Internet pricing 101: Why costs are all over the map | The San Diego Union-Tribune

There are 95 million American households with fixed — as in, not wireless — internet access, but few of us really understand why we pay what we pay, especially when we hear about a neighbor or relative with a cheaper rate and faster speed.

The answer isn’t especially enlightening or comforting. In fact, we know it all too well. Traditional internet service providers (ISPs) have set themselves up to let us down with temporarily discounted fees that always go up, and a lack of choice means we get what they want to give us.

“(ISPs) want to keep pace with others in the market. It’s a tough balance. If you lower your price just because the competition’s prices are lower, then everyone is racing to get to the lowest price,” said Brett Sappington, the senior director of research at Parks Associates. “The companies are anxious about doing that.”

So instead of always reasonable, fixed rates for high-speed service — as those fortunate enough to have access to Google-owned Webpass can expect — we get something else entirely. The promotional rate. Or, in other words, a means for ISPs to preserve the price of service while still offering new customers an enticing discount.

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Internet pricing 101: Why costs are all over the map – The San Diego Union-Tribune.