[10938] in Commercialization & Privatization of the Internet
Re: flat-rate=cross subsidy (was: FCC strikes the internet)
daemon@ATHENA.MIT.EDU (Karl Denninger)
Tue Mar 15 04:51:25 1994
From: karl@mcs.com (Karl Denninger)
To: Rbohn@ucsd.edu (Roger Bohn)
Date: Mon, 14 Mar 1994 23:27:40 -0600 (CST)
Cc: karl@mcs.com, fidelman@civicnet.org, com-priv@psi.com
In-Reply-To: <199403142054.MAA18638@ucsd.edu> from "Roger Bohn" at Mar 14, 94 12:54:26 pm
> At 6:53 PM 3/13/94 -0600, Karl Denninger wrote:
>
> >Finally, let's look at this. You wanted originally flat-rate email. Now
> >all of a sudden its SLIP access. That's MASSIVELY expanded service, is it
> >not? Yes, there are companies (mine is one) which will sell you that kind
> >of service. Are you arguing for <mandating> this? What if it turns out
> >that 2-3 years from now the "flat rate" ends up being "24 hour connected
> >for 90% of the users" and it becomes impossible to support that pricing
> >model?
>
> Just a reminder: Karl is alluding some of the key tradeoffs with flat rate
> pricing. Don't pretend flat rates are for the good of the individual end
> users; they wind up causing light users to subsidize heavy users, which
> means _from_ individuals, _to_ small business/stay at home offices.
>
> A flat rate, which exactly covers all costs, ends up creating a subsidy for
> the heavy users, at the expense of the light users. (Since under usage
> based pricing, light users would pay only a little, and heavy users pay a
> lot; yet total revenue collected is the same or higher.) It also leads to
> inefficiency, since no one has an incentive to conserve on login time. (In
> most but not all network architectures, this would raise costs, for
> everyone.)
Only if usage-sensitive pricing isn't offered.
In our case at MCSNet, it is. You can CHOOSE.
What I dislike is the government trying to tell me that one or the other
models of that form is wrong, that I must offer either, or that I may not
offer either. Any such proposal is a restraint on my company's choice.
--
--
Karl Denninger (karl@MCS.COM) | MCSNet - Full Internet Connectivity (shell,
Modem: [+1 312 248-0900] | PPP, SLIP and more) in Chicago and 'burbs.
Voice/FAX: [+1 312 248-8649] | Email "info@mcs.com". MCSNet is a CIX member.
