BitTorrent swarms have a deadly bite on broadband nets

Fri Oct 26 00:55:13 UTC 2007

Flat rate schemes have been spreading over the kicking and
screaming bodies of telecom executives (bodies that are
very much alive because of all the feasting on the profits
produced by flat rates).  It is truly amazing how telecom
has consistently fought flat rates for over a century
(a couple of centuries, actually, if you include snail
mail as a telecom technology), and has refused to think
rationally about the phenomenon.  There actually are
serious arguments in favor of flat rates even in the
conventional economic framework (since they are a form
of bundling).  But in addition, they have several big behavioral
economics effect in stimulating usage and in eliciting extra
spending.  This is all covered, with plenty of amusing historical 
examples, in my paper "Internet pricing and the history of communications," 
Computer Networks 36 (2001), pp. 493-517, available at

  http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf

Now flat rates are not the answer to all problems, and in
particular are not as appropriate if marginal costs of
providing service are high, or else if you are trying to
limit usage for whatever reason (whether to fend off RIAA
and MPAA, or to limit pollution in cases of car transportation).
But they are not just an artifact of an irrational consumer
preference, as the conventional telecom economics literature
and conventional telco thinking assert.

Andrew Odlyzko

  > On Thu 25 Oct 2007, Rod Beck wrote:

  > The vast bulk of users have no idea how many bytes they=20
  > consume each month or the bytes generated by different=20
  > applications. The schemes being advocated in this discussion=20
  > require that the end users be Layer 3 engineers.

  "Actually, it sounds a lot like the Electric7 tariffs found in the UK =
  for
  electricity. These are typically used by low income people who have less
  education than the average population. And yet they can understand the
  concept of saving money by using more electricity at night.

  I really think that a two-tiered QOS system such as the scavenger
  suggestion is workable if the applications can do the marking. Has
  anyone done any testing to see if DSCP bits are able to travel unscathed
  through the public Internet?

  --Michael Dillon

  P.S. it would be nice to see QoS be recognized as a mechanism for
  providing a degraded quality of service instead of all the "first class"
  marketing puffery."

  It is not question of whether you approve of the marketing puffery or =
  not. By the way, telecom is an industry that has used tiered pricing =
  schemes extensively, both in the 'voice era' and in the early dialup =
  industry. In the early 90s there were dial up pricing plans that =
  rewarded customers for limiting their activity to the evening and =
  weekends. MCI, one of the early long distance voice entrants, had all =
  sorts of discounts, including weekend and evening promotions.=20

  Interestingly enough, although those schemes are clearly attractive from =
  an efficiency standpoint, the entire industry have shifted towards flat =
  rate pricing for both voice and data. To dismiss that move as purely =
  driven by marketing strikes me as misguided. That have to be real costs =
  involved for such a system to fall apart.=20