Policy

Reports: Usage Pricing Has Benefits for Light Users

5/28/2012 12:01 AM Eastern

WASHINGTON — Think tank The Phoenix Center has been
thinking about usage-based pricing and concludes in a
new analysis that regulating it is “unlikely to improve
societal well-being.”

In the paper, chief economics George Ford concludes
that even if critics of the practice are right and broadband
providers are using such pricing to protect core
video and other services from rising over-the-top alternatives,
the end result can still be a net benefit to society.

Essentially, the argument is that imposing regulation
on tiered pricing would “force some consumers to pay
more for services they do not want or use, while others
are allowed to pay less for services they do. The prohibition,
in effect, results in a transfer of wealth from one
group of consumers to another, and profits are also
reduced. Overall consumer welfare is diminished, even
though some consumers are better off.”