Imaginary Menaces

The dedicated Kool-Aid drinkers who brought us the entertaining proposition that risks should be made public and any profits that derived from public investment should be made relentlessly private have left a number of curious inversions in their wake. Witness the odd rhetorical twist in the opening of today’s New York Times story about AT&T’s decision to introduce pricing tiers affecting data usage by cellphone owners.

The tiers seem like a perfectly reasonable business move to me. You have a small number of customers (primarily iPhone users) who are making heavy demands on your network and costing you more than they’re worth. You adjust your pricing so that the most expensive users pay a fee that makes them profitable. For many users, their fees will actually go down, as they will opt for and stay under the 2-megabyte limit of the middle tier plan.

But the article starts by describing and sneering at “data hogs” as if they were a public problem, using classic tragedy-of-the-commons flourishes. The only reason to think about this as a problem of public goods has to do with how we allocate and sell off spectrum. But if you had an issue with that, it wouldn’t be with what customers do, but with the entire idea of selling the public interest in spectrum to private companies. Once we’ve decided to handle it that way, what AT&T does to extract profit from the spectrum it holds rights to is its problem, subject to regulation. If AT&T decides to offer unlimited usage plans in order to draw iPhone customers, ok. If AT&T finds out that eats into their profits, ok. That’s AT&T’s problem.

What a few customers do under an unlimited usage plan is, well, use what they’ve been offered. If I go to an all-you-can-eat restaurant and Orson Wells shows up and proceeds to eat an entire cow’s worth of beef, it’s not Orson Wells’ problem, nor is it the problem of other customers, and it especially is not the problem of society at large. (Yes, ok, obesity itself may pose an issue in terms of public goods, but that’s a much bigger question. Just as “open access to online information” is a much bigger question than this data plan’s pricing.) Would you run a story in the business section on the problem of people who eat too much at all-you-can-eat restaurants and sigh with relief that at last they’re being surcharged, society is saved! The restaurant makes that offer gambling that it will draw people who will eat at best modestly more than they would have otherwise. If they calculate wrongly, they’ll have to change their pricing or their market image or their food quality or something. Or they’ll go out of business. Which is also their problem.