FC: Why per-minute Internet fees are a bad idea, by Andrew Odlyzko

[Declan McCullagh <declan () wired com>]

*********

Date: Sun, 18 Jun 2000 23:52:28 -0400 (EDT)
From: Andrew Odlyzko <amo () research att com>
To: declan () well com
Subject: FC: Wired magazine article on 1997 dispute


Declan,

Here is some work that documents the disadvantages of per-minute
fees.

Best regards,
Andrew








Three papers on the history of communications and its potential
lessons for the Internet are available at:

  <http://www.research.att.com/~amo/doc/networks.html>.

Hopefully they will be of interest to you.  Comments are invited.


1. Content is not king

   Telegraphic abstract:  The current preoccupation with content
   is a distraction.  Both currently and historically, people have
   been willing to pay far more for point-to-point communication
   than for content.  This suggests that content delivery will
   play a secondary role on the Internet.


2. Internet pricing and the history of communications

   Telegraphic abstract:  There are repeating patterns in the
   histories of communication technologies, including ordinary mail,
   the telegraph, the telephone, and the Internet.  In particular,
   the typical story for each service is that quality rises, prices
   decrease, and usage increases to produce increased total revenues.
   At the same time, prices become simpler.  The historical analogies
   of this paper suggest that the Internet will evolve in a similar
   way, towards simplicity.  The schemes that aim to provide
   differentiated service levels and sophisticated pricing schemes
   are unlikely to be widely adopted.


Both of the above two papers are essentially extended abstracts,
drawn from a more detailed work:


3. The history of communications and its implications for the Internet

   Telegraphic abstract:  There are repeating patterns in the histories
   of communication technologies, including ordinary mail, the telegraph,
   the telephone, and the Internet.  The goal of this work is to draw
   lessons from the evolution of all these services.  Little attention
   is paid to technology as such, since that has changed radically many
   times.  Instead, the stress is on the steady growth in volume of
   communication, the evolution in the type of traffic sent, the
   qualitative change this growth produces in how people treat
   communication, and the evolution of pricing.  The focus is on the
   user, and in particular on how quality and price differentiation
   have been used by service providers to influence consumer behavior,
   and how consumers have reacted.



Andrew Odlyzko


************************************************************************
Andrew Odlyzko                                      amo () research att com
AT&T Labs - Research                                voice:  973-360-8410
http://www.research.att.com/~amo                    fax:    973-360-8178
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