[186947] in North American Network Operators' Group
Re: Binge On! - get your umbrellas out, stuff's hitting the fan.
daemon@ATHENA.MIT.EDU (Owen DeLong)
Sun Jan 10 23:15:01 2016
X-Original-To: nanog@nanog.org
From: Owen DeLong <owen@delong.com>
In-Reply-To: <CABNB40WBfLgLLuUeVvTfD8OofMHYQwqJDq8Eq6x4L4muwcMW9w@mail.gmail.com>
Date: Sun, 10 Jan 2016 20:12:48 -0800
To: Jeremy Austin <jhaustin@gmail.com>
Cc: North American Network Operators' Group <nanog@nanog.org>
Errors-To: nanog-bounces@nanog.org
> On Jan 9, 2016, at 08:01 , Jeremy Austin <jhaustin@gmail.com> wrote:
>=20
> On Sat, Jan 9, 2016 at 5:06 AM, Mike Hammett <nanog@ics-il.net> wrote:
>=20
>>=20
>> The best solution for everybody is the solution most consumers are =
adverse
>> to, which is usage based billing. Granted, many times the providers =
have
>> shot themselves in the foot by making the charges punitive instead of =
based
>> on cost plus margin. Reasonable $/gig for everybody! :-)
>=20
>=20
> I'm tempted to make an analogy to health care, insurance, and =
universal
> coverage, but I'll abstain.
>=20
> Usage based billing alters the typical hockey stick graph: the 10% of =
users
> using 80% of the bandwidth are otherwise subsidized by the long tail.
>=20
> As an ISP, usage-based billing is more sensible, because I would no =
longer
> have to stress about oversubscription ratios and keeping the long tail
> happy. But usage-based models are more stressful for the consumer; I =
think
> I disagree that it's the best model for everybody.
As much as I love to criticize T-Mo for what they do wrong (and =
there=E2=80=99s plenty),
this is one area where I think T-Mo has actually done something =
admirable.
They have (sort of) usage-based billing.
For $x/month you get Y GB of LTE speed data and after that you drop to =
128kbps.
You don=E2=80=99t pay an overage charge, but your data slows way down.
If you want to make it fast again, you can for $reasonable purchase =
additional
data within that month on a one-time basis.
I would like to encourage other carriers to adopt this model, actually. =
If
Verizon had a model like this, I would probably switch tomorrow assuming
their prices weren=E2=80=99t too far out of line compared to T-Mo.
> Let me be a consumer advocate for a moment. One of the reasons =
consumers
> are averse to usage-based billing is that the tech industry has not =
put
> good tools into their hands. While it is possible to disable automatic
> updates, set Windows 10's network settings to "metered", and =
micromanage
> your bandwidth, in general:
>=20
> The Internet (from the non-eyeball side) is designed around a =
free-feeding
> usage model. Can you imagine if the App store of your choice showed =
two
> prices, one for the app and one for the download? The permission-based
> model on Android would have requests like, "This app is likely to cost =
you
> $4/week. Is this OK?=E2=80=9D
Kind of an interesting idea, but to me, the reason usage charges induce
stress has ore to do with the fact that they are kind of out of control
pricey first of all and second of all that you start incurring them =
without
warning and without any real ability to say no on most networks.
That=E2=80=99s why I actually like the T-Mo strategy here. With existing =
tools,
the customer has full choice and control about =E2=80=9Coverage=E2=80=9D =
costs even if
their data usage remains somewhat opaque.
> I don't know all the reasons that satellite provider Starband shut =
down,
> but that was a usage-based billing market; and it would never have =
been a
> 'reasonable' $/gig. I'm working to step into the hole they left, and
> you're right that customers don't want a usage-based model to replace =
it.
Because their operating costs overall exceeded the value perceived by =
consumers.
As a result, they could not sell their product to a critical mass of =
consumers
at a price that would allow them to continue operations.
> In addition, let's say I know of an ISP that makes 10% of its revenue =
from
> overage charges. Moving to a purely usage-based model would lower ACR, =
as
> it would have to charge a more reasonable price/gig; that top 10% of =
users
> won't replace the lost revenue. So even providers may have little =
incentive
> to change models, particularly if they have a vested interest in =
inhibiting
> the growth of video or usage in general.
How can an ISP make 10% of its money from overage charges unless they =
are
doing usage-based billing? If you=E2=80=99ve got an AYCE plan, you =
don=E2=80=99t have
overages. If you don=E2=80=99t, then you have some form of usage based =
billing.
The varieties of usage based billing that are available are a far less
interesting exercise.
Owen
