Friday, January 8, 2016

Ration or Use Prices: There is No Other Way to Manage Use of Network Resources

All the arguments about network usage aside, “networks are finite resources, and there are only two possible ways of allocating those resources,” says analyst and consultant Martin Geddes.

Either there is a market for a “quantity or quality” and the price mechanism decides who really values it, or here is rationing of resources by some decision process imposed on users.

“There is no third option: pick one of the above,” Geddes says.

In other words, we have the choice of using a price mechanism, or rationing. Geddes argues that all T-Mobile US customers essentially win when Binge On is enabled, because overall network load is reduced.

Some prefer rationing, even if that is not what they claim is the case. Others prefer price mechanisms. Congestion is actually a form of rationing. So is Binge On.

Some argue use of price mechanisms would work better, in part because a price mechanism allows buyers to decide how much they want to pay for, and encourages them to consider alternate ways of satisfying their bandwidth demand.

That is why Wi-Fi offload works. People choose to use it, instead of staying on the mobile network, because there are actual or potential cost savings.

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