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Tiered service structures allow users to select from a small set of tiers at progressively increasing price points to receive the product or products best suited to their needs. Such systems are frequently seen in the telecommunications field, specifically when it comes to wireless service, digital and cable television options, and broadband internet access.[1]
When a wireless company, for example, charges customers different amounts based on the number of cellphone voice minutes, text messages, amount of data and other features they desire, the company is utilizing the principle of tiered service. This is also seen in charging different prices for services such as the speed of one's internet connection and the number of cable television channels one has access to. Tiered pricing allows customers access to these services who may not otherwise due to financial constraints, ultimately reflecting the diversity of consumer needs and resources.
Tiered service helps to keep quality of service standards for high-bandwidth applications like streaming video or VoIP. This comes at a cost of increasing costs for better service levels.[2] Major players in the net neutrality debate have proposed tiered internet so content providers who pay more to Internet service providers get better quality service.[3]
- ^ Rouskas, G.N. (2009). Internet tiered services: Theory, economics, and quality of service. New York: Springer.
- ^ Boliek, Babette (October 2008). Net Neutrality Regulation in the Mobile Telecommunications Market: A Cautionary Tale from the Era of Price Regulation. 3rd Annual Conference on Empirical Legal Studies Papers. p. 10.
- ^ Feamster, Nick; Lixin Gao; Jennifer Rexford (January 2007). "How to lease the internet in your spare time". ACM SIGCOMM Computer Communication Review. 37 (1): 61–64. CiteSeerX 10.1.1.132.6900. doi:10.1145/1198255.1198265. S2CID 2321307.