Collusion

Members of the ISP-Marketing list discuss the benefits of price fixing. In an industry where services are often sold for less than their cost of provision, the idea is attractive to some.

[January 8, 2001]

On the ISP-Marketing list in December, NS queried,

"Anyone else getting sick of people complaining about paying $20 a month for Internet access? I'd love to send these people back in time so they can spend $12 an hour for a 1200 baud connection. I know if my competitors raised their rates, I'd raise mine in a heartbeat."

A large majority agreed that current dialup pricing is too low:

[NS recalled] "When I first started my company, the cheapest ISP in my area was $40 a month, and the highest was about $160. I thought $40 a month was too cheap, so I started at around $60 a month. After a few weeks I lowered to $35 when I realized the $40 guy was raking in the dough. Then it was $25, then $20… and we're one of the more expensive ISPs in the area. My costs? They've gone up and up and up."

[VL noted] "We as an industry have done this to ourselves, through free and cheap services. The public now places little or no value on our services. We should be priced at $40 or more for basic 56k access and cable or DSL should be $99 a month."

Then more than one respondent made the same risky proposal:

[WRC suggested] "Let's start a movement to raise the pricing up to $25 a month. Basic economics call for a raising of prices in reaction to an increase in demand. Time to do this, I would say."

[JM agreed] "We need to band together as ISPs to control pricing, just like the utilities do. A one-dollar-a-month increase resulted in an additional $13-$15,000 a month for us. We are not a regulated or tariffed industry like a utility; we can price-fix till we are blue in the face. Let's raise prices!"

But a strong majority advised that fixing prices might not be the best way to go:

[EA suggested] "If you do that, plan on spending the next few years in jail for anti-competitive activities!"

[KB added] "I'd be careful of organizing a price control consortium like OPEC. That's a no-no in the US (unless you're an ILEC…)."

[WW offered] "ISPs agreeing to increase prices together, so as not to compete with each other, would almost definitely be a violation of the law. If one ISP increased his price, and you decided to take advantage of that and increase your price as well, and you had no interaction with them regarding the price increase (meaning you both acted entirely independent of each other) there is no problem. It is the talking about it with each other in advance that creates the legal problem."

—End