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Data Pricing Sanity Maybe?

tbray.org

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Re: Data Pricing Sanity Maybe?

#31
post #6
post #2

This guy doesn't get consumer pricing psychology. It has been shown over and over again that consumers prefer fixed price, even if they have to pay more to get it. They don't want to be on a meter, they want a predictable budget. The telcoms don't set the dominant pricing model, the consumer does. There have been plenty of iterations of $/min and $/MB telcom plans already tried in the marketplace. And telcoms would p…

And the way to do that is: Fixed price for the first X GB, generous enough to cover ~90% of the users, variable pricing thereafter, and the aforementioned transparency about the status of your account. (In particular, text message alerts warning you when you've hit 90% of the limit, or some other active notification that you're going over, not just some abstract page that you could, theoretically, hit.)

This pricing model sounds to me like "the user is always punished."

You bought XGB this month. You didn't use it all? Ooops, you overpaid. Punished.

You used more? Ooops, you pay a higher rate for the overage. Punished.

How about we treat this like any other commodity and I get exactly what I pay for?

Re: Data Pricing Sanity Maybe?

#32
The major problem with usage based billing is that I'd need to evaluate the value of every bit I'm transferring. Was that cat picture really worth X cents? What about this blog post? And do I trust this app not to make a huge bill? Oh, I can't afford to download these updates now, surely nobody will try to exploit remote code execution holes on my box. My home web server got just slashdotted (hn'd?), how much will that cost?

Re: Data Pricing Sanity Maybe?

#33
post #26

Earlier quoted context omitted.

Why would you prefer pre-paid over being billed at the end of the month? The former is lending your carrier money at zero interest on a monthly basis.

Because prepaid limits risk. You never end up at the end of the month with a bill for 100s or 1000s of dollars and at the first sign of trouble you can switch provider.

You could just not pay the disputed bill until the matter has been resolved and switch providers in the interim.

Re: Data Pricing Sanity Maybe?

#34

First off, if we do go with variable pricing, the last thing we want is values to be denominated per MB. There is too much cognitive load on humans to think in terms of MB quantities. Second, variable pricing makes sense if those who use very little data get a discount off the amount this currently use.

But yet we price water and gasoline per gallon, natural gas per cubic foot, and electricity per kilowatt hour.

* in the US, others feel free to convert to your local units.

Re: Data Pricing Sanity Maybe?

#35
post #26

Earlier quoted context omitted.

Because prepaid limits risk. You never end up at the end of the month with a bill for 100s or 1000s of dollars and at the first sign of trouble you can switch provider.

You could just not pay the disputed bill until the matter has been resolved and switch providers in the interim.

With today's prices, you can rack up huge bills with legitimate usage; disputing such a bill is basically stealing. Pre-paid would prevent such problems.

Re: Data Pricing Sanity Maybe?

#36
"Fixed-price unlimited-volume data pricing is a totally, unfixably broken idea." -Bray

This "unfixably broken idea" is how the internet spread to the general population, 1995->present. That's 17 years. Seventeen years in which even very limited carrier competition brought prices way down and speeds way up. Does anyone remember how much a 128kbps ISDN used to run?

Seventeen years in which the typical consumer went from downloading mainly text and gifs to downloading mainly (bandwidthwise) lengthy videos, many of them high def. Despite the fact that, as Bray puts it, "once the network operator has your monthly payment, they’re powerfully incented to keep you from using the network."

Now any reasonable person can imagine how mobile might change things. But Bray gives such ludicrously short shrift to the power of flat-rate pricing it is hard to take anything else he writes in the essay seriously.

Of course the idea of unlimited usage is an illusion. Consumers know this. They have always known this in the deep and visceral way that only a flaky modem/ISDN/DSL/cable/EDGE/GPRS/3G connection can convey. But they like the trade offs: The ISP limits your bandwidth basically continuously such that your connection might slow down or outright disappear and such that latency might increase. In return, your bill is predictable.

ISPs have always worked this way. Always. You'd dial the modem bank and get a busy signal. Or you'd connect -- perhaps even through newfangled DSL technology, which in theory insulated you from your neighbors -- only to find the provider's upstream internet link was saturated. Or you'd jump on a cable connection and find it running at half speed because your neighbors were awake.

What consumers liked about "unlimited" was what it meant for our pocketbooks: Your use is unlimited as far as the bill is concerned.

Metered pricing is an illusion, too. The illusion is that you pay for what you use. But of course that's not true. No one is proposing dropping monthly mobile fees, you notice. So 0 bytes != $0. Also, having a million dollars to blow will not magically get you unlimited bandwidth. All the limits of network contention with fellow users, and all the limits of the network itself, are still there. Sure, other people might USE less data. But also, the telco might BUILD less infrastructure as a result. So in a way metered is the worst of all worlds: You still get the implicit limits and unreliability of a mass consumer network, PLUS new explicit limits that allow the telco to wallet-rape you.

It is amazing to me that someone as smart as Bray looks at this tangled mess of competing, differently- (but not-very-differently-) crippled versions of paid network access and actually accepts the abstractions at face value and, worse, writes off the arguably slightly less realistic abstraction as unworkable when that very abstraction is the reason he draws a paycheck from a company that sells web advertisements. I mean.

Re: Data Pricing Sanity Maybe?

#37
post #16

Earlier quoted context omitted.

Telco companies in other countries are able to do this. Why shouldn't companies in the US then be able to offer such a model? E.g., see "Bob" in Austria: http://www.bob.at/gigabob The table (for one of their plans) says: Included volume per month: 9 GB Cost per month: 8.80 Euro Each additional GB: 4 Euro Fee to activate the plan: 0 Euro Max. speed: 4 Mbit/s Commitment period: None I'd say this is pretty transparent t…

> Why shouldn't companies in the US then be able to offer such a model? They don't have to because they are in a government regulated cartel. Classic case of regulatory capture. The only free market in the US is the wifi sprectrum, which is providing the most value to US citizens.

If the industry is heavily regulated, the government should also regulate what the comment above points. The price should be clearly stated. Fine print should be forbidden.

Re: Data Pricing Sanity Maybe?

#38

First off, if we do go with variable pricing, the last thing we want is values to be denominated per MB. There is too much cognitive load on humans to think in terms of MB quantities. Second, variable pricing makes sense if those who use very little data get a discount off the amount this currently use.

But yet we price water and gasoline per gallon , natural gas per cubic foot , and electricity per kilowatt hour. * in the US, others feel free to convert to your local units.

Not sure about you, but my gas bill is $/therm(~100 cu ft) and my water bill is $/100gal.

Pricing data in MB (or KB!) is like billing for water by the cup (or Teaspoon!).

Re: Data Pricing Sanity Maybe?

#39
Another problem is that current network applications assume an unlimited data model. We would need an equivalent to the big yellow EngeryGuide label for data applications. The last thing I would want is some applications that just keeps sucking a MB here and a MB there in the background without my knowledge.

Re: Data Pricing Sanity Maybe?

#40
I was always a fan of a fixed cost to go towards the infrastructure and a variable cost based on network congestion.

On a phone, similar to seeing signal strength, you could see the current cost per min calculated by your location and current time.

People should be able to download stuff in off hours in what ever quantities they can. If there is a huge event that would normally overload the local towers, this would be a way of properly allocating network access to people who really need it.

It might take some time for people to get used to it, but a comparison to gas prices might be helpful.

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