Bill Would Require FTC Approval For Pay-Per-Byte Pricing
The Broadband Internet Fairness Act (H.R. 2902), unveiled Wednesday by Rep. Eric Massa, would require Internet service providers with more than 2 million customers to seek Federal Trade Commission approval before shifting to usage-based pricing. The act also would require the FTC to nix the new pricing if it determines that the rates, terms and conditions are unreasonable or discriminatory.
Massa drafted the bill in response to Time Warner's announcement earlier this year that it planned to roll out pay-per-byte billing to four cities on a test basis: Austin and San Antonio (Texas), Greensboro, N.C. and Rochester.
Those plans are now in limbo, but Massa and others are worried that Time Warner and other broadband companies will soon revive the pay-per-byte concept.
The Congressman added that while he typically supports free market principles, he favors oversight of broadband pricing because many consumers lack options for high-speed Web service.
"I believe that with enough competition we won't have this problem," he said. He added that in the meantime, "this bill leverages the long history that the FTC has in overseeing functional monopolies."
In his home district of Rochester, Time Warner is the only cable broadband provider, while the telecom Frontier offers DSL service. Verizon's FiOS network, while available in much of New York, isn't available in Rochester.
The now-shelved test would have offered Time Warner customers a choice of plans, ranging from $15 a month for 1 GB to $150 a month for unlimited bandwidth. Currently, many Time Warner customers pay between $40 and $50 a month for unlimited bandwidth. Downloading just one high-def movie can consume 5 GB.
Local residents rallied against the plan, while groups like Free Press called for a congressional investigation. Among other criticisms, advocates saw the pricing as part of a plan to discourage people from consuming video online for free, rather than to continue paying for cable TV subscriptions.
Time Warner announced in April that it would temporarily delay its plans, but recently it quietly revised its terms of service to provide for pay-per-byte pricing. The company also recently conducted a test of pay-per-usage service last year in Beaumont, Texas.
A Time Warner spokesman said in a statement that the company "has placed all of its plans to test consumption based billing 'on the shelf.'"
Time Warner isn't the only company to experiment with consumption-based billing. AT&T also tested a comparable system in Beaumont and Reno, Nev.
Chris Riley, policy counsel at broadband advocacy group Free Press, said it appears that Internet service providers still intend to move toward usage-based billing. "I think this is a real threat," he said. "If every provider thought they could get away with it, they would probably switch to it."