Earlier quoted context omitted.
What you are describing is merely competition. Everyone pays the same marginal amount per kWh for a given amount of electricity—ignoring minor details like connection charges and time-of-day pricing. Yes, having more aggregate demand will tend to raise prices for everyone, but that doesn't amount to a subsidy. Internet access is typically billed as "unlimited" so those who use it very little pay a high rate per bit t…
> that doesn't amount to a subsidy It's really the same thing as in the flat rate case. It's a bit less unfair since the cost rises linearly, but it's not enough to leave small consumers unaffected. People who consume small amounts of a utility still pay more because of people who consume a lot.
No, they really don't. People consuming small amounts and large amounts both pay more due to higher aggregate demand. If it weren't for the many small users the aggregate demand would be lower and the large users would also be paying less—do you consider that a subsidy in the opposite direction? No, of course not—because a price being bid up by competing consumers is not what is meant by the term "subsidy".
Now, if you banned large users from the system, or imposed discriminatory pricing as you previously suggested for the purpose of keeping prices low for the small users, that would be a subsidy: interference in the market to benefit one group at the expense of another.