A Proposal for a Flexible Service Plan that is Attractive to Users and Internet Service Providers

Abstract

The current Internet Service Provider market does not offer different types of service plans for Internet access. The predominant pricing plan is a flat-rated plan. Since the number of new Internet users is still growing very fast, there is no real competition in the Internet market. Consequently, there is no incentive for Internet Service Providers (ISPs) to focus on certain user groups by offering more attractive pricing plans in order to differentiate themselves. However, as soon as the number of new Internet users stagnats, ISPs have to specialize on certain market segments. Then, the question raises what is an attractive service plan that is attractive for users, but allows ISPs to build a sustainable business. Based on empirical results of the INDEX project, we discuss a service plan for Internet access that might be appreciated by Internet users as well as by ISPs. This service plan combines the advantages of flat-rate pricing and usage-based pricing. Using this service plan, users will benefit by receiving a basic service, but are given the choice of higher quality whenever they demand. From the ISP perspective, it will help to focus on certain user groups and limit the peak load on their network.