Usage-based pricing

[Heather Morrison <heatherm@eln.bc.ca>]

Andrew Odlyzkow wrote an article a few years ago which points to 
the research showing that usage-based pricing discouraged 
internet use, even at very low per-use levels.  Please see 
"Internet Pricing and the History of Communications", at: 
http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf

As further common-sense illustrations of how usage-based pricing 
discourages use:

Telephones:  the most common pricing model for a land line is a 
flat rate for unlimited local calling, and long distance charges 
assessed by time.  In my experience, with this model, we don't 
think at all about the cost of local calls, but we do tend to 
think about the cost of long distance - even long distance calls 
to the people we love very much.  This is the attraction of an 
unlimited long distance plan - it takes this tendency to 
discourage use out of the equation. When we're out of town and a 
cell phone will incur roaming and long distance charges, we might 
use the phone - but most of us will only do so if this is 
necessary, and not for any longer than necessary.

Utilities have implemented metered pricing for electricity and 
water, precisely in order to discourage excessive use, because 
these resources are limited.

Libraries have implemented photocopier charges - not to prevent 
people from photocopying, but to avoid high costs for unnecessary 
photocopying - and, to save trees.  The purpose of these charges, 
often low charges such as 10 cents per page - is to discourage 
use.

Knowledge, in electronic form on the internet, is not a limited 
resource.  An open access article can be downloaded by millions, 
and still be there and be exactly the same for the next person 
who wishes to download.  There is no good reason to discourage 
use.

Sharing knowledge enriches us all.  When people in a poorer, 
rural, or developing country have the ability to learn and then 
to do research and contribute to our collective knowledge, they 
benefit - but, so do I.

Heather Morrison
http://poeticeconomics.blogspot.com