A lot of people would argue that beyond internet access, any more nuanced distinction is just profiteering. Imagine the power company telling you to turn off your computer because you only have an "Unlimited Light and Heat" power plan.
Do you work in the technology industry? A substantial portion of your salary is based indirectly but inexorably on profiteering, which term for "pricing what the market will bear" is not widely used among businesspeople.
There are two clear reasons why the power company can't segment their market per your example. The first is that power companies are regulated utility monopolies that have to respond to state governments. The second is that they lack the technology to differentiate between power usages. Even so, if you talk to energy-intensive businesses, you'll find that there is customer segmentation in electrical power.
This shouldn't surprise you, because there is arbitrarily segmented pricing in everything from hotel rooms to canned tomatoes to beer to office space to cars to computer chips.
"The first is that power companies are regulated utility monopolies that have to respond to state governments."
This isn't entirely true/relevant.
The distribution network is regulated because (rightly) we don't want to have everyone running electric cables everywhere. In CT, you cannot choose your electricity distributor, but you can tell your electricity distributor who to buy your electricity from. (They call you up and tell you what their price per mwh is, and you can pick that company or a different one. You can also choose based on what source the energy is coming from solar/coal/nuclear etc.)
Similarly, radio bandwidth is regulated (auctioned to the highest bidder), because there are only so many frequencies available.
It would be very difficult to have a startup competing with ATT or Sprint, for example, because of the exorbitant cost of buying a chunk of spectrum to use (aside from hardware cost).
Maybe cell networks/bandwidth should be better regulated, based on a similar model to Connecticut's electricity, where the data is routed to a cell tower run by a local, government regulated monopoly, and then the actual internet connectivity is provided by different suppliers.
It seems that auctioning bandwidth has lead to monopolies that aren't really what we all want.
It's hard for me to take too seriously the idea that the wireless market is locked up given that its key players didn't exist 10 years ago; what's deceptive about it is, they were rolled up into decades-old brands, and so it seems like "Ma Bell AT&T" set the market for wireless. That's not what happened.
It's also unclear to me how much this has to do with "monopoly power" and how much it is simply the case that mass Internet access is an extremely capital intensive business that will always be led by large companies.
I don't know anything about the history of the wireless market, but it seems to me that it is locked up and (to some extent) capital intensive by virtue of the way that we regulate it.
You can see the amount of money that goes into the auctioning of the bandwidth. You have to pay in the millions of dollars before you can build a single tower.
It is a capital intensive business, and I don't suggest otherwise, but it seems to me that there is absolutely no incentive for any of the major players to innovate, as the market is locked down as soon as a chunk of bandwidth has been bought.
It would be nice if there were another way of structuring it to encourage competition in this particular market. One possibility might be to have a local distributor, and then competing vendors that work through that distributor. That is just of the top of my head, so I'm sure there are problems with it (I can certainly think of a few).
substantial portion of your salary is based indirectly but inexorably on profiteeringterm for "pricing what the market will bear"
My dictionary suggests that "profiteering" is a reference to price fixing, gouging, and other unsavory business behaviors -- not market-based pricing.
Moreover, data is data. Charging more for one kind of bit than another is ridiculous.
power companies are regulated utility monopolies that have to respond to state governments
And why not communication companies, then (beyond the small degree they're regulated)? Obviously there's a need.
This shouldn't surprise you, because there is arbitrarily segmented pricing in everything from hotel rooms to canned tomatoes to beer to office space to cars to computer chips.
Every type of product and service you mention has an open market and real competition. If I don't like the price of Heineken I can just buy Coors (presuming I think they're of equivalent quality).
AT&T, Verizon, and their cohorts have the mobile market locked up -- no other company is going to come along any time soon and offer carte blanche data access, because the whole market is engaged in "wink-and-nudge" collusion. They don't have to actually conspire; they just know they can all get away with the scam if they all pull it.
Comments
AT&T didn't sell you generic fungible data.
A lot of people would argue that beyond internet access, any more nuanced distinction is just profiteering. Imagine the power company telling you to turn off your computer because you only have an "Unlimited Light and Heat" power plan.
Do you work in the technology industry? A substantial portion of your salary is based indirectly but inexorably on profiteering, which term for "pricing what the market will bear" is not widely used among businesspeople.
There are two clear reasons why the power company can't segment their market per your example. The first is that power companies are regulated utility monopolies that have to respond to state governments. The second is that they lack the technology to differentiate between power usages. Even so, if you talk to energy-intensive businesses, you'll find that there is customer segmentation in electrical power.
This shouldn't surprise you, because there is arbitrarily segmented pricing in everything from hotel rooms to canned tomatoes to beer to office space to cars to computer chips.
"The first is that power companies are regulated utility monopolies that have to respond to state governments."
This isn't entirely true/relevant.
The distribution network is regulated because (rightly) we don't want to have everyone running electric cables everywhere. In CT, you cannot choose your electricity distributor, but you can tell your electricity distributor who to buy your electricity from. (They call you up and tell you what their price per mwh is, and you can pick that company or a different one. You can also choose based on what source the energy is coming from solar/coal/nuclear etc.)
Similarly, radio bandwidth is regulated (auctioned to the highest bidder), because there are only so many frequencies available.
It would be very difficult to have a startup competing with ATT or Sprint, for example, because of the exorbitant cost of buying a chunk of spectrum to use (aside from hardware cost).
Maybe cell networks/bandwidth should be better regulated, based on a similar model to Connecticut's electricity, where the data is routed to a cell tower run by a local, government regulated monopoly, and then the actual internet connectivity is provided by different suppliers.
It seems that auctioning bandwidth has lead to monopolies that aren't really what we all want.
It's hard for me to take too seriously the idea that the wireless market is locked up given that its key players didn't exist 10 years ago; what's deceptive about it is, they were rolled up into decades-old brands, and so it seems like "Ma Bell AT&T" set the market for wireless. That's not what happened.
It's also unclear to me how much this has to do with "monopoly power" and how much it is simply the case that mass Internet access is an extremely capital intensive business that will always be led by large companies.
I don't know anything about the history of the wireless market, but it seems to me that it is locked up and (to some extent) capital intensive by virtue of the way that we regulate it.
If you look here: http://wireless.fcc.gov/auctions/default.htm?job=auctions_al...
You can see the amount of money that goes into the auctioning of the bandwidth. You have to pay in the millions of dollars before you can build a single tower.
It is a capital intensive business, and I don't suggest otherwise, but it seems to me that there is absolutely no incentive for any of the major players to innovate, as the market is locked down as soon as a chunk of bandwidth has been bought.
It would be nice if there were another way of structuring it to encourage competition in this particular market. One possibility might be to have a local distributor, and then competing vendors that work through that distributor. That is just of the top of my head, so I'm sure there are problems with it (I can certainly think of a few).
substantial portion of your salary is based indirectly but inexorably on profiteering term for "pricing what the market will bear"
My dictionary suggests that "profiteering" is a reference to price fixing, gouging, and other unsavory business behaviors -- not market-based pricing.
Moreover, data is data. Charging more for one kind of bit than another is ridiculous.
power companies are regulated utility monopolies that have to respond to state governments
And why not communication companies, then (beyond the small degree they're regulated)? Obviously there's a need.
This shouldn't surprise you, because there is arbitrarily segmented pricing in everything from hotel rooms to canned tomatoes to beer to office space to cars to computer chips.
Every type of product and service you mention has an open market and real competition. If I don't like the price of Heineken I can just buy Coors (presuming I think they're of equivalent quality).
AT&T, Verizon, and their cohorts have the mobile market locked up -- no other company is going to come along any time soon and offer carte blanche data access, because the whole market is engaged in "wink-and-nudge" collusion. They don't have to actually conspire; they just know they can all get away with the scam if they all pull it.