The less intense users also may prefer a provider who charged in this fashion. The externality of slower access speed when another user is taking up enourmous amounts of bandwidth is quite significant. Users who see slow speeds when others are bandwidth hogs may prefer not to share bandwidth hogs. (I do understand that certain types of distribution systems, such as cable are more prone to bandwidth degredation from bandwidth hogs than others.)

In addition to helping to avoid bandwidth degredation, providers can also charge lower prices (fixed charge and use charge) to less intense users, users who generally have lower demands, and higher total (and marginal) prices to the less elastic intense users. While this is a good way to price discriminate, it also makes a great deal of sense. Charging in this fashion makes users sensitive to their bandwidth use, and take greater measures to avoid frivolous downloads. This reduces the problem of Moral Hazard (if you are not familiar with this idea, look it up on Wikipedia).

-MC

Kurt Merrill

The few hardcore users would argue that Time Warner runs the risk of losing the subscriptions of those users who use the internet a lot. This will undoubtedly happen, but the extent to which it will happen is unknown and couldn’t be readily estimated. The loss of these few customers could be accounted for by simply laying off those extra workers who were only there to deal with the problems caused by excessive usage until enough public awareness gets out to the casual users, and the company can hire back those workers to do efficient work.

Segments could say this is unfair to those who have to use the internet a lot. I say not so much. These users have enjoyed a competitive advantage for far too long. In economics, “fair” is normative. Economics creates winners and losers and just because you are a “loser” doesn’t mean that you have failed, or people don’t like you, or you live with your mom at age 40, it simply means that for this particular resource (here internet), your competitive advantage has run out and you must use your skills to gain an advantage in some other way. In this sense, everyone has an equal opportunity for success.

David Dominique

Time Warner expressed that they are concerned about alarming customers and also they do not want to test their plan nationwide. I offer my opinion on this topic and their concerns. I interpret the flat fee that is charged now is probably based on the consumption of the average user. Time Warner could create positive support for their initiative from their majority customers, whom have little to average broadband use. Details should be provided before implementing the usage fee by providing each customer with a meter of some sorts so that they can witness their actual usage and what it ‘would’ cost, under the proposed usage plan. The ‘average’ user will see that his costs will stay +/- the current cost; the ‘small’ user a decrease in the current cost; and those ‘over the average’ more than the current cost. Also detailed anonymous usage statistics (not the websites people visit) of all users should be provided which will allow the customers to understand why this change is needed, and when the time comes to implement a usage pay system, there may be less apprehension from Time Warner’s broadband majority. Once usage pay is in place, the terms small user, average user, and high user have no meaning. If they charge the fair market price (however it will be setup, minute, hour?) potentially their current ‘small’ and ‘average’ broadband users may pass the word around to friends and family that a better deal can be found with Time Warner under this usage pay. Hopefully, other users may switch from their flat fee plan to Time Warner for broadband and maybe even television services they offer.

With regard to students printing on campus, again I agree. If the university adopts a per page fee (usage), they should also eliminate the portion of the Instructional Technology Fee that is used to fund student printing. Also if the fee continues to be a part of tuition, for those that end up not printing on campus during the semester, this paid fee should be reimbursed.

While the university is contemplating a usage fee, they could consider parking permits. From what I gather (uncertain), the parking fee (decal) is based on the academic year ($50) and not a semester basis. I began Nicholls this Spring and the cost of the parking permit was $50. I checked, and if I was enrolled in the Fall, the fee still would have been $50 and it would have allowed me to park during the Fall, Spring, and Summer Sessions. I paid to park in the Fall 2007 semester and I was not enrolled in a single class. Another example of why parking permit costs may need changing is, if a student is graduating in the Fall semester, and that student will not be enrolled or present for the Spring or Summer sessions, that student should pay a reduced fee for Fall only parking.

To the university’s credit, they do reduce the parking cost when one purchases a permit for Summer session only which seems fair for the student to use parking for the Summer session.