The Net Neutrality Bus

Don't get me wrong. I love my cheap Internet line. I pay less than $100/month for 6Mbps downstream Internet speeds and cable TV service and it's great. I don't know what I would do without it. It would be even better if it were less expensive. But I realize that it's not as simple as that. There's an economic equation that dictates much of what happens in the market. Or at least it probably should. Here's an analogy:

You decide you want to get into the transportation industry. Living in a small town, you spend $100,000 buying a small bus. It carries 40 people. You have a route that you've mapped out that takes roughly one hour to traverse and covers most of the town. There is perhaps one other person in town that has been making a living in the same business. If you can make eight trips a day and carry 40 people each time, charging each a quarter, you can make 80 dollars a day. Not including fuel, maintenance, insurance and other expenses, it would take 250 weeks of 5 business days, or almost 5 years, to pay off the bus. You decide that you want to pay off the bus faster so that you can invest in a better bus that carries more people. So you decide to create a special, express bus service. It stops at half of the bus stops and generally the bus is half full but it gets people to work much faster. You charge $2.00 for it. The benefit? Your passengers get to work 45 minutes earlier, giving them an advantage over others who take the regular bus. If the first two trips of each day are express trips, and each express trip can carry only 20 people due to the quicker routes that have fewer stops, then for those trips, You'll make 4 times more than a normal trip. The net? You pay off the bus in 2.7 years rather than 5. That means the new bus can be purchased that much faster and hopefully you'll be able to carry more people on one trip.

But wait. Since you are one of only two bus companies in town, the city commission steps in. Since people are dependent upon your bus service and some can't afford to pay $2.00, they tell you that you can't charge different people different rates for the ride, even if they can afford it. You are excluding some people who can't pay $2.00 and still need to take the bus since you now make fewer trips at the quarter price.

You keep your rates the same then and you use the same bus for almost 5 years, with no opportunity to obtain a bigger, faster one that carries more people.

You are happy about this. Or are you?