>It would be like the phone company saying 'Want to talk to your family members? Well that costs 10c per minute but talking to your friends is only 5c per minute.'
You mean like wireless carriers making in-network calls free? Or Skype making in-network calls free?
>What the consumer pays for the bandwidth should be based on the actual cost the ISP incurs for that bandwidth and not on the value the customer is getting
This is based on the costs the carrier incurs - it costs more to transport traffic through a NAP and across another carrier's network than it does through one's own [1].
Preferring cost-based-pricing, i.e. fixed margin, versus value-based-pricing says carriers are a utility. The wording used implies cost-plus pricing (which has it's own boat of troubles - witness NASA contractor costs versus SpaceX [2]) is inherently superior to market pricing.
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>It would be like the phone company saying 'Want to talk to your family members? Well that costs 10c per minute but talking to your friends is only 5c per minute.'
You mean like wireless carriers making in-network calls free? Or Skype making in-network calls free?
>What the consumer pays for the bandwidth should be based on the actual cost the ISP incurs for that bandwidth and not on the value the customer is getting
This is based on the costs the carrier incurs - it costs more to transport traffic through a NAP and across another carrier's network than it does through one's own [1].
Preferring cost-based-pricing, i.e. fixed margin, versus value-based-pricing says carriers are a utility. The wording used implies cost-plus pricing (which has it's own boat of troubles - witness NASA contractor costs versus SpaceX [2]) is inherently superior to market pricing.
[1] http://blog.teracomtraining.com/how-isps-connect-to-the-inte...
[2] http://www.parabolicarc.com/2011/05/31/nasa-analysis-falcon-...
You make good points.