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FCC likely to approve of wireless tiered pricing: analysts

Federal regulators aren’t expected to stand in the way as wireless service providers move away from flat rate Internet plans and moving toward tiered pricing schemes, according to analysts.

Verizon Communications CEO Ivan Seidenberg said the nation’s largest wireless service provider will introduce pay-as-you-eat Internet data plans in coming months, joining AT&T and Cricket who have also moved toward tiered pricing schemes.

The Federal Communications Commission, which once looked at such price models with a skeptical eye, has recently signaled it would approve of those price packages. FCC Chairman Julius Genachowski recently said in seeking comments about his net neutrality proposal that tiered pricing plans could help alleviate data congestion on networks.

That would be boon for wireless operators, analysts said.

“Wireless cable operators for years have wanted to generate more revenue from broadband service through tiered pricing but delayed doing so due to potential FCC concerns,” said Paul Gallant, a communications and media analyst at Concept Capital.

As reported last January, Verizon Wireless chief technology officer Dick Lynch told Post Tech that the company planned to offer tiered pricing of its wireless services for fourth generation mobile broadband. Seidenberg said last week at an investor conference that tiered pricing was coming to wireless users the next four to six months, according to The Wall Street Journal.

The idea of tiered pricing had sparked debate among telecom policy observers.
Some public advocacy groups warned that users would access the Web less and the tech industry would be worse for it. But some consumers like the idea of paying for what they actually used, saying they didn’t want to pay flat-rate fees that subsidized the heaviest users.

Gallant predicted that the FCC would apply the same reasoning for tiered pricing on wireless networks to cable and broadband fixed-wired service providers such as Verizon’s FiOs. But public interest groups warn that charging too much for data would deter users from viewing video over the Internet. That could be a scheme, they say, to keep consumers strapped to their cable and satellite television subscriptions.

By Cecilia Kang  | September 27, 2010; 2:55 PM ET
Categories:  AT&T, Broadband, FCC, Mobile, Net Neutrality, Sprint Nextel, T-Mobile, Verizon  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Suit against T-Mobile for text blocking heads to federal court this week
Next: Commerce finishes $4 billion broadband Internet stimulus grants


Given that wireless broadband Internet access is an information service at this point, the FCC has no more lawful ability to regulate its pricing than it does to regulate what Google charges for ads or whether newspapers' websites must be free or can be behind a paywall.

Posted by: MichaelDSullivan | September 27, 2010 4:08 PM | Report abuse

Sprint's doing unlimited. I was a subscriber for years, this has me eying breaking my AT&T contract now to go back to them.

Posted by: Nymous | September 28, 2010 4:33 AM | Report abuse

ask scott case and the former aol time-warner shareholders what a good business model a flat rate unlimited access fee structure was.

Posted by: george32 | September 28, 2010 7:27 AM | Report abuse

Tiered pricing is a good idea because it both expands consumer choice and will help alleviate data congestion. Users will access the web more judiciously, and many teenagers will probably see more pressure from their parents to cut back on online gaming and refocus more on their homework. This is not all bad. Other users will be pleased that the networks will become faster as a result.
From our perspective just about everybody except online gaming applications and websites will be winners under tiered pricing, and both online gaming applications and websites have been growing so fast that a little slowdown in their sector won’t hurt them.

Bruce Hahn
American Homeowners Grassroots Alliance

Posted by: brucehahn | September 28, 2010 8:16 AM | Report abuse

Again another way to get more money from everyone who has these plans. People have no idea just what the costs will be and when a phone company says we will save you money by using a tiered system that is a lie. It will make them more money and you will be the ones who pay it. Companies are not in business to save you money that does not put more profit on their bottom line. Finding ways to sucker you into paying more and making you believe it's a better deal is how they improve the bottom line. It's all about getting more money out of you the consumer to line their pockets. The key is to find a way to make you think and believe that you are getting something for less when in fact you will be getting less for more cost. Look at history it's all there for you to see and find. Don't believe the hype from a company who is taking your money. As for the FCC they are in bed with the wireless companies. When has the FCC stepped in to really help the consumer in wireless or broadband.

Posted by: Concerned5 | September 28, 2010 9:11 AM | Report abuse

This is a step backwards. US companies have been given millions in tax subsidies to improve the American broadband network, but haven't delivered. The transmission of HD video and audio requires more broadband, not less. Locking customers into limited plans just forces them to pay more to Comcast and DirecTV for movies and entertainment, so you know who

Posted by: magnifco1000 | September 28, 2010 9:31 AM | Report abuse

I don't believe that carriers are doing this out of benevolence.

It's their bottom-line that will benefit.

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Posted by: strade34 | September 28, 2010 10:01 AM | Report abuse

I cut the cable TV cord, and now watch streaming content from Netflix and listen to Pandora via FiOS internet. The purpose was to save money by cutting access to content that I was forced to pay for -but hardly ever consumed - and program my own entertainment. I don't have a problem with companies being allowed to go to tiered pricing if I am not overcharged for bandwidth. But somehow I think that Comcast and Verizon will use metered internet pricing as a lever to force you to purchase a TV subscription...

Posted by: maus92 | September 28, 2010 10:16 AM | Report abuse

The FCC has no authority over what wireless operators charge.

Posted by: Bob_Dobbs | September 28, 2010 10:33 AM | Report abuse

Tiered pricing can be good or bad or somewhere in between depending on many factors. It can be good for low volume users IF the base price is kept low. It can be bad for heavy users as they will now be paying for what they use, not having someone else pay for their usage. Most likely neutral for those in the middle. They key to making tiered pricing acceptable is very low base rates. The more you use, the more you pay. Now comes the problem of sites like the WaPo with increasingly more display ads, audio and viedo, that send a lot, but do nothing.

Posted by: gmclain | September 28, 2010 1:08 PM | Report abuse

If my cable operator is going to charge me for every Gig I download It better be for content that I want not for the flash advertising they force feed me now. Should I also have to pay my internet provider for a movie I rent from Netflix? What should be their take on a few Kindle downloads? Or a little internet radio. A few streaming sessions with my grandchildren will probably cost a fortune. Allowing these operators to set rates in a non-competitve environment will only line their pockets and stifle innovation. Tiered pricing will only allow the wealthy to use the internet unhindered. What about the rest of us?

Posted by: otrhead | October 2, 2010 5:12 PM | Report abuse

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