2014-02-21

Why you should want metered INET?

When people think about metered, they may think about mobile roaming or old outrageous per minute PSTN billing. Those are not fair prices, they are not what I'm talking about.

Also INET should be always on, billing should take this into consideration, maybe once you exceed your paid capacity, your connection is policed to 256kbps unless you pay for more. You could get notice when this limit is nearing by SMS and Email.

Flat-rate billing is based on assumption that on average INET is not used much at all, in such scenario it works. Consumers get flat-rate stove-gas in Helsinki, because its use is almost non-existing. But services like Youtube and Netflix which are relatively new can alone be 2/3 of all your traffic, meaning what ever average use you planned for, it's not true, average use is increasing as more services users care for appear.


1. Quality

When you pay flat rate there is financial incentive for your operator not to provide you bits, every bit not provided improves your margins. Operators today regularly keep some ports congested, because it would be expensive to upgrade, instead they try get someone else to pay for it, if they have the leverage.

If consumers pay for bits then delivering bits means more money and Internet quality is market driven fact, everyone has good Internet.

2. Equality

I may stream HD content whole day just to have background noise, my retired mother might check email 3 times per week, yet we pay the same. Clearly my mother is subsidizing my use, considering her minuscule pension is 1/5th of my still moderate wage, it does not seem very fair at all.

Should I pay same for electricity, petrol or grocery shopping as everyone else? In post-scarcity society we wouldn't pay for anything, but unfortunately we're not there yet.

http://www.telecompetitor.com/jdsu-less-than-1-of-users-comprise-over-50-of-lte-usage/

3. Free market

Eyeball providers know that providing bits is bad for business, so if you are large enough like FT or Comcast you can extort money from content owners by keeping your transit ports congested. This causes consumers to complain to content shops and forces content shops to either lose business to these consumers or pay FT/Comcast/etc premium rate to access their network. This premium rate isn't anything to sneeze at, it can be four times the cost you pay for IP transit.

So essentially consumers are paying part of their access indirectly through content shops.

In addition to the clear inefficiencies that indirect billing causes this is also highly anti-competitive, if you are small provider you lack the leverage to extort content owners making it much harder for you to compete with the market leaders, over time this creates de facto monopolies.

http://www.lightreading.com/cable-video/ott/cogent-gearing-for-another-peering-battle/d/d-id/707831?

What might happen if some eyeball operator would change to fair per-use billing over-night? I'll assume very naive model as I'm not ready to give this sufficient thought. Let's assume they create scheme which delivers exactly same amount of money from consumers as they get today, 1/3 pays more, 1/3 pays same and 1/3 pays less.

I would guess the obvious outcome is, 1/3, the heavy users, switch to alternative provider if such exists in their market. This removes huge quantity of capacity, so essentially provider can save all CAPEX spending to the network.

What would happen to the networks who got these 1/3 heavy users? Their business case would get radically poorer, as they didn't get enough regular users to pay for those heavy users, so they would struggle to deliver the bits leading to congested poorly performing network.

Heavy users who want quality, would have to switch back to a network which financially can and will deliver the service they want and other operators now struggling with broken fundamentals would need to implement same billing scheme.

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