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The Review of Economics and Statistics 2026

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

Brian McManus1; Aviv Nevo2; Zachary Nolan3; Jonathan W. Williams4

1 Department of Economics, University of North Carolina at Chapel Hill [email protected] · 2 Department of Economics and Wharton School, University of Pennsylvania [email protected] · 3 Department of Marketing, University of Arizona [email protected] · 4 Department of Economics, University of North Carolina at Chapel Hill [email protected]

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.

DOI
10.1162/rest.a.1709
Pages
1-45
Language
en
Sources
openalex crossref

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