Are we pricing by the bucket, pricing by peak off peak, or both?
Sunk costs are sunk costs. They cannot be avoided. Yes there is peak and off peak in broadband, but if you price for peak and off-peak are the rates truly non-discriminatory?
Using freight as a common carrier example, let’s say I rent a semi to go from NY to LA. The sunk cost is the capital associated with buying and maintaining the truck, the semi-fixed cost is the driver and the variable cost is the fuel. Now once I rent it, I could fill it with lead or gold, Styrofoam packing nuggets, or one pail of sand from a child’s beach bucket. Weight only affects one component, the fuel, (and maybe tolls) and the value of the cargo has zero economic relationship to the cost to provide the service.
We know the backbone providers want to kill net neutrality (oops I guess I shouldn't limit myself to the backbone - all of them), so they can charge by value, but that has nothing to do with cost.
Rhetorically, what is the best most economically efficient pricing model: weight, volume or capacity (whether used or not)? |
