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Distance vs. LATA-based Pricing: Why it matters

When our Channel Managers review different product and service options for partners, a multitude of considerations come into play. In this article, we’ll discuss two different pricing models that influence the recommendations we make for data services: Distance and Local Access and Area Transport (LATA).

Distance-Based Pricing
city map with Pin Pointers 3d rendering image

Typically, the cost of data service is determined on a distance-based pricing model. This means the farther a customer is from a provider’s service node, the more expensive their internet access is likely to be. It doesn’t matter how much data the customer actually uses; the farther away they are, the more they pay.

This model works fine for businesses in a large city, since more than likely they are in close proximity to a node simply because of the condensed realities of urban areas. But for businesses in suburban or rural areas, often with many miles of ‘loop’ between themselves and a service node, distance-based pricing could very well be out of reach and therefore a deal killer.

That’s when the benefits of LATA-based pricing kick in.

LATA-Based Pricing

In a LATA-based model, distance is removed from the pricing equation. Instead, cost is determined by data transport capabilities, or the size of the connection. So, for example, a customer can choose to pay for 2 Mbps or for 10 Mbps. But whether your customers is one mile or 100 miles from a service node, distance will have no bearing on the cost they pay.

These are the factors we consider when we work with organizations such as the Wireless Internet Service Providers Association (WISPA). WISPA members cater to underserved, often rural geographies where service nodes are few and far between. One data service we often recommend to our WISPA partners is Metro Ethernet. And we do so for a simple reason: The provider who has ownership over the majority of WISPA territories changed its Ethernet pricing model from distance-based, to LATA based, which essentially means WISPA customers aren’t penalized for their physical location.

So, how do you know which data service is right for your customers?

Start by asking these two questions and you’ll be pointing them in the right direction:

  1. Is your customer in an urban or remote location?
  2. Is the service priced by distance or usage?

For more inside tips on how to get your customers the best and most cost-effective technology solutions, contact us at info@tbicom.com.

 

About TBI
TBI is one of the nation’s leading third-party technology distributors. For more than 25 years TBI has been assisting IT consultants, VARs, MSPs, and more than 2,500 other industry professionals to source, advise and quote the right customer solutions.

TBI serves as our partners' advocate, ensuring the most competitive prices and trouble-free provisioning of cloud, internet, data, mobility, voice and managed services from over 70 service providers. Through a variety of training programs, marketing support, and back-office tools, TBI empowers our partners to be the foremost authority and single source provider for all of their customers' technology needs. For more information, visit www.tbicom.com.