Usage-Based Pricing of Residential Broadband: Cost Savings and Implications for Subscribers
Posted by Social Science Research Network
Usage-Based Pricing of Residential Broadband: Cost Savings and Implications for Subscribers – Jacob B. Malone, John L. Turner & Jonathan W. Williams (University of Georgia – C. Herman and Mary Virginia Terry College of Business – Department of Economics)
ABSTRACT: Despite the growing prevalence of usage-based pricing, its effects on subscribers are largely unknown, primarily due to limited data access. Using novel data that tracks broadband usage by over 75,000 subscribers at the monthly and fifteen- minute level, we first show that usage-based pricing is effective at reducing usage and limiting growth in the most extreme subscribers. Second, we show low-usage subscribers pay up to forty times more per gigabyte than high-usage subscribers to emphasize the degree of subsidization that is occurring. Next, we demonstrate that when provided with simple means to track their usage, subscribers are very adept at doing so. They rarely choose dominated plans and respond sensibly to the possibility of incurring overage charges. Subscribers tend to reduce usage in a uniform fashion across the day to avoid overage charges. This suggests peak usage, which determines an Internet Service Provider’s costs, is fairly elastic, yet a pro- portionate reduction in off-peak usage indicates an inefficiency. This suggests more progressive policies like congestion-based pricing are likely required to effectively manage peak usage and more equitably distribute costs among subscribers, so long as the implementation costs are not too large.
Featured News
Canadian Breadmakers Settle Price-Fixing Lawsuit
Jul 25, 2024 by
CPI
EssilorLuxottica Open to Meta as Shareholder, Says CEO Francesco Milleri
Jul 25, 2024 by
CPI
California Supreme Court Upholds Proposition 22, Securing Independent Contractor Status for Uber and Lyft Drivers
Jul 25, 2024 by
CPI
Paramount Global Investor Sues to Block Skydance Media Merger
Jul 25, 2024 by
CPI
Software Vendors Win Class Action Status in Antitrust Case Against CDK Global
Jul 25, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – International Trade & Antitrust
Jul 26, 2024 by
CPI
What is Wrong with the WTO Discipline on Subsidies?
Jul 26, 2024 by
CPI
The Abiding Tension Between Trade Remedy Law and Antitrust
Jul 26, 2024 by
CPI
Trade and Antitrust: An End to Isolationism
Jul 26, 2024 by
CPI
International Trade Law and Domestic Regulation of Generative Artificial Intelligence: Divergent Approaches?
Jul 26, 2024 by
CPI