What types of pricing schemes are used?
Until recently, nearly all users faced the same pricing structure for Internet usage. A fixed-bandwidth connection was charged an annual fee, which allowed for unlimited usage up to the physical maximum flow rate (bandwidth). We call this “connection pricing”. Most connection fees were paid by organizations (universities, government agencies, etc.) and the users paid nothing themselves. Simple connection pricing still dominates the market, but a number of variants have emerged. The most notable is “committed information rate” pricing. In this scheme, an organization is charged a two-part fee. One fee is based on the bandwidth of the connection, which is the maximum feasible flow rate; the second fee is based on the maximum guaranteed flow to the customer. The network provider installs sufficient capacity to simultaneously transport the committed rate for all of its customers, and installs flow regulators on each connection. When some customers operate below that rate, the excess ne
Until recently, nearly all users faced the same pricing structure for In ternet usage. A fixed-bandwidth connection was charged an annual fee, which allowed for unlimited usage up to the physical maximum flow rate (bandwidth). We call this connection pricing. Most connection fees were paid by organizations (universities, government agencies, etc.) and the users paid nothing themselves. Simple connection pricing still dominates the market, but a number of variants have emerged. The most notable is committed information rate pricing. In this scheme, an organization is charged a two-part fee. One fee is based on the bandwidth of the connection, which is the maximum feasible flow rate; the second fee is based on the maximum guaranteed flow to the customer. The network provider installs sufficient capacity to simultaneously transport the committed rate for all of its customers, and installs flow regulators on each connection. When some customers operate below that rate, the excess network c
