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Free market Internet pricing and diversity of choice

The reality of market pricing for Internet usage is naturally gaining more attention.  

  • The New York Time's had an informative Sunday page one story: "Charging by the Byte to curb Internet traffic." 
  • Today the Wall Street Journal highlighted why market pricing for Internet usage is evolving with dramatic changes in the Internet marketplace in its story today: "Cisco projects growth to swell for online video."  

The big economic takeaway here is that in a free market Internet, where users have very different demand: i.e. needs, wants and means for speed, usage, mobility, latency, immediacy, reliablity, flexibility and other attributes -- suppliers (ISPs, application providers and content providers) must have the freedom to innovate, experiment and provide a diversity of choices, at a diversity of prices in order to meet the diversity of demand from users.

The big political takeaway here is that Internet "fairness" is not legislated/regulated net neutrality or a one-tier Internet where all bits must be treated the same and where light Internet bandwidth users must subsidize heavy Internet users -- but real and practical Internet fairness comes from users paying their way, paying for what they use above a certain amount and not expecting others to subsidize one's extreme bandwidth usage.

  • It's just common sense that those who consume more of a finite good -- should pay more -- otherwise the Internet system would become a highly regressive "reverse Robin Hood scheme" -- where the low end users with least means would be forced to pay more to subsidize the extreme usage of the few highest end users -- who often have the most means.

At core, a Free market Internet dynamically and efficiently balances supply and demand and prices adjust accordingly.

  • Net neutrality proponents effectively seek "neutral" or average-pricing, which short circuits supply and demand -- and discourages investment, innovation, and experimentation -- in order to create a pre-text for Big Government to intervene and pick what Internet technologies users will get at what price and with what functionality.
  • Net neutrality is simply a pre-text and excuse for Big Government types to take over and control the Internet for their own political and economic purposes.