Internet Pricing in Practice

While Internet pricing has become fairly standardized in the U.S., the situation is not so overseas.

In New Zealand, their government provided nu subsidy for connecting the island to the international network, meaning the cost had to be passed along to the customers. Each of six universities agreed to chip in to cover the costs, and they agreed that volume charging would be a fair approach.

EN: I'm skipping a good bit of information about how the network within the islands was configured - will mention it if it becomes germane, but the granular details seem excessive.

An early problem was inbound traffic: while universities could set policies to govern the usage of their own staff, they had no control over inbound e-mail from external sources. Even so, this did not become an issue, as inbound traffic was roughly proportional among the sites to their outbound.

Another issue was public access, but universities created commercial services, reselling some of their own bandwidth to the public in their area. There was no central agreement, each university could charge what customers in its area were willing to pay, generally based on a scake related to volume, and the geographic locations of the data centers determined which markets were served by which universities.

There was also the matter of bandwidth needs on the internal network. One example was a packet-video experiment that required higher capacity between two sites. It was agreed upon that the sites that needed higher bandwidth (which mean more expensive data lines) would bear the cost of serving their individual needs and transport costs on their internal network, which would be accounted for separately than its internet traffic (off-island).

EN: The authors present a case study, but do not seem to draw any conclusions. In the end, I suppose it's an example of an instance in which metered access worked well - providing adequate quantity to the market at a per-unit equilibrium price that the consumers were willing to abide.