Thursday, August 11, 2011

Cheap Internet for Low Income Families

Comcast is offering $10 a month internet service for low income families. My guess is that the marginal cost of adding one more internet line is close to $10. To verify that families are low income, their children must be enrolled in reduced/free school lunch program. This helps Comcast prevent high income people from enrolling.

Comcast didn't do this out of the kindness of their own heart, instead it was required as part of the governments stipulations for Comcast buying NBC. PC World also has a good rundown of the pros and cons of the merger. To outweigh some of these cons home internet for disadvantage children seems like it could be a public good.

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1 comment:

Millsy said...

I think Comcast actually makes out here. Once installed, I can't imagine the cost is $10 per month. In fact, I imagine it's nearly zero--especially if lower income families are living in rental apartments where there is likely at least one person with internet.

Certainly Comcast price discriminates for new customers, and this seems to be a way to get lower-income families as customers without getting in trouble for asking for income statements from families or backlash from those not allowed to pay $10 a month (though, given that it's a different internet speed, we are talking about a different product). If they're still charging the same prices to me and you, but getting additional customers below cost, this seems to work out for Comcast as well.

It seems like teams allowing standing room tickets at sold out games.

In the end, that deal probably works out for both lower income families and and Comcast just as it does for the team and people who don't mind standing at the ballgame.