It would be relatively simple for a provider to monitor a customer’s usage and bill by the packet or byte … However, pricing every packet would not necessarily increase efficiency, because the marginal cost of a packet is nearly zero. Since it is bandwidth that is scarce, efficient prices must reflect the current availability of bandwidth. Neither a flat price per packet nor time-of-day prices would closely approximate efficient pricing.
Predictor: MacKie-Mason, Jeffrey K.
Prediction, in context:The 1995 book “Public Access to the Internet,” edited by Brian Kahin and James Keller carries the chapter, “Pricing the Internet” by Jeffrey K. MacKie-Mason and Hal R. Varian. MacKie is an associate professor of economics and Varian is a professor of economics at the University of Michigan. They write: ”It would be relatively simple for a provider to monitor a customer’s usage and bill by the packet or byte … However, pricing every packet would not necessarily increase efficiency, because the marginal cost of a packet is nearly zero. Since it is bandwidth that is scarce, efficient prices must reflect the current availability of bandwidth. Neither a flat price per packet nor time-of-day prices would closely approximate efficient pricing.”
Date of prediction: January 1, 1995
Topic of prediction: Information Infrastructure
Subtopic: Cost/Pricing
Name of publication: Public Access to the Internet (book)
Title, headline, chapter name: Pricing the Internet
Quote Type: Direct quote
Page number or URL of document at time of study:
Page 287
This data was logged into the Elon/Pew Predictions Database by: Guarino, Jennifer Anne