[1284] in Commercialization & Privatization of the Internet
Re: impact of settlements on provision of free services
daemon@ATHENA.MIT.EDU (Cyndi Mills)
Fri Aug 30 12:12:12 1991
From: Cyndi Mills <cmills@BBN.COM>
To: com-priv@uu.psi.com
Cc: lixia@parc.xerox.com, stan@karazm.math.uh.edu
In-Reply-To: <CMM.0.88.683514315.lixia@parc.xerox.com>
Date: Fri, 30 Aug 91 12:10:32 EDT
> ... moving to a strict usage-based billing system
> for everyone is counterproductive.
Now I feel compelled to speak. The above statement is a great slogan, but does
counterproductive refer to ALL BILLING, STRICT BILLING only, USAGE-BASED BILLING
only, BILLING FOR EVERYONE only (i.e. let some pay more equally than others), or
all of the above? There's an underlying mis-interpretation that "measuring usage
is bad" - the notion that only as long as we don't understand what we're doing
can we get the administration to fund it. (Sounds like research to me :-)
There are a number of usage factors that contribute to the cost of service,
regardless of how the tariffs are constructed: the number of packets generated
and delivered, access circuit bandwidth (particularly non-shareable resources),
point of connection and routing resources, disk space, security measures, etc.
How about a LESS STRICT BILLING system? Accountants have found many
ways to charge for fuzzy resources like water, electricity, gas, local
and long distance phone bills, but usage-based charging is often among the
palette of billing choices offered to the consumer. There is straight usage-based
charging (e.g. 1 quetzal per kilopacket), a variety of stepped rates (e.g. $10
for the basic service regardless of traffic, $5 per kilopacket for the first
hundred kilopackets, $1 for the next thousand kilopackets, etc.). For the faint
of heart (university budgets are justifiably faint-hearted) a CAP, e.g. a
MAXIMUM MONTHLY PAYMENT can be negotiated. By measuring usage the parties can
check that on the average the cap is "fair" for whatever measures of
fair apply and on this basis a new cap may be negotiated for the next term
(e.g. year). The subscriber cannot generate more traffic than the bandwidth of
the line, and the service provider will not charge more than the cap,
therefore both parties have agreed to a limit on their exposure to risk.
How about usage-based billing for SOMEBODIES? With my non-corporate somebody
hat on, I have always regretted the high cost of Internet Access and wished
for occasional private access to the internet from home. But the service
providers might charge me $250/month or more flat fee on the basis that I might
the service full-bandwidth 24 hours a day. As an INFREQUENT low-volume user,
I'd prefer to pay $5 a month to maintain an account and then pay by usage,
perhaps up to a maximum cap (presumably based on consumption of resources)
which is either a quota (cut me off at $100 please) or just a maximum rate
(for $250 eat all you can). This type of service is coming (finally).
Usage measurement isn't COUNTERPRODUCTIVE in my book.
For the service providers to understand what kind of revenues their billing
schemes will generate, shouldn't they measure usage patterns regularly?
Then they know better how subscriber usage patterns change over time.
Since subscribers have vastly different technical and financial networking
requirements, shouldn't they have an appropriate smorgasbord of tariffs? And
be able to chose intelligently between the options?
> Having relatively inexpensive usage-based billing will make it easier for them
> to sell a connection internally. Once you *HAVE* the connection, and
> actually start using it, it will become quite clear in relatively
> short order that a fixed-price connection is the right thing to do.
> It's just that initial jump-start where you really need usage-based
> billing.
Again, I can't quite agree with where this is leading, although for
MANY, maybe even MOST subscribers the conclusion is correct. I think the
jury is still out on whether fixed-rate billing regardless of usage
is BEST for EVERYONE.
Anyway, we're holding an Internet Accounting Birds-of-a-Feather at Interop.
It's oriented towards the task of MEASURING usage rather than BILLING topics,
but we could set aside some time at the end for debates on billing if sufficient
desire exists.
--------
Cyndi Mills cmills@bbn.com (617) 873-4143
BBN Communications 150 CambridgePark Dr. Cambridge, MA 02140, USA
