Tycho is smart and he should never lower the fee.
People behave like flock animals and will concentrate to whatever is the biggest pool "because it must be good if it's popular".
Only an imbecile would, in his position, try to be "competitive" by taking away the astronomical fees. He is profiting from the stupidity of other people's "choices".
He doesn't need to 'compete' because the pool status is a self fulfilling prophecy.
It's big so it will keep being big, because new miners want to be in a "big pool". People actually willing to pay 10% for mining.
Only extended downtime could bring it down, and I believe some have tried it (DDoS), without success. So it's not going away for a long time if ever.
If you can do a better job than Deepbit or any other fee based pool, then just do it.
Doesn't work that way, it's popularity was already established when mining became common.
Nobody or nothing can surpass it anymore (without, once again, extended downtime of the pool)
You can't make a new deepbit any more than you can make a new Microsoft or Apple.
Those market positions are already filled by the biggest player and can't be surpassed without either illegal means or misfortune.