often limiting the flat rate zone to
"reasonable" personal usage levels of a couple hundred hours per
In short, I see no economic basis for such metering, and no moves
towards such metering. Maybe I'm wrong, but I doubt that we're going
to see any change in this any time soon.
More information about the NANOG