Local Loop

Someone did a Google search for “how to price ip transit costs south africa”, and ended in my apache logs when they followed the search result to this site.

Having never worked in the ISP industry, I’m not really qualified to answer, but here goes anyway:

If you have this much bandwidth:

ZA can has traffic?

…then do this:

1. Randomly choose a price thats so expensive that it’s economically infeasible for your customers, then dial it back until you have ~100 reluctant customers.
2. Bill for transit by traffic volume in giga-bytes, call this a “quota”.
3. Hard-cap the “quota” so that the customer would exhaust it on the first day of month.
4. Expire (steal) the customer’s unused quota at the end of the month.
5. Oversubscribe like a lunatic, and then be vague about this to your customers.
6. Redefine “Internet access” to exclude certain popular protocols, and then buy a router that forwards those specific packets slower, or not at all.

If, on the other hand, you have this kind of bandwidth:

MOAR please.

…then do this:

1. Bill customers monthly for a 5-minute average traffic rate (Mbps).
2. Offer a variable per-Mbps discount if they commit to a minimum rate, and allow them to set the rate (to zero, if they like).
3. Don’t fine them for traffic spikes, instead, discard the top 5% or 10% of the 5-minute averages each month.

Here is the thing though, aren’t the graphs symptoms, and not causes of the pricing strategy?