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- Path: sparky!uunet!looking!brad
- From: brad@clarinet.com (Brad Templeton)
- Subject: Re: How is the Net financed and what does it cost?
- Organization: ClariNet Communications Corp.
- Date: Sat, 07 Nov 1992 01:31:52 GMT
- Message-ID: <1992Nov07.013152.18900@clarinet.com>
- References: <1d6kd9INN2ar@armory.centerline.com> <gmmsTB9w165w@mertwig.UUCP> <BxB93B.9yJ@exnet.co.uk>
- Lines: 27
-
- While we all like the distance independent model, the realities of data
- pipes are very similar to the phone system. The local pipes are used
- only on connections to or from local people, and the LD pipes are used
- on all non-local connections.
-
- Unlike the phone, it is true that you are on this net just as likely to
- connect to somebody remote as somebody local, bandwidth being equal.
- That may mean that they have to build lots of LD data pipe, and they can
- do flat rate pricing if it makes sense.
-
- Flat rate pricing has many advantages, but it does have a couple of
- disadvantages. Flat rate pricing works when you charge each user what the
- average user would actually pay under variable rate pricing.
-
- This means that most people are actually paying more than they would have
- paid under measured service, to subsidze the high volume users.
-
- Well, that's roughly how it works, because the other disadvantage -- under
- flat rate, people's usage changes, and people tend to use more. Ie. you
- do need to buy more raw bandwidth, or you end up giving people poorer
- service than you did under measured service if you charge the old measured
- service price.
-
- As it turns out, you usually charge a bit more than the averge you would
- have charged under measured service.
- --
- Brad Templeton, ClariNet Communications Corp. -- Sunnyvale, CA 408/296-0366
-