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If bandwidth is scarce there's always an incentive to go towards "pay for what you use" schemes, though. It's like an insurance "death spiral"[1] -- if one pro

If bandwidth is scarce there's always an incentive to go towards "pay for what you use" schemes, though. It's like an insurance "death spiral"[1] -- if one provider provides fixed-cost internet (or wide "bands"), the customers who use the least data will subsidise those who use the most. If another provider offers them internet at the true marginal rate, they'll move there. After they've moved on, the fixed-cost internet provider has to increase its rates, rinse and repeat. Of course, customers may prefer to be insulated in the months they use more data than usual, and moving between providers may not be free, or they may just not care at all... 1: http://en.wikipedia.org/wiki/Death_spiral_(insurance) http://en.wikipedia.org/wiki/Death_spiral_(insurance)

yellowapple 12y ago
> If bandwidth is scarce That's a big "if". And even if bandwidth is indeed scarce, then that's the problem that needs to be solved by building out one's network; punishing users for using the network is not viable in the long term (especially when folks like T-Mobile, as I've mentioned elsewhere in this discussion, are able to offer both throttled and unthrottled unlimited data plans without issue on a network that's probably nowhere near as built-out as those of AT&T and Verizon). > Of course, customers may prefer to be insulated in the months they use more data than usual This is exactly why the low-data users in networks like T-Mobile's and Sprint's typically don't mind subsidizing the high-data users (not that they're really subsidizing a whole lot, seeing as their respective unthrottled unlimited data plans cost more than their respective throttled unlimited and capped data plans). Having an unlimited data plan (throttled or otherwise) provides the peace-of-mind that you won't ever be charged extra based on your data usage, and that's a pretty big win for a lot of customers (especially when coupled with T-Mobile's data rollover).
im3w1l 12y ago
The transaction cost is often higher for pay as you go (Did I use up my cap? I hope next bill wont be too large! Need to remember to top up soon). Those who use the least, can then feel that it is easier to slightly overpay for fixed pricing.

yellowapple 12y ago

> If bandwidth is scarce That's a big "if". And even if bandwidth is indeed scarce, then that's the problem that needs to be solved by building out one's network; punishing users for using the network is not viable in the long term (especially when folks like T-Mobile, as I've mentioned elsewhere in this discussion, are able to offer both throttled and unthrottled unlimited data plans without issue on a network that's probably nowhere near as built-out as those of AT&T and Verizon). > Of course, customers may prefer to be insulated in the months they use more data than usual This is exactly why the low-data users in networks like T-Mobile's and Sprint's typically don't mind subsidizing the high-data users (not that they're really subsidizing a whole lot, seeing as their respective unthrottled unlimited data plans cost more than their respective throttled unlimited and capped data plans). Having an unlimited data plan (throttled or otherwise) provides the peace-of-mind that you won't ever be charged extra based on your data usage, and that's a pretty big win for a lot of customers (especially when coupled with T-Mobile's data rollover).

im3w1l 12y ago

The transaction cost is often higher for pay as you go (Did I use up my cap? I hope next bill wont be too large! Need to remember to top up soon). Those who use the least, can then feel that it is easier to slightly overpay for fixed pricing.