| Flat-rate Fixations - ' the last refuge of the unimaginative' ? |
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| Written by Groupe Intellex Global | |||
| Friday, 23 January 2004 01:00 | |||
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We all like the comfort of ‘knowing where we stand’ and we complain about shifting sands or goalposts going walkabout, but the essence of life and growth, progress and creativity is largely about how we cope with change – whether we deny it or welcome it. Are we to be or not to be the same, or to be different ? Fighting for fixed fees for university tuition is merely the latest manifestation of flat-rate minds. It is the topical tip of a mountain of resistance populated by those who shall not be moved – physically or, one suspects, emotionally. We cannot deny the reality that petrol prices vary across the country. We are not surprised that housing is more expensive in larger towns and cities. We do not wonder that bus services are thin on the ground in places where few people need them. We may moan and grown about the digital divide – but those of us who choose to live and work in the ountryside do not always freely admit to the value of clean air, breathtaking views, pleasant neighbours, relative peace and space to park the cars. So why then do we sometimes demand that variability should be banished? There seem to be two forces at work – protection and convenience. Denial of dynamics is a mechanism for those who wish to protect the status quo – even if the quo’s status has only recently been established. Lurking underneath the horror and dismay about the advent of variable tuition fees are the massed ranks of government employees and academics who fear the awful prospect of variable rates of pay – possibly even the notion that these might have to reflect performance. In choosing to serve their country our public sector people may have forgone the opportunity to gain great wealth, and, they argue, it’s a reasonable compensation to at least be assured of some consistency wherever they work regardless of their costs. The system, of course, recognises extremes, like ‘London weighting’, but a Grade ‘n’ is largely supposed to be a Grade ‘n’ anywhere and deserves Grade ‘n’ pay regardless. They do not then have to be distracted from their duties by the need to worry about the future. By and large they don’t get hired and fired but the reality is that instead of arguing with the boss about pay rates they put most of their competitive energies into being re-graded or maintaining the ‘headcount’. The other driver for dynamic denial is convenience – and this is often rooted in the tabloid tendency of commercial minds. Marketeers love simple messages. No matter how elegant, how feature-rich, how multi-dimensional, how complex the product, they are convinced that to flog it to the masses it will need Sun headlines. Take, for example, mobile phones. Sure, they will say, the design team has done a great job, but let us just tell the public about one small feature. So, is it to be the size, or the colour screen? Never mind about the improvement in battery life, the feel of keys, the ease of use, the voice activation, the memory capacity, the signal clarity, or any one of the umpteen technical nuances that make all the difference between an ordinary thing and a thing that works really well. Or take, for example what the big brands call broadband – services which perform generally at between 12.5% to 25% of the international standards for true Broadband services. Its not just that their definition of broadband has been reduced to match the current delivery capability. It is blindingly obvious that some customers have widely different expectations. But the convenience of marketing a flat-rate product (and minimising the cost of billing) raises huge challenges in coping with excessive variability in usage and uncertainties in the demand levels across the country. This particular bias towards flat-rate pricing stems in part from decades of regulatory adherence to ‘universal service obligations’ imposed on the former monopoly Telco, BT. The obligation does not, they say, apply to new stuff like broadband but the regulatory culture is ingrained. BT does not offer variable pricing to reflect variances in costs and demand levels for the same sort of product but instead refuses to provide the service in all locations unless clusters of demand are above their ‘trigger level’. Folks in country areas may be well-used to paying more for petrol and less for parking than their city cousins, but the option of getting wired broadband is stuck in the mire of flat-rate mindsets. Less visibly, the providers of broadband services have another fall-out from flat-rate - the challenge of coping with the Kazaa Kiddies and the demon downloaders who monopolise capacity at the bottlenecks in the networks. Again, instead of charging for the amount of capacity actually used, they resort to chopping back demand. Flat-rate pricing, ‘eat as much as you like’, always results in a minority of excessive consumers – and the cost of serving them has to be spread across the entire customer base. But Flat-Rate Fixation Rules – so the only response is to limit the customers to a maximum amount of downloaded information. But what would we say if mobile phone operators declared that you can have the service but only for 24 minutes every day? The cop-out convenience of flat-rate pricing and the protectiveness of pay and grading are legacies of the past and the last refuge of the unimaginative. They deny the dynamics of variable costs and it is not at all clear that the compromise is worth the cats cradle of inflexibility. It is high time we demanded something better and more attuned to the realities of the real economy.
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| Last Updated on Friday, 11 July 2008 14:12 |







Oscar Wilde may, or may not, have said that ‘consistency is the last refuge of the unimaginative’ but in a week where those battling against variable university tuition fees will be aligned with those despairing of the party-line on weapons of mis-direction, its time to wonder at our collective tendency to cling to the constant and deny dynamic realities.