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To: Gerald Walls who wrote (75511)	3/6/1999 2:25:00 PM
From: Jeff Fox	Respond to of 186894

Gerald, re:"US West wants almost twice as much for one-quarter the speed of a cable modem" Absolutely price is everything. It was the flat rate $20 per month deal that caused the Internet to explode. Three years ago the cheapest connection was $5 per hour! You were expected to log on, download mail and log off. "Surfing" was a rich mans diversion. I believe that the pot of gold will go to the first broadband service company that adopts the correct pricing model. Funny how these things are easy to do, but so slow in coming. One of those paradigm shift things I suppose. For those interested I set forth on a diatribe on this below. Feel free not read it if you don't care for speeches :) Jeff ---------------------- Connectivity Pricing What is the way to charge for communication that makes sense today? I am totally convinced that carriers must begin to charge by the megabyte transferred. The reason is simple if you think about it - all other models do not fit the technology. Phone co.s are trained to charge for connect time. But with packet switching there is no real thing as a "connection". All lines are always connected whether they are active or not. Its amusing to watch the phone co.s go to all kinds of trouble to artificially impose a "connection" model such as with ISDN and DSL. Enterprising folks will make $$millions with services that subvert there best efforts. As an example, today's "phone through the Internet" is doing this. Realize this is "voice" packaged inside a "data" model, then this "data" is transported on the "voice" network. And with this complication the price drops? Cool! This has become an industry conundrum. Rather than change the phone companies will try to outlaw this practice... Now broadband is being setup for its own debacle. They are providing high burst rate to customers, but only on over few channels shared by thousands. The average bandwidth per customer is much too low. But what is a "burst"? Nobody is defining this, but instead just assuming that customer need will be similar to that experienced by the typical ISP using phone modem connections. Hah! No way - a sizable minority of customers do use all they can get Why not if it cost no more than not downloading. For example look at Hughes' Direct PC satellite service; to the point look specifically at the newsgroup that discusses user issues with Direct PC. Hughes is trying to manage by policy - called "fair access policy". They seek to identify their heavy users an put a collar on their accounts. When a user uses "too" much bandwidth, they arbitrarily cut his data rate, often as severely as down to 56 Kbs! The result? One irate customer! This has invented the new expression, *I've been FRAPPED!*. Looks like Hughes has found the ideal method of ticking off the customer base. It is never a good thing to appear to be policing your customer. Now it is apparent that both "time" and "flat rate" neither fit with the nature of broadband. Why charge "per megabyte"? Simply this reflects the true nature of the infrastructure cost. Switching gear expense is a direct product of capacity and speed. Providers will be influenced to build out must efficiently if the pricing reflects this reality. Per megabyte fees allow customers to manage their own use without the crutch of technology limitation. Use more pay more. This is simple and in line with everything else in life. Notice this does not entail anything about what is in the content of the data. Consider what this does for a phone call! In this new world teen lovers can connect for pennies from across the world "just to hear each other breath" Breathing uses very few bytes. But chatter mouths might get shocking phone bills!