Will smart pricing finally take off

Smart pricing" has been the goal of the networking research com- munity and the telecommunications industry for decades. Yet it has also proved remarkably hard to achieve. This paper presents a brief overview of telecom- munications economics and technology, and the major changes that are taking place. Special emphasis is placed on the many popular but harmful notions that continue to lead this industry astray, such as that content is king, or that telecom is characterized by high fixed costs. The influence of such factors on ad- visability of various pricing strategies is then considered. The main conclusion is that flat rates for individual users should be regarded not as a pernicious can- cer, but as necessary for the healthy development of wired networks. However, in the wireless arena, there is a mismatch between potential demand and what technology can provide, and this likely means that some forms of not-very-smart pricing will dominate.

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