Broadband Data Caps Don't Hurt Competition
Now that Netflix has started moving away from its DVD service in favor of more concentration on streaming video, many are anticipating that internet service providers may go the way of telecommunications companies like Verizon who recently did away with ‘unlimited’ data plans.
Usage-based pricing is used in countless economic sectors every day, and it is overwhelming viewed by economists as a sensible way to calibrate supply and demand while ensuring costs are covered.
While some look at the relatively low cost of increased data usage for any one user, they ignore the other costs facing broadband operators in doing so. High fixed-cost goods like broadband networks don’t just grow on trees or fall like manna from heaven. Someone financed and built those networks, and someone has to keep building and improving them.
There is no free lunch. Someone has to pay the bills, including the broadband bills.