Internet service providers are considering charging their users by how much bandwidth they utilize. I didn?t realize it until reading about these possible schemes [hyperlink] in the New York Times, but bandwidth under current ISP pricing schemes is essentially a commons.
Hence, it is possible that bandwidth is subject to the tragedy of the commons [hyperlink], wherein those who utilize common property overuse that property to the point where it is over-exploited and/or under-provided. If this is true, then charging consumers by bandwidth utilisation would lead to the provisions of more bandwidth in the future.
Such a change in pricing schemes will impact many online media providers, such as YouTube, whose services utilise a large amount of bandwidth. These companies are understandably upset about the possibility of by-the-byte pricing.
Regardless, the ISPs own the bandwidth, so it is their right to price it however they want.
But, that doesn?t mean that some Coasian bargaining won?t occur?perhaps media companies will pay ISPs to not change pricing schemes. I wouldn?t rule out the possibility of media companies buying out ISPs as a result of this either.
?http://exuberant-rationality.blogspot.com