An Attempt at Economically Rational Pricing: Time Warner Trial

Sun Jan 20 14:37:02 UTC 2008

On Jan 19, 2008, at 3:25 PM, Rod Beck wrote:

> If service is metered, it doesn't imply 25 cents a minute. It would  
> probably be based on bytes transferred and would probably be less  
> expensive for the bulk of users than the current flat rate pricing.  
> If the cable companies are telling the truth, roughly 5% of their  
> customers generate 50% of the traffic. That implies that the bulk  
> of users are effectively subsidising the five percent of heavy users.
>
> So any sort of well crafted usage-based pricing, would lower the  
> amount paid by the vast majority of users and raise it dramatically  
> for the five percent of heavy users.
>
>

Dear Rod;

This does not match my experience of the world. Raise the price for  
the 5%, sure. Lower prices for the rest, probably not. What I would  
really expect to result from this are very complicated bills full of  
obscure fees that effectively raise almost everyone's monthly charge  
to well above what they advertise on TV. This is, after all, the  
common pattern on phone service, and I would expect "plans" where you  
get so much bandwidth but if you exceed your limit you are suddenly  
paying some exorbitant rate per GB. Soon to come would be TV  
commercials talking about weekend Gigabytes and daytime Gigabytes and  
how you can carry your unused Gigabytes over from one month to the next.

Regards
Marshall

> Usage-based pricing would give the cable companies and telephony  
> incumbents an incentive to upgrade infrastructure and actually  
> compete for the heavy users. The heavy users would be the most  
> profitable customers. New technologies would be welcomed instead of  
> discouraged.
>
> Ironically, the Net Neutrality debate is about the access providers  
> trying to impose usage-based pricing through the backdor - on the  
> content providers. It goes without saying I oppose it. It's the end  
> users who decide what they view and hence ultimately generate the  
> traffic flows. So the end users should be subject to the usage- 
> based pricing.
>
> Regards,
>
> Roderick S. Beck
> Director of European Sales
> Hibernia Atlantic
> 1, Passage du Chantier, 75012 Paris
> http://www.hiberniaatlantic.com
> Wireless: 1-212-444-8829.
> Landline: 33-1-4346-3209.
> French Wireless: 33-6-14-33-48-97.
> AOL Messenger: GlobalBandwidth
> rod.beck at hiberniaatlantic.com
> rodbeck at erols.com
> ``Unthinking respect for authority is the greatest enemy of  
> truth.'' Albert Einstein.
>