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> Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable? It's a very important p
by hackuser 9y ago
> Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable?
It's a very important point; this false argument is often used. In truth, in the marketplace, goods are not priced at 'cost-plus'; i.e., they aren't priced by taking the cost to the vendor and adding a profit margin.
Goods are priced at the point that will maximize profit for the vendor; economists would say at the point that maximizes marginal profit. Colloquially, they charge as much as they can.
The fact that the vendor has another stream of income from Product B doesn't cause them to reduce their prices for Product A. Microsoft doesn't cut the price of Windows because they are making so much from Office.
- aero142 9y agoThis is only half the argument, though. Yes, companies charge as much as possible, but prices go down when a competitor can offer a comparable good at a lower price. Some markets clearly have features that make competition harder.
- hackuser 9y agoAgreed, but how do you see that applying in this situation? Privacy regulations apply either to all competitors or none.
- aero142 9y agoI think both sides just argue past each other. Democrats promote government regulation as the solution without discussing the problems. Heavy regulation often leads to stagnation and lack of innovation. You also have to deal with regulatory capture since your politicians now have huge influence and are worth bribing. Republicans argue for "free-market solutions" which are actually government granted or encouraged monopolies where no competition exists. There lots of examples of free market capitalism making the world a better place and markets failing as well. There are examples government run services providing great consistent services and there are examples of government bureaucracies soaking up budget and graft in their own or lobbyists interest. Which tool do you think will work best in this situation and why? How do you plan to deal with the inherent problems of government involvement in ISP regulation? I'm just tired of "free market solves all" vs "corporation are evil, government is universal solution". We learn nothing and convince no one.
- awqrre 9y agoWhat competition in the ISP space?
- astrodust 9y ago> Microsoft doesn't cut the price of Windows because they are making so much from Office. Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office. Microsoft Word vs. WordPerfect, Excel vs. Quattro Pro and Lotus 1-2-3. These battles were won because of Windows and that cemented their position as industry leader. Now that Microsoft is in a dominant position they don't cut the price of Windows as much, but to remain on top they do give the OEMs a very sweet per-unit deal they really can't refuse.
- hackuser 9y ago> Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office If that's true (and that's not my understanding) they did it to gain marketshare and maximize profit, not because they already had enough profit. In that scenario, they cut the price of Windows to make even more from Office.
- astrodust 9y agoThey cut short term profits in order to cement long-term ones, so yeah, they were maximizing profits but over a longer time-scale than one transaction.
- slededit 9y agoThey didn't cut the price. Rather they made a windows runtime available so you could run office on DOS. This was also available to third party ISVs.
- astrodust 9y agoBundling for free is cutting the price.
- daveFNbuck 9y agoThe profit-maximizing price drops as the profit margin goes up. As service providers make more money by selling customer data, they'll be able to increase profits by lowering prices and bringing in more customer data. Of course, this assumes a significant amount of customers who have the option to switch providers or choose not to have internet access.