23. Recently, an Internet service provider in the UK implemented a no-strings US-style flat-rate plan whereby its
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23. Recently, an Internet service provider in the UK implemented a “no-strings US-style flat-rate plan” whereby its subscribers receive unlimited dial-up Internet access for a flat monthly fee of £14.99. Under the old “metered plan,” Alistair Willoughby Cook spent 1,499 minutes online and paid
£14.99 in usage fees in a typical 30-day month. If all customers are exactly like Alistair, what is the impact of the flat-rate plan on consumer welfare and the company’s profits? Explain.
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