Geolocation Costs you Money

THe internet is by far the biggest global market place that the world has ever seen, but it’s far from the fairest. Across the world one of the goals of economic development has been the operation of free trade, opening up markets across geographical and social divides. Of course, it doesn’t always work like this but to be fair in the infancy of the internet it came pretty close.

When sites like Amazon where in their infancy, it was quite simple to order from a different country with relatively few restrictions. I routinely used to order computer software and hardware from Amazon in France simply because it was often 20-30% cheaper than Amazon prices on their UK site. After a few years most of the sites blocked this behaviour and it became much more difficult to access regional versions of different web sites.

The reason that the internet has become so segmented is primary due to an economic concept called price discrimination.
Here’s how it’s defined on Wikipedia –
Price discrimination is a pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets

Basically to maximise profits, a company seeks to try and sell it’s product or service at different prices to different markets. Often this is difficult to do, simply because you have to keep these markets completely separate. Initially the internet made markets more accessible, and consumers used the technology to cross the geographical barriers – however now using a technology called geo-location the barriers are rising again.

Most commercial websites determine your location when you try and access their pages, they look up your IP address and then redirect you based on your location. So if you visit the BBC from outside the UK you’ll be redirected to the international version which doesn’t have any of the iPlayer functionality. So it continues – videos, films, goods and services blocked, filtered or offered at different prices according to where you logon to the web.

Unsurprisingly, this behaviour is not entirely popular and there are a myriad of technologies designed to circumvent these blocks with one of the simplest is by using proxies. Take for example if you want to access UK content but happen to be based somewhere outside the UK – by using an English proxy like the one in this video you can fool the website.

The basic idea is that if you route your internet connection through a proxy server based in a different location, then the web site thinks you are in that country too. Hence you can use an English based proxy to access UK content or sites, a French proxy to use French sites and so on. There are now even services which offer multiple proxies in a variety of countries which you can buy – like this.

The companies obviously are not happy with these services and indeed a ‘cat and mouse’ game of them blocking various proxies and VPNs addresses, then the providers switching IP address and data centres.

2 thoughts on “Geolocation Costs you Money

    • Yes Jane absolutely. The location of your IP address greatly affects services, prices and all sorts of stuff. For instance a UK IP address allows you to watch thousands of TV shows on BBC, ITV, Channel 4 and 5 for free – all these are unavailable from other countries. Same goes for all the big media channels but of course you need a US address for those. Airlines charge different prices depending on your current location for exactly the same flight!

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