Rep. Eric Massa introduces bill to regualate metered billing

Massa Bill Would Review ISPs' Volume Usage Service Plans [Multichannel News]

Yesterday, U.S. Representative Eric Massa (D-New York) introduced a bill designed to create federal regulations for Internet providers who look to create new broadband pricing structures that charge customers based on their broadband usage. Massa's bill, a reaction to the metered billing trials announced but never carried out by Time Warner Cable earlier this year, would require Federal Trade Commission (FTC) approval for any Internet provider with more than 2 million customers that decides to create a metered billing system.

While several providers, including Time Warner and AT&T, have experimented in test markets with broadband billing systems designed to charge based on consumption, Rep. Massa's bill is designed to chill any provider's plan to attempt a similar experiment. The bill would require ISPs to submit any usage based billing proposal to the FTC for review and approval that the practice isn't "unfair and unconscionable." The FTC would consult with the FCC to make that determination. Only when both agencies green-lighted the test, could it proceed, should Rep. Massa's bill pass.

As I've said here before, ten years ago, when flat rate billing was decided upon, no one anticipated that video and other big bandwidth consumer apps (not to mention the insatiable appetite for bandwidth of high definition video) would become so prevalent on the Internet.  I know, in this day and age, it's fashionable to mistrust corporate America making it easier to accept the Federal government regulating almost everything that moves. But this level of regulation in a business that is changing so dynamically runs a huge risk of stifling innovation and investment by ISPs. 

I know I'm not popular with some people in my support of these experiments but I deeply understand the economic drivers of Time Warner's and AT&T's previously announced tests.  Unfortunately, the biggest mistake that occurred when they announced them was that no one made it extremely clear that their plans would also result in some customers paying less.  Instead, the only discussion was centered around huge bandwidth consumers who will likely pay more.

I call upon Congress to move with great care when they decide to plunge deeply into regulating industries that are functioning well.  Let's not forget that broadband has gone from serving virtually no one to nearly two-thirds of the population in a handful of years.  If we don't keep up with the changing nature of its usage, an obsoleted economic model inevitably will slow innovation and strangle critical new investment. 

And that's not good for anyone.

Comments

[DM]

Michael,

What are the "economic drivers" for these tests?

Time Warner Cable and AT&T could not make it clear that "their plans would also result in some customers paying less." They couldn't do this because that is the point of a trial, test, or experiment - you do not know what the results are going to be until after you have completed the test, trial, or experiment.

Are you stating that the internet industry is functioning well? If the internet industry is functioning well, then why do changes to the billing model need to be made? Broadband growth seemed to do okay under the current business model.

Additionally, just because an industry is functioning well does not mean they then become exempt from government regulation. Regulation exists to ensure that unfair business practices are not implemented.

[harrisd]

Michael,

I work with many broadband providers across the country. I am a big insight fan mainly because the company does not put limits on usage-like Comcast limiting email downloads to 10mg. I strongly disagree with this practice, and I think that this proposed legislation has been lobbied by the likes of Comcast to legitimize the above practice.

This is just an old phone company ploy to squeeze the end user for more. With Verizon's Fios growing in footprint, this is the wrong time for cable companies to get greedy.

[harrisd]

Sorry-that comment should read that the likes of comcast will certainly fight any legislation that keeps them from nickel and diming customers.

[Mark]

Michael,

You mentioned that it is fashionable to mistrust Corporate USA. While I'm not a fan of metered billing (I'm already a victim of it thanks to Comcast), I am even less of a fan of the government believing that they can monitor and regulate every decision / movement I make.

That being said, I would not be nearly as upset if ISPs advertised, and made available, at a reasonable price, an unlimited usage plan. That way, people who only want / need 20gb a month, can have their reduced-price and usage, and for those of us who download entire operating systems, download and edit (HD) video for their church, and work from home, could subscribe to an unlimited-use subscription that would continue to bill at a flat rate, and not ding us with "overage charges" each month.

I am a big fan of cable over DSL, U-Verse, FiOS, etc. However, if I'm forced to choose between an unlimited-use account, and 3-4mb more speed, but a capped monthly usage, I will choose the unlimited plan, even if I have to pay a bit more, as the odds are that the few dollars more a month for the unlimited account will still be cheaper than the overage charges, and much better on the nerves than the "abuse / threat to disconnect" letters that come in when you go too far over too often.