[ih] History of the Economics of the Internet?

[Sebastian Moeller]

Hi.

On July 30, 2026 10:59:35 PM GMT+02:00, John Levine via Internet-history <internet-history at elists.isoc.org> wrote:
>It appears that Jack Haverty via Internet-history <jack at 3kitty.org> said:
>>The Internet also seems to be stuck in a "subscription" mode of its 
>>economics.  Everyone wants you to pay every month for something. ...

I note that investors quite like well predictable income streams (and end users like predictable costs) so the move to flat rate billing was driven by both sudes of the market... it also makes sense if you look what really drives ISP side costs, establishing and maintaining capacity, not transporting individual bits... this is also why the traditional costs-rise-with-bandwidth pricing is a decent reflection of the ISP side (obviously prices rise steeper than costs, but the point is the backbone and peering/transit infrastructure to support 1 Gbps plans is more expensive than 1 Mbps plans).


>
>Well, yeah.  My ISP which happens also to be my phone company has run
>fiber to my house, and provides service capped at 500Mb each way.  Their
>fixed costs are high, and don't vary much if I use more or less data,
>for which they charge about $100/mo and they throw in a landline phone,
>via the same fiber modem.*

Well, to a large degree it seems to be an accounting decision how to distribute the cost and margin across your customers... assigning each customer a relative large base lump is convenient as it decouples your margin well from whether your customers select narrow or wide plans... and solves the issue of marginal utility of each additional bit/second.

>
>How else are they supposed to charge than monthly?

Montly is not the issue, the question is more, flat rate or based on some proxy of caused cost. In mobile plans over here often traffic volume is used, so you get X GB of high speed volume monthly and if you transfer more the data rate is severely capped and users are offered additional volumes of high speed data. ISPs between each other often realise that cost is driven by capacity and so use utilisation of that capacity to derive montly cost, see burstable billing.

>
>For news and other content sources, see the recent discussions of micropayments.

My hunch is that part of the dislike comes from the fact that micropayments increase friction... 


>People hate them, even if they are usually cheaper than a subscription.  I pay
>subscriptions for newspapers and some freemium sites where the subscription gets
>more content and/or fewer ads.
>
>>I fear the time if and when The Internet takes over the restaurant 
>>business.  Can you imagine restaurants with a subscription "all you can 
>>eat, all the time" business model?   Your favorite Italian restaurant 
>>will deliver as much great food as you want whenever you want it, as 
>>long as you pay them the monthly fee. 


Well, the analogy suffers from the fact that foodstuffs cost a restaurant, but individual bits do not really cost an ISP any fixed cost... with 95% burstable billing the same bit can cost from 0 to a full per rate step cost increment...

>
>You probably thought you were kidding, but:
>
>https://www.delish.com/food-news/a71899035/olive-garden-pasta-pass/
>
>R's,
>John
>
>PS: Since they still think like a phone company, the modem has a backup battery
>so that even if the power fails I still have phone service and can use the Internet
>at least until the battery on my laptop runs out.
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