Internet Demand under Different Pricing Schemes

Abstract

The proliferation of electronic commerce has emphasized the need for multiple qualities of service (QoS) that meet user requirements for, e.g., best-eort services, transactional guarantees, prioritized services, and bandwidth reservations. When Internet users will be able to choose from a large selection of network services, an important question is whether this exibility will be appreciated by the user and how much value is placed on network resources. This paper focuses on user acceptance of dierent usage-based pricing models for network services as well as on which users benet from dynamic pricing. The analytic results presented here are based on pricing experiments conducted within the INternet Demand EXperiment (INDEX). The pricing experiments comprise per-minute and byte-volume pricing. After describing the experimental design and characterizing our subject pool using demographic data, we analyze user demand for Internet access by comparing the three experiments in terms of traÆc generation, QoS selection, and expenditure. Finally, we show which user groups will benet from such services.