The net neutrality debate: Why price discrimination can be good thing

[Commentary] Amongst all of the brouhaha circulating following the Federal Communications Commission’s network neutrality announcement, some of the most puzzling comments concern the purported ‘evils of price discrimination’ that will inevitably emerge if -- heaven forbid -- a network operator dares to charge one person a different price to move traffic over the Internet than another person.

The mere fact that discrimination could occur is deemed sufficient cause by many to justify its legislative prohibition. The ‘evils of price discrimination’ are almost always voiced by individuals fervently advocating for the necessity of universal and uncapped Internet access tariffs – often to the extent that metered Internet access should be legislated out of existence, so that the digital world can flourish unbounded and ‘free’, just as its instigators intended.

If one digs a little deeper, one would probably find that the vast majority of these ardent advocates currently purchase their (uncapped) fixed Internet connection in a ‘triple play bundle’ alongside their cable or IPTV subscription and some form of voice telephony service.

Do these advocates realize the double standard they exhibit when calling for the prohibition of one form of price discrimination while at the same time benefiting from price discrimination that underpins the entire business case of their digital experiences? Because ‘flat rate’ Internet access and triple play bundles are simply other forms of price discrimination. If price discrimination is illegal then surely these too must be banned?

[Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]