One interesting thing is our baseline of what we believe current cell phone service to be. You are paying US$0.7/minute for every minute you use? The plans I own are ~$US50 for ~400/PrimeMinutes/Month (and enough off-prime that I can never use them) with ~US$0.4/minute after I drain the initial pot. This is per phone. Is NZ really that far off in price?
As far as quality, I have ALWAYS found that re-dialing fixed any quality problems I had. That is, some calls come up (or develop after 10 minutes in the call) a bad echo, presumably based on a mismatch of echo cancellation technology with the realities of the wireless line (or bad implementation by my service provider's infrastructure provider). Hang up, redial, voila, no more echo. Similarly when I do call in traffic and get a "too bad for you try again later" message, I do try again later, about 3 seconds later. I am not even sure I've ever had to try a 3rd time, the 2nd time gets me through so often. Finally as to voice quality, I have simply never had a voice quality issue with any CDMA phone I have used (or any AMPS phone for that matter). If the call is up, the voice quality is good.
So a very interesting difference in what we experience as "current" cellular service. But I am not sure that that actually impacts materially on the Cat's Eye discussion.
One thing that seems patent to me is that in a World Trade Center type disaster, no realistic pricing scheme is going to provide the capacity to clear the queues of calls and still maintain the gold standard of service you are suggesting. Suppose the cellular system offers calls with 10X pricing difference for each of the last 5 calls on the system, so it might go $US.1, $US1, $US10, $US100... $US10,000/minute for the last call on the sector. I suppose what you do at that point is start kicking off the 10 cent callers, because you can't offer another call at that point. I guess you could give some more capacity if you have as part of your contract that "Your call may be dropped if sector utilization causes more than a 100X price difference between your call and the next call on the system, but we guarantee this won't happen to you more than once per year." The caller still has the ability to get his call through, just at a much higher price as he gets bounced.
But is this realistic? I am in R&D and I am constantly seeing projects proposed with a lot of complicatedness and what seems to me very little return for the complication. I think of these as "dancing on the head of a pin" in reference to the old question about the angels. Interesting exercises in logic unlikely to ever make it into reality. My initial reaction to an extreme cat's eye is just that. But it is just an initial reaction.
The idea that Cat's Eye can get ARPU down in a system is interesting, and my first thought is not, but maybe it is yes. For a given system, total revenue to make the business go vroom has to be the same. With Cat's Eye can/will you really get more people on that system, and keep them happy to be there? You suggested cutting average bills down by 2/3, I think. If you have 3X the customers on the system, than by definition you are "buying" those users down in busy hour usage by 2/3. This might actually work! Busy hour usage is pretty spikey and variable. It could be that for the person who wants to call home in traffic but is willing to wait 10 minutes that they COULD get their call through with delays of only 10 minutes. Phones would clearly be programmed with a "max price" feature that lets you push the "send" button then the call queues in your phone until the Cat's Eye comes down to where you set your threshold. Then when your call can be sent, your phone rings, and if you press the "send" button within a few seconds, your call is made at your max tolerable rate.
To be a business success, I think your Cat's Eye program has to appeal to BOTH the money-sensitive user AND the time-sensitive user. The time-sensitive user is, after all, the one who is willing to make the last call in the busy system, and so, like the business traveller, is the one who actually makes the system profitable. This merge's in with my thought that Cat's Eye can best be done as only one pricing option. I think you need to tell the time-sensitive guy "you can pre=purchase 400 anytime minutes for $50" or somesuch like that. You can, by contract limit that person to whenever the Cat's Eye is reporting less than $100/minute, and tell him he will pay the Cat's Eye rate for any calls he makes at over $100/minute. My point is that if the Cat's Eye is a good idea, it will bring your system revenue during its underutilised times, which can be used to offset how much you must get from the busy hour to "close the loop" financially. So if Cat's Eye is a good idea, it lets you sell buckets of anytime (or in-fact "near-anytime" minutes) at a better price than the non-Cat's Eye companies can do.
Quality of service: you will still have a QOS problem if your customers find too often that their cost to make a call is too high. The only way to solve that is to limit the number of customers per infrastructure. Or similarly, build out infrastructure when usage gets above some threshold. Interestingly, Cat's Eye will help with this. The key would be build out infrastructure when the revenue-per-channel-element gets "too high." Even better, rank order sectors for expansion by their revenue-per-channel-element and build them out as long as your cost of capital is larger than the expected extra revenue by some good margin. That works quite well, as sectors with good non-busy hour usage make it onto the list anyway, but sectors beat to death in the busy hour and ignored other times make it onto the list first.
Your contract with your subscriber's should really insure a QOS level in terms of "Across the system, No More than 1% of calls will be made at prices above $10/minute." or some such. This guarantees to the customer that IF you continue to grow revenues by adding customers or by adding minutes-per-customer or by customers-willing-to-call-in-busyhour, that you will balance that with build out of infrastructure.
It is very interesting. Maybe a solution for my concern of complicatedness is to have only ~3 levels of pricing, Premium, Anytime, Offtime.
Maybe this is a cool idea.
My own prejudice for all you can eat comes from telecom, internet, and wireless personal feelings about bills. I have NEVER bought an internet service that charged by the hour. Mostly I had "free" internet through work or school, but by the time I purchased internet (DSL), I was only interested in always-on all-you-can-eat. The idea of buying connectivity vs. buying Mbits seemed right to me. But maybe it isn't. Despite the availability of wireline long distance at all-you-can-eat deals, I have a complicated service which charges me different rates to different numbers within different states based on the carrier's underlying costs. Most carriers average these statistically to come up with a single rate to that state, but I actually LIKE "buying" that risk as I know most of the numbers I call are in the lower rate parts of states.
Your comments that with no marginal costs and only fixed costs, Cat's Eye becomes MORE sensible rather than less seem right on. My bad.
My comments that 6 second vs. 1 minute billing is a gimmick I still stand behind. The reaon is that your provider could offer you, for example, NZ$0.7/minute for 1-minute billing or NZ$0.9/minute for 6-second billing. Your carrier would set those prices so that its expected revenue was the same. You would be charged with gaming the system to try to beat the company by altering your behavior to fit one price plan or the other. There would always come some price-difference where you would choose the 1-minute over the 6-second billing, and the interesting thing would be that unless you did more to alter your habits than the average customer, it really wouldn't matter which plan you took because the company knows usage statistics way better than you do. I would choose the 6-second billing at almost any price because then I would know that my best strategy was to keep my calls short, as opposed to having to try to keep track of the 1, 2, etc. minute marks, which would be odious to me.
Anyway, thanks for moving me off my dime. I had bought into the "buy connectivity" model without enough thought to the alternatives. The fact is, busy-hour set's the cost of the network, so it should be the most expensive time to call, anything like Cat's Eye which increases revenue outside busy hour is absolutely worth a look or three.
One of these days...
Ralph |
