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

[Mike Hammett <nanog () ics-il net>]

My point on usage based billing isn't meant to stifle anything, but to provide equitable service to everyone at a fair 
price. $10/gig certainly isn't a fair price for almost any network. People pay variable rates for water, electricity, 
gas, food, etc., etc. 

Is it necessarily a bad thing if people stop to think about what their usage costs? 




----- 
Mike Hammett 
Intelligent Computing Solutions 
http://www.ics-il.com 



Midwest Internet Exchange 
http://www.midwest-ix.com 


----- Original Message -----

From: "Jeremy Austin" <jhaustin () gmail com> 
To: "Mike Hammett" <nanog () ics-il net> 
Cc: "North American Network Operators' Group" <nanog () nanog org> 
Sent: Saturday, January 9, 2016 10:01:47 AM 
Subject: Re: Binge On! - get your umbrellas out, stuff's hitting the fan. 





On Sat, Jan 9, 2016 at 5:06 AM, Mike Hammett < nanog () 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. 


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?" 


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. 

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. 


-- 





Jeremy Austin