I&#x27;ll use Verizon as an example because their numbers are easily available. Verizon&#x27;s ARPU for wireline was $125.32 per month in Q3 2014.[1] But their operating profit margin on wireline was only 2.3%. So if you&#x27;ve got a $70&#x2F;month FiOS subscription, is that costing Verizon money? Probably!<p>What&#x27;s going on? The nature of fiber deployment is that most of the cost is getting wires out to a neighborhood. Once you&#x27;re there, hooking up additional households is relatively inexpensive. Moreover, most municipalities will not let you just wire up the neighborhoods you want. To get permission to wire any of them, you have to wire most or all of them. Once you&#x27;ve wired up a neighborhood, it makes sense to offer lower-priced plans, because a customer signing up even at below your average per-house cost is better than one not signing up at all.<p>Now, you could fix this by not having different prices for different service tiers. But that isn&#x27;t what maximizes your revenue. And when you&#x27;re working with a single-digit operating profit margin, you need to figure out ways to maximize your revenue. Services like FiOS wouldn&#x27;t exist if it not for &quot;gouging&quot; on high-margin stuff like Triple Play packages, just like airlines wouldn&#x27;t exist without &quot;gouging&quot; on first class seats and extra bags.<p>[1] <a href="http:&#x2F;&#x2F;www.verizon.com&#x2F;about&#x2F;file&#x2F;3755&#x2F;download?token=8QwymXvu" rel="nofollow">http:&#x2F;&#x2F;www.verizon.com&#x2F;about&#x2F;file&#x2F;3755&#x2F;download?token=8QwymX...</a>