Friday, March 26, 2004

Interestingly enough, in connection to posts by Taylor and Chad, the other day I saw an ad for a vending machine-like service for a wireless LAN. It was actually an offer to be a franchisee in this service. You buy the right to place a wireless access point in a high-traffic area. If people swipe their debit card through the vending machine, they get the password that allows them access to the wireless network for whatever amount of time they purchase. If I could remember the name of it I'd link to it.

Another point: Though this doesn't truly reflect on the market-responsive variable pricing for M&M's in a vending machine that Taylor suggests, there was once a system in place in which consumers paid only for the minutes that they used. Almost all internet providers have given up on that, though you can still find some cell-phone plans that have that as an option. Of course, Virgin has brought it back with a vengeance. The companies figured out that they can charge more than you would have spent on minutes anyway and the average consumer out there thinks that he's getting a bunch of free minutes which most consumers never utilize. I admit to my own idiocy in this scheme.

Back to the point, most people who have broadband never use enough bandwidth to justify the cable company charging $45 a month. Nor do most people watch enough cable TV to justify the other $40 a month. Although a really interesting concept would be paying per channel per time based on market demand. Can you imagine how cheap it would be to watch AMC at 3am? Or how expensive to watch a certain tournament on CBS tonight? So obviously with cable TV it doesn't work because the system is set up to provide balance. Most cable providers are actually losing money providing ESPN right now, but they're making money off of OLN.

Broadband is another issue. For every person like myself who uses a considerable bandwidth at certain times of day, there are those who practically never utilize the bandwidth. In a perfect world, the cable company should charge them half price and charge me twice as much.

So, I'm getting tired of this post and I'm not sure I've made a single point at all, but in wrap, I guess my point is that current business models just aren't geared up yet for highly individualized pricing or pricing by instantaneous market demand. However, I'm in complete agreement that that would be the ideal of consumer-driven free-market capitalism. The flip side is that the current way of doing business is near the ideal of business-driven free-market capitalism. The difference being, like Chad has said, people are too lazy to shop around and are goaded into the "best fit" offered by businesses, which is how we get to the point that those of us who know we should be getting a better deal feel like we're getting screwed when talking to these companies on the phone because there is no deal that they offer which fits our needs within the close margin of efficiency that we are accustomed to in our various professions.

Posts like this are the crap that happens on my day off.


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