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

Fri May 14 22:44:16 UTC 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 at invisiblehand.net
1-866-MERKATO (USA)
1-812-355-5908 (Intl)
<http://www.invisiblehand.net>