An efficient pricing mechanism would have the following structure: (1) a packet charge close to zero when the network is not congested; (2) a positive packet charge when the network is congested; (3) a fixed connection charge that differs from institution to institution. Current pricing is almost always limited to a fixed connection charge. The main difference in what we propose is the addition of usage-sensitive charge when the network is congested … The price to send a packet would vary minute-by-minute to reflect the current degree of network congestion … Each packet would have a ‘bid’ field in its header to indicate how much its sender is willing to pay to send it
Predictor: MacKie-Mason, Jeffrey K.
Prediction, in context:The 1995 book “Public Access to the Internet,” edited by Brian Kahin and James Keller carries the chapter, “Pricing the Internet” by Jeffrey K. MacKie-Mason and Hal R. Varian. MacKie is an associate professor of economics and Varian is a professor of economics at the University of Michigan. They write: ”An efficient pricing mechanism would have the following structure: (1) a packet charge close to zero when the network is not congested; (2) a positive packet charge when the network is congested; (3) a fixed connection charge that differs from institution to institution. Current pricing is almost always limited to a fixed connection charge. The main difference in what we propose is the addition of usage-sensitive charge when the network is congested … The price to send a packet would vary minute-by-minute to reflect the current degree of network congestion … Each packet would have a ‘bid’ field in its header to indicate how much its sender is willing to pay to send it … The network would admit all packets with bids that exceed the current cutoff amount, determined by the marginal congestion costs imposed by the next additional packet … Rejected packets could be bounced back to the users, or be routed to a slower network … We expect that bids would be set by three agents: the local administrator who controls access to the net, the user of the computer, and the computer software.”
Date of prediction: January 1, 1995
Topic of prediction: Information Infrastructure
Subtopic: Cost/Pricing
Name of publication: Public Access to the Internet (book)
Title, headline, chapter name: Pricing the Internet
Quote Type: Direct quote
Page number or URL of document at time of study:
Pages 292-295
This data was logged into the Elon/Pew Predictions Database by: Guarino, Jennifer Anne