NPI has been asking for and predicting the coming of postalized ethernet pricing since early 2015. We are now beginning to see it in the marketplace.
What is postalized pricing? In telecom speak, to “postalize” means to structure prices so they are not distance sensitive. For example, an enterprise that has more than 100 domestic locations on their network might have a different price for every location. Having a unique cost for each site or at least a pricing tier based on distance from the Central Office will likely deliver the least cost for access for some locations, but it makes it more difficult to project future costs and also makes manual auditing for billing errors and contract compliance more difficult.
The billing error bit can’t be underestimated. Errors are common and can add up to substantial overpayments to carriers. If your contract price for every DS1 access circuit is fixed at $175, then it is easy to spot billing errors. It’s not so easy when each circuit is priced differently.
Until now, most carriers have priced Ethernet access on a site-by-site basis. The new pricing we’re beginning to see offers up tiers of Ethernet access pricing as long as the location is in the carrier’s local access region. As customers embrace this more simplified pricing approach, we have little doubt that it will gain traction, and it will get even simpler. We’re looking forward to seeing how quickly this catches fire across the major carriers.