🚀 go-pugleaf

In article <47uhoj$p8b@vanbc.wimsey.com>,  <vanepp@vanbc.wimsey.com> wrote:
>"D. Cartwright" <dcartwri@Express.CA> writes:

>account to phone line ratios and/or "unlimited" not being unlimited. There
>are a number of providers around that believe in charging the customer for
>what they use (which of course drives the heavy users to the "unlimited"
>places ...).

ISP's are kind of like restaurants. If you have the only restaurant in town
and you decided to that you would offer a smorgasboard for $19.95 (including 
desert and coffee) you would probably do ok. It's not too unreasonably high
and if there is no competition then even people who don't eat too much will
eat there. You just balance the costs so that on average your cost of
providing the food is less than that. 

Now if someone else opens up accross the street and makes their menu a la
carte you may have a problem. All those people on diets, or people who think
that the quality of your food is too low may choose to go over there and pay 
only for what they eat (saving money) or pay more and get better quality.

The only problem is now you have fewer people, and all the people left are
the big eaters. Before they balanced out with the people who didn't eat
much. But the light eaters left because they are getting a better deal across 
the street. So you have two options. Either reduce the quality of your food 
even farther or raise prices so that the heavy eaters are paying for what 
they use.

The moral is that when you have multiple billing options, users will
gradually migrate to the one that costs them the least. In the above case
and in the case of ISP's this means that heavy users will graduate to plans
that promise a flat price for large amounts of time and light users will
graduate to plans where they pay only for what the need and want. An
interesting side effect of this is that the users and providers of the flat
rate service generally are not happy. The original plan was to have the
light users subsidize the heavy users but now that they have left the ISP
can't continue to provide the same level of service. On the other hand the
light users and their ISP are happy because the one is paying only for what 
they need and the other is not loosing his shirt providing it.

-- 
Stuart Lynne <sl@wimsey.com>      604-933-1000      <http://www.wimsey.com>
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