ISPs Want Freedom Netflix Has

Netflix is introducing new premium plans in Europe featuring support for 4K and high dynamic range support that would not be available on standard plans. Adding features based on quality is not unusual for any product supplier, nor is the offering of different product models.

We note this only to point out that while observers seem to understand the business wisdom when suppliers offer different models and features, at different price points, to satisfy different segments of the market, that same business practice is supposed to be denied to internet access providers.

The point: Netflix is creating additional value, and differentiating plans, to support its business model. ISPs want to do the same thing.

source: BLS  

In principle, offering quality of service or other features of an access service, and therefore creating differentiation, is simply a normal business practice. So long as standard and economy products exist, premium versions are not necessarily harmful to consumer choice, the right to use any lawful application, or the ability of app providers to be reached by their customers and users.

Increasing product value might be a bigger business challenge in any industry where prices for the standard product version are falling, as has been the case for U.S. internet access prices, where prices have fallen for two decades, according to U.S. Bureau of Labor Statistics data.

According to the U.S. Bureau of Labor Statistics, prices for internet services and electronic information providers were 21.98 percent lower in 2018 versus 2000.

Between 2000 and 2018: Internet services experienced an average inflation rate of -1.37 percent per year. In other words, internet services costing $50 in the year 2000 would cost $39.01 in 2018 for an equivalent purchase.

Compared to the overall inflation rate of 2.09 percent during this same period, inflation for internet services was significantly lower.

As budget and standard consumer internet access offers keep getting better, in terms of bandwidth, usage buckets, latency and cost-per gigabyte of usage, as well as absolute prices in many cases (and certainly for inflation-adjusted pricing),  the search for ways to add value is understandable.


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