Congress Asked To Probe Pay-Per-Byte Internet Service

cable network stock artAdvocacy group Free Press is calling on Congress to investigate new pay-per-byte billing programs currently being tested by Time Warner and AT&T.

"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.

3 comments about "Congress Asked To Probe Pay-Per-Byte Internet Service".
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  1. John Grono from GAP Research, April 23, 2009 at 9:09 a.m.

    Not being from the US I don't understand the angst. Don't you phone your phone bill by the call? Does everyone pay the same for electricity or do you pay according to what the meter says - same goes for your water supply? Why shouldn't Internet usage be some form of scale of billing where heavier consumers pay more?

    Please explain. What have I missed?

  2. Monica Bower from TERiX Computer Service, April 23, 2009 at 9:48 a.m.

    Actually in the US many/most phone plans are a flat rate, and most utilities are either budgeted - meaning that with some obscure calculations they charge you the same amount each month so you don't have to deal with seasonal spikes in costs - or estimated, meaning that they read your meter once every three months and take a good guess when they bill you.

    The problem is that while heavier users will pay more, people who just check text emails every few days won't be paying any less; Time Warner is acting like it's ten years ago. Bandwidth is getting cheaper and faster ahead of increased consumption (if anything the cheap speed is driving that very consumption). Suddenly putting on the brakes will be tantamount to shutting off the hose.

    But the reality is, the way to solve this problem is to let the idiots do it, and then everyone will go to a different provider and TW will have perpetrated yet another epic web fail (AOL Time Warner anyone?), one that might actually put them out of a game where they really have no business now anyway. But since Socialism is such an in thing these days we have to get Obama to tell them they can't do it, instead of letting them do it and finding that metered billing costs more in maintenance and administration than a moderate flat rate, something that other providers discovered in the 90's.

  3. John Grono from GAP Research, April 23, 2009 at 6:10 p.m.

    Thanks for your explanation Monica. But I still don't see the problem with scaled billing (TW may have proposed a bad model - which is a different thing).

    Surely if someone uses more of a resource or service then they should pay more. Would you accept a flat rate for filling the tank of your car - no matter how big the tank was or how empty it was? Of course not. You pay by the gallon. Why isn't Internet usage the same?

    I also don't get the "metered billing costs more in maintenance and administration than a moderate flat rate" line of reasoning. This is the Internet. One of the biggest industries on-line is counting clicks, bits and bytes (mind you, most are poorly done). If the costs are as horrendous as is implied then online analytics is doomed (which it obviously isn't). Surely an ISP could EXTREMELY easily and cheaply work out how many Gb a month was used - a few nanoseconds of processing. I know I can check my monthly usage online through my ISP 24/7 (though it doesn't include the current hour's usage) - in total, by day, by hour of each day etc.

    Finally, what's with the socialism comment? I thought we were talking about TW and Internet pricing. Is it "socialist" to have scaled access and pricing levels?

    Still confused down here.

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