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List:       nanog
Subject:    Re: [nanog] Re: Microsoft offering xDSL access
From:       "Eric M. Carroll" <ecarroll () rogers ! wave ! ca>
Date:       1998-01-26 6:28:17
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> The business models on which this stuff is based are full of assumptions
> that anyone who has been in this business for more than a week knows won't
> work in the real world.

While most business models require a feedback loop that is frequently
missing in Internet businesses (assume traffic characteristics, measure
network, correct business model) all of these kinds of tiered service
depend on classes of customers and their usage patterns. If I have classes
of customer that uses a T1 service differently, it is completely
reasonable to sell it differently. For example, if I have a 10 Mb/s cable
modem, but *on average* use it like a 28.8kb/s modem, then why should I
pay for a full 10 Mb/s of bits that I am not sending/receiving? If I get
the 10 Mb/s access but it is engineered to deliver 56k based on my
customer class useage patterns, is that fraud? I think not. What if I
advertise it as 100 times faster than a standard modem? Still not fraud.
Now, if I as a residential cable modem user set up a pay per view web
site that makes cool site of the world, I am do not fit the class of
customer profile. The key issue in all this is what the provider will do
with outliers, and if the prediction of outliers matches the experience of
outliers. 

Another way to look at this is that it is in effect a pay per bit system,
that, combined with customer useage assumptions, gives a a tiered service
pricing offered over one type of access. Most ISPs do not price their T1 service
assuming 100% useage 100% of the time. $35/mo over a T1/ADSL/Cable modem
is just an extention of this practice with different assumptions.

Eric Carroll			eric.carroll@acm.org
Tekton Internet Associates

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