Work

Does Pricing of Internet Usage Steer Consumers or Meter Usage? Evidence from a Pricing Experiment

Year: 2026

Type: article

Abstract: Competition authorities have expressed concern that firms selling broadband internet and TV subscriptions may employ usage-based pricing (UBP) of internet to steer consumers toward TV over streaming video. We study this issue with household-level panel data from an internet service provider's UBP experiment, capturing the prices' effects on internet and TV subscriptions, internet usage, and firm revenue. We find that this specific UBP policy largely served to meter internet usage by high-demand households rather than steer them toward TV. Households' payments increased due to usage-related overage charges and internet subscription upgrades to avoid overages. Some households avoided internet-related payments by reducing usage rather than adding TV subscriptions.

Source: The Review of Economics and Statistics

DOI: 10.1162/rest.a.1709

Authors: Brian McManus, Aviv Nevo, Zachary Nolan, Jonathan W. Williams

Institutions: University of North Carolina at Chapel Hill, University of Pennsylvania, University of Arizona

Language: English

Topic: ICT Impact and Policies

Subfield: Media Technology

Field: Engineering

Domain: Physical Sciences

Open Access status: green

OpenAlex ID: W7127628124

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Cited by: 2

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