RE: An Attempt at Economically Rational Pricing: Time Warner Trial

["Rod Beck" <Rod.Beck () hiberniaatlantic com>]

Hi Andrew, 

I don't think it is obvious that it is too expensive to justify metering in today's environment. Such a claim was 
definitely true a few years ago when end users were mostly sending email, instant messages, and downloading web pages, 
but innovation has probably changed the outcome of the cost/benefit analysis so that metering can be justified for the 
heavy users. 

Regarding stimulating demand, the only obvious way to increase revenues and profits in a flat rate pricing scheme is to 
add more users or bundle more products (voice, voicemail, television, etc.). I would argue that the US has reached the 
point where further increases in broadband penetration probably require either subsidies or government fiat or pressure 
(Korea, Japan, etc.). And the large American underclass doesn't that help the broadband penetration cause either. 

Indeed, the virtue of metering is that it gives the provider an incentive to stimulate demand. Flat rate pricing is the 
worst model in terms of stimulating supply and investment. 

My humble two cents. PS: I'll take a look at your papers. 

Roderick S. Beck
Director of European Sales
Hibernia Atlantic
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rod.beck () hiberniaatlantic com
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