[1907] in Commercialization & Privatization of the Internet
ANS Pricing Model
daemon@ATHENA.MIT.EDU (Jeff Bone)
Tue Jan 7 16:03:12 1992
Date: Tue, 7 Jan 92 13:00:39 PST
From: Jeff.Bone@EBay.Sun.COM (Jeff Bone)
To: com-priv@psi.com
(apologies if this arrives twice, something odd happened on the initial send)
I have a few questions and comments on the ANS Plan.. If these are naive
or ignorant, please be patient. Standard disclaimers, of course.
I don't understand the reasoning behind the "attachment fees" paid to ANS
by the midlevels for end customers which attach to the midlevel. Why in
the world does ANS get a piece of every single customer of every midlevel?
It would seem to be more reasonable for the midlevel to pay only for the
size of its data pipe(s) to ANS (and its COMBit traffic), and have what
happens on the midlevel side of the gateway be essentially invisible to ANS
from a business/revenue perspective.
Allowing ANS to bill the midlevel for each customer that midlevel attaches
seems to have some frightening implications:
(1) end customer attachment fees are anticompetitive
By "fixing" a category/price structure for attachment, ANS in effect gains
the ability to control the baseline price for connectivity. The midlevel
must pass the attachment fee along to its customers in order to recover
cost, therefore ANS sets minimum prices for everybody. This reduces the
ability of the midlevels to compete on a price basis. The effect of this
might be minimized if the midlevels were given the ability to participate
in determining the attachment category/price structure.
(2) inhibits "very low end" connectivity
The attachment fees listed in the document would tend to indicate that
connectivity is still going to cost the end user a good bit. What does
this do to the ubiquitous networking idea? One goal (at least in my mind)
of the whole commercialization effort is to make the resources more widely
available. Unless very low end service can be priced at a level comparable
to phone service, the low end will not flourish. Given the ANS plan, it seems
to me that it would be very difficult for midlevels to profit by providing
very low end service.
(3) gives ANS unnecessary leverage
The costs-to-operate which ANS incurs on a per-midlevel basis are very
closely related to the bandwidth of the connection and the overall
traffic and usage of that bandwidth. Getting a chunk of change for
every customer on the other size of the midlevel's gateway is great for
ANS, but is IMHO greedy and unnecessary. In addition, ANS apparently
intends to compete with the midlevels for end customers (I gather this
from the Cooperative Agreement statement). SO --- ANS gets the buck
whether or not they get the customer. I'm sorry, but that's not the
way a free and open market works!
My suggestion: charge for data pipe capacity only. If the midlevel
signs more customers than can be accomodated by the single pipe, ANS
sells them another pipe. This seems fair and equitable.
Okay, somebody clue me in: why are these arguments ill-formed and
wrong? :)
Yrs,
Jeff Bone
