TPRC 2024: The 52nd Research Conference on Communications, Information and Inter

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Abstract:
Regulatory agencies have expressed concerns that usage-based pricing (UBP) of internet service steers consumers from streaming video to traditional TV subscriptions. We study this issue with household-level panel data from an internet service provider’s UBP experiment, capturing the pricing strategy’s effects on internet and TV subscriptions, application-specific internet usage, and payments to the firm. UBP served largely to meter internet usage by high-demand households rather than steering them toward TV. Households’ payments increased due to usage-related overage charges and internet subscription upgrades to avoid overages. Households that avoided internet-related payments reduced their internet usage rather than adding TV subscriptions.