Prompted by Time Warner Cable's botched attempt streamyx penang force low caps and metered billing on its customers, Rep. Eric Massa (D-N.Y.) today unveiled internet franchise "Broadband Internet Fairness Act" (HR 2902), legislation aimed at protecting consumers from unreasonable broadband overage charges. Massa, prompted by consumer complaints, stepped up during the Time Warner Cable kerfuffle to call the effort an "outrageous, job killing initiative."
Massa today unveiled the legislation with help from consumer advocacy firm Free Press and Phillip Dampier, the Broadband Reports user who went on to create the Stop The Cap blog to protest unreasonable billing models by broadband carriers. In a statement, Free Press lauded Dampier's involvement and Massa's reaction as "inspiring example of grassroots activism."
Dampier became involved after realizing dsl high modem speed Time Warner Cable's plan would have tripled his Time Warner Cable bill for the exact same service he'd had since 1998. Dampier's blog came to fruition when local Rochester, NY telco Frontier Communications began exploring 5GB monthly caps for all DSL users.
Frontier ultimately backed off the plan when they realized it made better business sense to sit back and soak up customers fleeing from Time Warner Cable, one of which was, ironically, Dampier. Dampier's also blogged about Frontier's horrible customer service and slow DSL speeds, and how they've placed him between a rock (high overages) and a hard place (poor service).
The proposed legislation (pdf) imposes the following requirements on ISPs:
Requires internet service providers (ISPs) to submit plans to the Federal Trade Commission (FTC), in consultation with the FCC if they plan to move to a usage-based plan
Prohibits volume usage plans if the FTC determines that these plans are imposing rates, terms, and conditions that are unreasonable or discriminatory
Sets up public hearings for plans submitted to the FTC for public review and input;
Only affects internet providers with 2 million or more subscribers
Imposes penalties for broadband ISPs that ignore these rules
"Cable providers want to stifle the internet so they can rake in advertiser dollars by keeping consumers from watching video on the Internet," says Massa. "But so long as Americans can't choose which cable channels they want to pay for, I don't think cable operators should be able to determine consumers' monthly internet usage," he says. "Additionally, charging based on a bandwidth usage is a flawed model when the cost of usage is totally out of line with the price." In Time Warner Cable's case, up to 2,000% over cost, in fact.
Such a bill will of course be a nightmare for ISPs, WiFi@Home of whom dream of migrating to a metered billing model. While carriers like to claim the move is made necessary by fiscal and network limitations, inspection of hard data suggests otherwise. Carriers have been very profitable under the flat-rate billing model, and rumors of a looming bandwidth apocalypse are very much overstated for political effect. In reality, the move to metered billing is driven by a desire to offset future losses to TV revenues caused by an explosion in Internet video use.
While the Time Warner Cable scenario was a very unique instance of real grass roots activism bending the will of a major corporation, it's hard to think this (or any legislation mandating how ISPs price services) will make it through a heavily lobbied Congress. Verizon for one has been anticipating such a move, company lobbyists pretending any network neutrality or pricing control regulation would prohibit them from offering parental controls.
AT&T, who's conducting metered billing trials in both Beaumont Texas and Reno, Nevada, was quick to respond when asked for comment. "The Free Press Solution advocates for a radical and unprecedented government mandate that will demand that consumers have only one all-you-can-eat pricing model for Internet services," says the carrier. "Free Press prefers that grandma - who simply wants to download their grandchildren's online photos a few times a month - to pay for the heavy-using teenager who is downloading HD movies."
The argument that light users (grandma) "cross subsidizes" heavier users is a familiar -- and incorrect -- talking point. Taken to its logical conclusion, "grandma" should be paying $3 a month for bandwidth -- a service tier you'll surely never see AT&T offer. Likewise, if AT&T was truly only interested in managing heavy users, they could target them specifically by migrating them to business class tiers or by instituting a high cap only those users would hit. Instead, these metered billing efforts are aimed at impacting all users.
Again, regardless of the ocean of carrier rhetoric on this front, the push toward metered billing isn't about the users of today, it's about nickel and diming the Internet video users of tomorrow. Should users begin getting TV content online and find that subscribing to AT&T U-Verse wasn't necessary, AT&T then has a way to ensure that they can offset this lost revenue with bandwidth surcharges.
The push is primarily focused on pleasing investors, who likewise see the protectionist aspect, but also adore the idea of consumers paying more money for the same product -- a product that's getting incrementally cheaper to supply. There's a huge push for this coming from the investment community, and as we predicted, the industry's giants are going to spend millions on farmed data, lobbyists and public relations in order to get their way.
Expect Massa to lose this particular fight, barring some kind of K-Street miracle. That brings us back to our point from last summer, about how certain things need to happen before we can seriously tackle broadband reform. Loosening corporations' tight grip on regulators needs to happen first, after which government can focus on finding ways to increase competition. Competition is the cure for everything from network neutrality violations to unreasonable pricing, and until we see more of it -- we're going nowhere fast.
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