[1976] in Commercialization & Privatization of the Internet
re: ANS Pricing Model
daemon@ATHENA.MIT.EDU (Ken Laws)
Tue Jan 14 14:15:20 1992
Date: Tue 14 Jan 92 11:13:37-PST
From: Ken Laws <LAWS@ai.sri.com>
To: com-priv@psi.com
In-Reply-To: <CMM.0.90.2.695394999.almes@home.ans.net>
> This is an issue where
> big mid-levels and small ones will naturally have different views.
ANS is trying to hammer out a rational compensation policy that
will satisfy a range of high-capacity customers that it wishes
to serve. Great; I wish them success. (Like others on this list,
I suspect that the CO/RE distinction is a poor foundation -- but
ANS may be stuck with it. Other backbones will provide pure CO
connections, and customers will be able to choose. NSF's support
may become a less important factor as the years pass, or NSF may
find that direct subsidies to users are an improvement over its
current role as a regulatory agency.)
Given the CO/RE distinction, and other self-imposed constraints,
it may be that ANS cannot find a single pricing policy that is
perfect for all customers. If it finds a compromise that is
generally acceptable, it leaves itself open to later competition
from backbone vendors that want to better serve segments of the
market. One vendor may attract the smaller regionals, another
may try to grab the largest ones.
I suggest that ANS consider offering two (or more) billing plans,
just as the phone company does. Some regionals may want to
pay by the customer, others may prefer to pay for capacity.
Some may want a flat rate per connection, others may want to
pay for use. (Universities, for instance, are going to have
a heck of a time adjusting to pay-per-packet, even if the total
cost is less than they now pay. An immediate result may be
refusal to carry Usenet newsgroups that incur charges.)
Per-packet charges are the only ones that require expensive
technological solutions for real-time tracking, and you're already
committed to providing such billing. Other billing methods are
trivial, and administrative complications are a small price to
pay for keeping each customer happy.
In offering such plans, ANS would obviously have to adjust the
rate of each so that it makes as money as it would from a
compromise solution. There would be no net savings to the
regionals at first, but customers would be able to cut costs
by modifying their usage patterns. A first cut at equitable
rates could be made by equalizing the marginal profit per
sign-up, so that ANS really doesn't care which option a
regional chooses. (I know, it's not really that simple.)
When software designers have to make difficult design choices,
they often insert a user-settable parameter so that the ultimate
user can make the choice. This is considered user-friendly.
Indeed, interface customizability created much of the early
Mac enthusiasm. The opposite approach is perceived as fascist.
-- Ken
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