Congress Asked To Probe Pay-Per-Byte Internet Service
"We agree with the thousands of Americans who have signed petitions, contacted their representatives, and held rallies opposing the new charges," Free Press policy director Ben Scott said in the letter, which was sent to the House Energy and Commerce Committee.
Time Warner and AT&T are both testing metered billing programs in Beaumont, Texas, while AT&T is also testing such a program in Reno, Nev. In Beaumont, Time Warner offers new subscribers a choice of four plans that allow them to download between 5 GB and 40 GB per month. AT&T's tiered plans range from 20 GB per month to 150 GB per month. Overage charges are at least $1 per GB.
Free Press estimates that streaming Netflix HD for 22 hours consumes 40 GB. Currently, many broadband subscribers pay a monthly fee for unlimited Internet usage. For Time Warner customers, the fee tends to hover between $40 and $50.
"Imposing arbitrarily low usage limits and arbitrarily high usage fees on Internet access may have substantial negative impacts on competition, innovation, and long-term economic growth," Scott writes. "These price-gouging schemes will discourage consumers from using high-bandwidth Internet applications -- especially video, damaging the nascent market for Internet delivery of video, a market that increasingly competes with traditional cable television services."
At the beginning of the month, Time Warner sparked protests by announcing a plan to expand metered billing to four new cities -- Austin and San Antonio (Texas), Greensboro, N.C. and Rochester, N.Y. Rep. Eric Massa (D-N.Y.) and Sen. Chuck Schumer (D-N.Y.) complained, as did consumer advocates.
Faced with pushback, Time Warner delayed its plan to roll out pay-per-download pricing to more cities, but the company continues to metered billing in Beaumont.
Time Warner says that bandwidth consumption is increasing and that metered billing is a fairer way to allocate costs. But advocates say that the company has not presented any hard numbers justifying the new pricing plan.
Free Press said in its letter to Congress that the publicly available data suggests that "usage fees are well above the marginal cost of providing Internet service."
Time Warner did not respond to a request for comment.