Observations of an Internet Middleman (Level3) (was: RIP Network Neutrality

Mon May 12 19:48:50 UTC 2014

On 5/12/14, 10:55 AM, "Owen DeLong" <owen at delong.com<mailto:owen at delong.com>> wrote:
Who cares? It’s insensitive from the end-customer perspective. Same as what I pay to Comcast is insensitive to my usage. Amazon hasn’t negotiated insensitive pricing with their shipping companies, just as Comcast hasn’t negotiated insensitive pricing for infrastructure upgrades.
Seems to me that the analogy holds.

Interesting analogy.

To digress a bit. UPS/FedEx/UPS generally serve as the package delivery network for Amazon Prime shipments, though sometimes they do so via smaller regional package delivery networks. Also Amazon seems to be experimenting with direct delivery in some areas in order to provide a level of delivery quality they don’t feel they can get via 3rd party (same day delivery).  As you describe, the end users (consumers of Amazon Prime) are insensitive to the shipping cost due to the flat fee the consumer paid to Amazon.

This dynamic appears to have contributed to a 2013 holiday shipping season that saw package delays (packages sent exceeded capacity to deliver on time), which appears to have played a role in FedEx’s recent announcement of a plan to charge shippers by size, rather than purely by weight. Some analysis I read was that this may prompt companies like Amazon to get more efficient in what they send to package delivery networks; packages will become smaller (think fewer of those inflatable plastic bags inside).

Jason