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Hard caps (or equivalent pricing) are wrong
From: David Farber <dave () farber net>
Date: Thu, 7 Aug 2008 01:31:38 -0700


________________________________________
From: Dave Burstein [daveb () dslprime com]
Sent: Wednesday, August 06, 2008 10:06 PM
To: David Farber
Cc: Bob Frankston
Subject: Hard caps (or equivalent pricing) are wrong

Dave, Bob

    You're on target saying there should never be a hard cap, because
the net is fundamental communication. Pricing usage above the cap at
1000% or higher markups should also be prohibited, because it has a
similar effect. The prices at Bell Canada, Time Warner and others are
ten+ times the effective cost of bandwidth, which is unreasonable. I
wrote carelessly mentioning a "cap" in my note before.

     What I should have said was that charging reasonably for the
traffic you generate is fair, but the charging shouldn't start below
the level at which you really are adding major cost to the network.
To put numbers on it, Comcast is right in not charging until you are
using over 250 gig a month, and NTT at 30 gigabytes per day in
upstream. They have very few users over that level, so in practice
they can do what Verizon does and not bother. Their cost per gigabyte
per the best available numbers is 40 to 70 cents per ten gigabytes,
so I think it fair to charge a dollar or a little more for each 10
gigabytes after that. Moore's law should double the "included" figure
and halve the "overage" in 3-4 years. In practice, the bandwidth
costs are so low most carriers can and should emulate Verizon and not
bother charging.

      Better cost data very much appreciated, and rural, small, and
perhaps wireless carriers have very different costs. I'm writing an
item on that problem right now.

      Sorry I was careless. You're right.
db





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