[lsc]

The reason why we often "charge $x per GB after y GB transferred per month." is that this is simple and the customer can understand it. Usually the idea is that metering costs more than the bandwidth, up to a point, so you get a 'don't worry about it' quota, and then a punishing price after that. Me, I limit people after the 'don't worry about it' price, because, well, the sort of people who are my customer don't want to get hit by unexpected bills.

what would that look like if you had the 'don't worry about it' quota with a more reasonable price on overages? I don't know. It used to be that you'd set the 'don't worry about it' quota a little too high, 'cause with the unreasonable cost of overages, most people would error on the side of not using it all.

(metering costs more for both the provider and the customer, but mostly the customer; the provider side can be automated, so it's largely a fixed cost. The customer usually prefers a flat rate over a variable rate, even if the variable rate was slightly cheaper on average, because variable rate billing means that the customer needs to pay attention, which is expensive.)

When dealing with more savvy customers and selling amounts of bandwidth that matter, charging on the 95th percentile is pretty common.

That said, any major ISP who claims it costs them more than a few pennies per gigabyte to move traffic is flat out lying.

[Bo102010]

"That said, any major ISP who claims it costs them more than a few pennies per gigabyte to move traffic is flat out lying"

Not lying, but confused (see my comment below) and measuring at the wrong margin.

[lsc]

unless their load is /way/ more peaky than average, they are most likely lying. The people running ISPs know this stuff. I mean, unless their margin is so high that bandwidth costs don't matter, getting different customers with different peaks is what ISPs /do/ (well, it's what transit providers do, and any ISP of sufficient size eventually starts acting like a transit provider.)

[Bo102010]

I'm saying the engineers may know it, but their bosses _do not_.

[lsc]

It's possible? but I'd be very surprised if this was common. First, it's fairly core to the business of being an ISP; second, it's a fairly easy concept to grasp. I could pretty easily explain the concept to someone who is average; I mean, most upper management looks kinda dumb compared to Engineering, but they are usually above average, even if they usually spend more points on social stuff that doesn't correlate with G.

This would be like saying the president of ford motor company doesn't understand the difference between the EPA 'city' and 'highway' mileage numbers, and how to game each. Sure, if it's convenient, he might claim ignorance to the press, but there's no way he doesn't understand something that central to the business.