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Tiered Pricing & the Free Press

By 3 June 2010 One Comment

Years ago, when I was a mid-level consumer protection official in the FTC, two different staff members approached me within an hour with two different theories about the refund practices of proprietary vocational schools. Staffer A said that a school’s practice of giving a full refund on demand for the unused portion of a course was an unfair practice because it was used by the salesmen to induce students to sign up (“you can always drop out and get a refund”) and then inertia kept them in. Staffer B said that another school’s practice of not giving such a refund was unfair because it meant a student could not get out of a wrongful choice.

I suggested that the FTC could bring both cases, on the theory that we were just misanthropes who were sure that every business was doing something unfair, so details and consistency did not matter.

Maybe the ex-FTCers have gone to work for the Free Press, which is OUTRAGED, UTTERLY, that AT&T is implementing tiered pricing for wireless: “As of June 7, new iPhone customers will now have to select between a 200 megabyte (MB) data plan for $15, and $25 for a 2 gigabyte (GB) plan. These plans also come with overage fees that range from $10 to $75 per GB.”

The FP statement explaining its reaction is pretty much a logic-free zone. Personally, I think giving consumers a choice of tiers is perfectly reasonable, and I predict that FP would be equally, if not more, outraged by an ISP sticking to a one-price system. The goal is government takeover-by-regulation, so whichever road gets you there is fine with FP.

UPDATE (09:23 a.m.): My colleagures remind me of Adam Thierer’s post a year ago on Free Press Hypocrisy over Metering & Internet Price Controls:

Indeed, if you look back at what Free Press and their chairman have said about the matter over just the past 18 months, they seem to be whistling two very different tunes.

For example, George Ou reminded me of what Free Press had to say in its November 2007 filing in the FCC’s Comcast-Bit Torrent proceeding:

“More importantly, if Comcast is concerned that the collective set of users running P2P applications are affecting quality of service for other users on a cable loop… they could also charge by usage.” (p. 29)

[...]

“Indeed, in many nations, network providers do meter, and bill their customers on the basis of amount used. So the transaction costs of doing so must not be prohibitively high. Indeed, a network provider can apparently meter cheaply because, in most networks, users’ traffic to and from the Internet passes through a single gateway, the network access server.” (p. 31)

And Richard Bennett reminded me of what Tim Wu, chairman of the Free Press, had to say about metering to the Washington Post just one year ago:

“I don’t quite see [metering] as an outrage, and in fact is probably the fairest system going — though of course the psychology of knowing that you’re paying for bandwidth may change behavior.”

So, what gives?  Will the real Free Press please stand up? Does the Free Press believe in pricing freedom or price controls for the Internet?

And for more on Free Press hypocrisy, see Nick Brown’s Daily Caller piece: The Wonderful-Whimsical Imagination of Free Press’ Timothy Karr.

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