Linked by fran on Tue 1st Feb 2011 23:04 UTC
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Member since:
2005-10-12
When the incremental cost of obtaining a good which has utility is zero, demand is unbounded.
Because incremental bandwidth use is free to the user, the user has no incentive to limit use of it in any way. The business model of the providers of services over these incrementally free links will be to buy connectivity as cheaply as possible, and monetize the services they provide, relying on the fact that for the end user, the bandwidth is free. Monetization may come in the form of advertising, or in the exploitation of personal information supplied by service users.
Because generally people perceive high bandwidth services as being more valuable than low, there is a tendency of the net to migrate to them over time. We have increasingly graphic rich services now, even when the additional graphics and bandwidth adds little to the value, because every little helps, and it costs nothing to add it.
The exact same thing would happen if eating at restaurants was as often as you wanted and whatever you wanted for a flat rate monthly fee, and restaurant owners paid a flat rate for all they could pick up at supermarkets. In no time at all you would have everyone flocking to restaurants. All kinds of events would take place there, and people would be talking about the restaurant generation. A small number of people would eat nowhere else, and would hold large noisy parties every day of the week.
However, in the end, the supermarkets would have to start charging by what the restaurants bought, the food producers would charge the supermarkets that way.
And the 'restaurant generation' would be furious that their fun actually had to be paid for.
More like the Prozac Generation. Basic ignorance of markets and economics.