Commentary

FCC Chair Gives Another Thumbs-Up To Tiered Pricing, Aggravating Consumer Advocates

Consumer advocates aren't happy with comments made today by Federal Communications Commission Chairman Julius Genachowski, who reiterated his support for pay-per-byte pricing during a speech at a cable industry event.

Tiered pricing "could be healthy and beneficial,” Genachowski reportedly said. “Business model innovation is very important,” he added, according to The Washington Post. "There was a point of view a couple years ago that there was only one permissible pricing model for broadband. I didn’t agree.”

The FCC head has made similar statements in the past. In late 2010, when the FCC voted to enact neutrality rules, Genachowski endorsed usage-based pricing, and the FCC's neutrality order itself repeats that view. "Prohibiting tiered or usage-based pricing and requiring all subscribers to pay the same amount for broadband service, regardless of the performance or usage of the service, would force lighter end users of the network to subsidize heavier end users," the order states.

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But data caps and tiered pricing are even more controversial now than in 2010 -- in part because watchdogs are increasingly concerned that cable companies will respond to the influx of online video services by making broadband more expensive.  After all, consumers who can stream unlimited videos via Netflix (or startups like Aereo), at all-you-can-eat pricing, have less reason to also shell out money for cable TV subscriptions.

The issue drew attention earlier this year, when Comcast introduced a feature that will allow Xfinity subscribers to stream content to an Xbox without having the data count toward its 250GB a month data caps. (Comcast said last week that it will raise caps to 300GB, allow people to pay more for extra data, and will also temporarily suspend enforcement of the caps.)

News of Comcast's plan triggered complaints from Netflix, which says that all video should count equally toward data caps. Comcast counters that its Xfinity for Xbox app isn't transmitting data over the public Internet, which enables it to treat Xbox data differently than other Web streams.

Consumer advocates obviously wish the FCC chief had taken on Comcast about its Xbox plans, rather than give a stamp of approval to usage-based billing.

"We still do not know how the caps are set, how they are evaluated and how they affect consumers," Harold Feld, legal director for Public Knowledge, said in a statement. "Also unanswered is the question what counts against the cap and what doesn't. Companies should not be able to exempt their content from the cap while counting the same type of content supplied by others."

Free Press policy director Matt Wood added, "Comcast's recent actions show both the harms of these caps and the lack of any legitimate reason for them."

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