Saturday, May 12, 2012
Wallsten: Data caps aren’t perfect, but that’s OK
Opinion: Data caps aren’t perfect, but that’s OK | Ars Technica: "just because price discrimination can be good for consumers does not mean that it always is good for consumers. Any price discrimination requires some degree of market power, but firms with sufficient market power can use price discrimination to segment markets in ways that leave consumers worse off. For example, a firm may be able to set prices in ways that increase profits but not output if switching costs are too high, entry too difficult, or pricing models unfairly benefit the firm’s downstream products at the expense of a competitor. It is not possible to conclude based on theory or conjecture alone whether a given pricing scheme, including those involving data caps, will ultimately harm or benefit consumers overall, but the test for determining the net effect of pricing schemes is, in principle, simple: do they increase output?" No prizes for guessing that measurement will be different in different regions of the world - so that mobile broadband will be accepted as a substitute for fixed in the US (I know, I know, they are terrible substitutes as Noam and Economides have pointed out, but US antitrust is irrationally skewed towards incumbents), while in the UK consumers know that DSL-based broadband is no substitute for fibre-based cable...yet cable is still considered untouchable by regulators (except in Denmark) - 'via Blog this'