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Posted at 8:00 AM ET, 12/ 8/2010

Pay-as-you-go Internet prices raise questions

By Cecilia Kang


As details emerge about the Federal Communications Commission's controversial proposal for regulating Internet providers, a provision that would allow companies to bill customers for how much they surf the Web is drawing special scrutiny.

Analysts say pay-as-you-go Internet access could put the brakes on the burgeoning online video industry, handing a victory to cable and satellite TV providers.

The practice is legal but had been discouraged by the FCC and by protests from consumers and public interest groups. But wireless companies are moving rapidly in that direction. All major cellphone providers offer subscribers tiered data plans for Internet service. AT&T doesn't offer flat-rate wireless plans for new customers.

And although FCC Chairman Julius Genachowski said last week that his so-called net-neutrality proposal would generally prohibit broadband service providers from tampering with Internet traffic, he added that he is open to new billing models that charge by how much data a user consumes.

Public interest groups say that trend will lead to a widening gap in Internet use in which the wealthiest would have the greatest access. And it could place limits on how much consumers use Web video, which eats up an enormous amount of bandwidth and could carry higher costs under a tiered pricing plan.

"The question is how this will be enforced because it has the potential to do a lot of harm," said Art Brodsky, communications director for Public Knowledge.

By blessing tiered pricing practices, Genachowski said he wanted to strike a balance between consumer protection and promoting "network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing."

An FCC official said in a statement that it would be a "cop on the beat" for "arbitrary, anti-consumer, or anti-competitive tiered pricing plans."

Read here for full story.

Related stories:
Battle over your television viewing habits

FCC chair to propose net neutrality plan

Netflix moves beyond DVD, tangles with ISPs

By Cecilia Kang  | December 8, 2010; 8:00 AM ET
Categories:  AT&T, Broadband, Comcast, FCC, Net Neutrality, Online Video, Sprint Nextel, T-Mobile, Verizon  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Reps. Waxman, Markey urge strict conditions on Comcast-NBCU merger
Next: Netflix strikes deal with ABC-Disney, building Internet video library

Comments

Why does the government always need to interfere? Everytime they did, they make it worst? For an example, remember the switch the switch in TV reception? Many people have worst reception with the converter boxes who do not have cable.

Posted by: wdsager | December 8, 2010 8:37 AM | Report abuse

We want Net Neutrality!! - well, except for fools trained by Frightwing media to believe it's bad.

Posted by: angie12106 | December 8, 2010 9:04 AM | Report abuse

There must be some way we can blame Obama for this.

Posted by: motogp46 | December 8, 2010 9:21 AM | Report abuse

i think that tiered pricing is a great way to go for internet/cable companies.

i await the day when i can give $100 to my tv provider and then another $100 to my (same company) internet provider (to view the same tv stuff). and then $100 or more to my cell phone company (verizon tifecta) and a measley $75 to my old land line (verzion quadfecta).

and when the ceo needs to get his $30 million dollar bonus, i'd be more than happy to fork over another $50 for each service.

would it be easier to just give them full access to my bank account now rather than later?

Posted by: perryrants | December 8, 2010 12:06 PM | Report abuse

Tiered or usage based pricing is a common and generally accepted practice in commerce and is not inherently an unfair trade practice. The Federal Trade Commission has the FCC’s back when it comes to unfair trade practices. The FTC has already successfully prosecuted numerous private data providers (consumer facing real estate multiple listing service websites) for their efforts to exclude discount real estate brokers who charge very low real estate commissions. Regardless of the final shape of the network neutrality proposal, the FTC’s broad mandate to address unfair trade practices provides it the necessary standing to investigate any practices that may be anticompetitive, wherever they may occur.

Bruce Hahn
President
American Homeowners Grassroots Alliance

Posted by: brucehahn | December 8, 2010 12:44 PM | Report abuse

Tiered or usage based pricing is a common and generally accepted practice in commerce and is not inherently an unfair trade practice. The Federal Trade Commission has the FCC’s back when it comes to unfair trade practices. The FTC has already successfully prosecuted numerous private data providers (consumer facing real estate multiple listing service websites) for their efforts to exclude discount real estate brokers who charge very low real estate commissions. Regardless of the final shape of the network neutrality proposal, the FTC’s broad mandate to address unfair trade practices provides it the necessary standing to investigate any practices that may be anticompetitive, wherever they may occur.

Bruce Hahn
President
American Homeowners Grassroots Alliance

Posted by: brucehahn | December 8, 2010 12:44 PM | Report abuse

Doesn't sound like Mr Hahn really supports the "grassroots" users in this mess. Cable television is a perfect bad example of letting the providers police their pricing. My rear is still sore from the pain of cable and satellite pricing. I imagine the phone / ISP companies are going to go the "screw the users" route, just as cable / satellite does.

It seems kind of dumb to price the bulk of the audience out of the internet movie world, since the internet ready/3D flat screens are designed to perform massive amounts of downloading.

And it if is going to cost per kb, then who will be watching TV, movies, or listening to Pandora? RICH PEOPLE!

Posted by: tojo45 | December 8, 2010 1:34 PM | Report abuse

disparity internet use is among the least of our problems. health care, employment and income, asset ownership and wealth concentration, etc. are far more serious than not being able to spend unlimited amounts of time on line via pc, smart phone or whatever. metered use works fine for electricity, natural gas, automobile fuel,etc. i also eat at a la carte restaurants rather than price fixe all you can eat.

Posted by: george32 | December 8, 2010 2:31 PM | Report abuse

I don't have a problem with the idea of pay as you go as a concept. It makes sense that users who are eating up more bandwith pay more.
HOWEVER, a lot of the information that comes through my connection is stuff I don't want! Until and unless the providers have a technology that allows me to block all the pop-up ads, animations, streaming commercials, unneeded software updates and other assorted crap that is a useless consumption of my data stream, they should not be allowed to enact tiered pricing!
Now I know that some would say that it is my responsibility to turn off or block it if I don't want it but how many people will be caught unaware but those stealth streams of data? It happens on smartphones now that programs run in the background eating up data. If you're savvy, you can turn them off but so many people are surprised by data overage charges on their phones.
I say until the providers give us a simple straight-forward means to cut off the stream of the stuff we don't want that is easy to adjust as needed, they shouldn't be allowed to enact tiered pricing!

Posted by: tlcento | December 8, 2010 2:38 PM | Report abuse

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