A Short Answer

ISPs charging consumers on the basis of usage is just one corner of the overall landscape of Internet economics. We will pick consumers' monthly bills to focus on in this chapter, but there are many other key questions.

• The formation of the Internet is driven in part by economic considerations. Different ISPs form peering and transit relationships that are based on business and political decisions as much as on technical ones.

• The invention, adoption, and failure of Internet technologies are driven by the economics of vendor competition and consumer adoption.

• The investment of network infrastructure, from purchasing wireless licensed spectrum to deploying triple-play broadband access, is driven by the economics of capital expenditure, operational expenditure, and returns on investment.

The economics of the Internet are interesting because the technology-economics interactions are bidirectional: economic forces shape the evolution of technology, while disruptive technologies can rewrite the balance of economic equations. This field is also challenging to study because of the lack of publicly available data on ISPs' cost structures and the difficulty of collecting well calibrated consumer data.

Smart data pricing

There is a rapidly growing research field and industry practice on network access pricing. What we described on usage pricing in the last chapter, in the form of tiered and then metered/throttled plans, is just a starter.