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Binge On! - get your umbrellas out, stuff's hitting the fan.



> On Jan 9, 2016, at 08:01 , Jeremy Austin <jhaustin at gmail.com> wrote:
> 
> On Sat, Jan 9, 2016 at 5:06 AM, Mike Hammett <nanog at ics-il.net> wrote:
> 
>> 
>> The best solution for everybody is the solution most consumers are adverse
>> to, which is usage based billing. Granted, many times the providers have
>> shot themselves in the foot by making the charges punitive instead of based
>> on cost plus margin. Reasonable $/gig for everybody! :-)
> 
> 
> I'm tempted to make an analogy to health care, insurance, and universal
> coverage, but I'll abstain.
> 
> Usage based billing alters the typical hockey stick graph: the 10% of users
> using 80% of the bandwidth are otherwise subsidized by the long tail.
> 
> As an ISP, usage-based billing is more sensible, because I would no longer
> have to stress about oversubscription ratios and keeping the long tail
> happy. But usage-based models are more stressful for the consumer; I think
> I disagree that it's the best model for everybody.

As much as I love to criticize T-Mo for what they do wrong (and there?s plenty),
this is one area where I think T-Mo has actually done something admirable.

They have (sort of) usage-based billing.

For $x/month you get Y GB of LTE speed data and after that you drop to 128kbps.

You don?t pay an overage charge, but your data slows way down.

If you want to make it fast again, you can for $reasonable purchase additional
data within that month on a one-time basis.

I would like to encourage other carriers to adopt this model, actually. If
Verizon had a model like this, I would probably switch tomorrow assuming
their prices weren?t too far out of line compared to T-Mo.

> Let me be a consumer advocate for a moment. One of the reasons consumers
> are averse to usage-based billing is that the tech industry has not put
> good tools into their hands. While it is possible to disable automatic
> updates, set Windows 10's network settings to "metered", and micromanage
> your bandwidth, in general:
> 
> The Internet (from the non-eyeball side) is designed around a free-feeding
> usage model. Can you imagine if the App store of your choice showed two
> prices, one for the app and one for the download? The permission-based
> model on Android would have requests like, "This app is likely to cost you
> $4/week. Is this OK??

Kind of an interesting idea, but to me, the reason usage charges induce
stress has ore to do with the fact that they are kind of out of control
pricey first of all and second of all that you start incurring them without
warning and without any real ability to say no on most networks.

That?s why I actually like the T-Mo strategy here. With existing tools,
the customer has full choice and control about ?overage? costs even if
their data usage remains somewhat opaque.

> I don't know all the reasons that satellite provider Starband shut down,
> but that was a usage-based billing market; and it would never have been a
> 'reasonable' $/gig.  I'm working to step into the hole they left, and
> you're right that customers don't want a usage-based model to replace it.

Because their operating costs overall exceeded the value perceived by consumers.
As a result, they could not sell their product to a critical mass of consumers
at a price that would allow them to continue operations.

> In addition, let's say I know of an ISP that makes 10% of its revenue from
> overage charges. Moving to a purely usage-based model would lower ACR, as
> it would have to charge a more reasonable price/gig; that top 10% of users
> won't replace the lost revenue. So even providers may have little incentive
> to change models, particularly if they have a vested interest in inhibiting
> the growth of video or usage in general.

How can an ISP make 10% of its money from overage charges unless they are
doing usage-based billing? If you?ve got an AYCE plan, you don?t have
overages. If you don?t, then you have some form of usage based billing.

The varieties of usage based billing that are available are a far less
interesting exercise.

Owen