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From: rick@uunet.uu.net (Rick Adams)
Newsgroups: news.admin,news.misc,comp.mail.uucp
Subject: Re: New rules for UUPSI
Summary: rational
Message-ID: <124940@uunet.UU.NET>
Date: 9 Mar 91 00:49:32 GMT
References: <1991Mar04.221119.5075@utoday.com> <1991Mar5.141606.1797@uu.psi.com> <1991Mar07.014612.4537@utoday.com>
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> Our fixed price methodology stands in constrast to the usage based
> service providers who want to encourage as much use as possible since
> they bill according to this use.

Funny, I don't remember you being around when we discussed fixed rates
versus connect based charging. Actually, I dont even remember you being
in the UUCP business until about three years after we made that decision.

It's fascinating how you were able to determine our motivation when
separated by time and space (and facts...) Anyway...

We originally examined fixed prices and rejected them as unworkable.
We wanted a system that would scale into the thousands (even though
this was a "crazy" concept 4 years ago).

We settled on the time based charging (note that this IS different
than volume based charging) as the most equitable way of recovering the costs.
(Notice that we did chose a fixed base charge in addition to the variable.
The rational was that the fixed charge paid for the fixed expenses: e.g.
rent, salary, computer and that the variable charge paid for the
items that had to increase as the load went up: e.g. adding modems,
serial ports, memory & cpu [on top of the base system. More simultaneous
uucicos use more memory and cpu].

The connect based pricing encourages efficiency, not taking as much as
possible. If we wanted to force usage up, we'd mandate everyone
accepting a full newsfeed rather than allowing newsgroup level selection.

A fixed price scheme does not encourage people to move the data as efficiently
as possible. In fact it encourages them to use slow modems and make
poor use of resources. One port on a machine can serivce 24 hours
of connect time. You could service 32 users at 9600 bps for
the same resources a 300 bps user hogs (presuming equal amounts of data).
With no message units or connect charges, why should anyone bother.

I'm convinced that fixed charging breaks down completely at higher
numbers of customers (somewhere in the hundreds). You MUST encourage
people to be as efficient as possible to keep things economical for all.

When you charge by the hour, you encourage people to buy faster modems.
(Dumping a 2400 bps modem in favor of a trailblazer would reduce your
connect charges by a factor of 4 or more. It probably pays for the
cost of the modem in 6 months or less. Thats a business case most
managers can accept.)

Fixed rate pricing effectively has the efficient users subsidizing the
inefficient users (I.e. they use different amounts of computer resources but
pay the same). We chose to attempt to make everyone pay their fair share.

PSI offers fixed rates with 81 users (count from the current uucp map).
If they plan to reach thousands they'll have to charge based on resource usage.

Things look real easy from two orders of magnitude smaller...

---rick