[2152] in Commercialization & Privatization of the Internet
re: low-end users
daemon@ATHENA.MIT.EDU (Craig Partridge)
Tue Jan 28 17:54:18 1992
To: Roy Tennant <rtennant@library.berkeley.edu>
Cc: com-priv@psi.com
Reply-To: Craig Partridge <craig@aland.bbn.com>
From: Craig Partridge <craig@aland.bbn.com>
Date: Tue, 28 Jan 92 14:49:48 -0800
> Hasn't anyone ever heard of using some services to subsidize others?
Roy:
Sure -- CSNET did it for years. High-end customers were charged more
than what it cost to serve them to subsidize connections to universities
that didn't have enough money to pay for the service they needed.
But now that we're in the world of real business, that's often
a losing proposition. If you charge big customers extra to cover your
losses, I can decide not to have low end customers, offer your big
customers the same service for less, and still make a profit. Assuming
my service is equivalent, I'll take customers from you.
Now there are ways to market so that your big customers decide not
to run off for lower prices. Brand names do have a value. But you cannot
make the price differential too large or you'll certainly lose business.
So as a starting assumption, you should assume that folks pay what
it costs you to serve them.
Craig
