| > If Amazon paid the same price as everyone else to get their packages into the pipeline, they would send fewer of them, and more delivery resources would be available for everyone else, would there not? No. High volume allows the shipper to operate at a higher scale, with lower costs, and they pass along some of the savings in the form of a volume discount to Amazon. I think you're missing the part about scale. Amazon is not taking away resources, their volume creates capacity and lowers prices. Let's say UPS has 1 truck profitably serving a neighborhood route before Amazon comes along, delivering K packages per day operating at $N/day. The current businesses customers pay $M per package, that's the average delivery cost factoring for fluctuating actual delivery costs (operating costs are mostly fixed, a day with fewer deliveries is less profitable than many deliveries). Now Amazon enters the scene and doubles the package volume. What happens? Assuming the first truck was well utilized, UPS will buy a second truck and split the route in half. Operating costs per house goes down because the routes are shorter, the distribution hub services more trucks, and maintenance operates at a higher scale. Every previous business customer will pay $M or less - pick up costs are the same, but delivery from the UPS hub to the customer is lower due to volume. Amazon will pay even less because they get a volume discount from UPS; that discount reflects lower pickup costs for UPS, receiving a full truck load of packages from one Amazon distribution center costs less than picking up packages from multiple small businesses. Plus other factors like Amazon's ability to pre-sort within their warehouse on behalf of UPS. At no point are small businesses competing with Amazon for delivery. The delivery company needs to grow, so they do grow, and as a result everyone from consumers to small businesses to massive corporations benefits. The issue is that teleconglomerations do not want to grow. They have accrued tremendous organizational and technical debt which requires significant investment to overcome - generating large profits long-term, but only after a couple years of poor profits / shareholder dividends. That's why we're seeing this "net neutrality issue". To be blunt, it's a fucking idiotic excuse for badly managed uncompetitive companies to sit on their laurels of regional monopolization. They're so short sighted that they can't fix their internal problems, and their size enables them to squash disruption, so their strategy is to use lobbying in order to slow down the growth of the internet (and our nation) to match their inefficiencies by charging both ends of the connection. To tie it back to your example - this is like UPS not buying a new truck because they only have one parking space, then forcing Amazon and small businesses to bid for limited delivery capacity and charging customers based on where their package shipped from... all because their management takes 8 years to fund, design, approve, and construct a new parking space. There is no excuse for this behavior. It's utterly absurd from any political/economic stance. |
UPS only buys the new truck because they have to in order to stay in business, just like competitive ISPs adding value to their service. Amazon would have to pay for prioritization if UPS suddenly became the only game in town, if it wanted to maintain the same delivery speed and prioritization were available. I was just challenging your assertion about the original UPS-Amazon comparison and that it's only "fundamentally different" in the absence of competition, which is a problem, but not one affecting all Americans.
[1] https://arstechnica.com/information-technology/2016/08/us-br...