A freshman legislator who won headlines opposing pay-by-the-byte internet plans being tested by Time Warner Cable has introduced a bill that would make unfair usage plans illegal and make ISPs — including mobile phone carriers and satellite providers — justify their internet subscription plans and overage penalties to federal regulators.
The bill, as written, would apply to any ISP with more than 2 million customers that offers more than one service plan that is based on the amount of data used within a certain period of time. Those broad definitions would give the FTC authority to fine the nation's largest wireless, satelllite, DSL and cable ISPs if they introduce plans that aren't justified by the cost of providing service.
Rep. Eric Massa (D-N.Y.) wrote the so-called Broadband Internet Fairness Act (.pdf) after successfully helping to force Time Warner Cable to stop its trial of new pricing schemes on his constituents in Rochester, N.Y. Net neutrality group Free Press and the anti-tier group Stop the Cap are already vocally supporting the measure.
Nearly all plans from major ISPs are sold on the basis of speed of a connection, rather than the amount of data used. ISPs are complaining, however, that the rising popularity of video is taxing their networks and that increased usage will lead to 'brownouts' on the net. Those claims do not, however, make much economic sense, when the prices they pay to move their customers' data keeps falling and their profit margins rising.
For instance, Time Warner Cable pulled in over $1 billion in revenues from broadband subscribers in the first quarter this year, while spending less than $35 million to transport the bytes.
Not surprisingly, the companies currently trying out tiered pricing also have cable franchises that look increasingly archaic and vulnerable as online video services grow in popularity and scope.
"Cable providers want to stifle the internet so they can rake in advertiser dollars by keeping consumers from watching video on the Internet," Massa said. "Charging based on a bandwidth usage is a flawed model when the cost of usage is totally out of line with the price."
Time Warner Cable says the new pricing model it yanked from its proposed trials has nothing to do with protecting its cable operation, because there's no evidence that people are cutting that cord — at least not yet. But it's certainly got something to do with increasing the amount of revenue per user per month, an obsession for communication companies.
A company spokesman declined to comment on the legislation, saying only that "As previously announced, Time Warner Cable has placed all of its plans to test Consumption Based Billing 'on the shelf,' including the trial in Beaumont, Texas." The company has also said it intends to try again with a better public relations campaign.
If passed, Massa's bill would force major ISPs that want to keep or impose caps or tiered billing plans to justify them in detailed filings to the feds, which will scrutinize them to make sure they are fair.
The bill is likely to face stiff opposition from the powerful telecom lobby, because the bill would appear to force providers like Verizon, AT&T and Sprint to justify and explain the caps on their so-called unlimited data plans for mobile phones and mobile USB modems.
Graph: Wired.com/Dennis Crothers
See Also:
- Time Warner Cable Cancels Download Cap Plans
- Congressman Wants to Ban Download Caps
- Time Warner Cable Earnings Refute Download Cap Economics (Again)
- Satellite Net Service Sued for Caps, Paltry Bandwidth
- Download Cap
- ISP Download Caps Not Dead, But Ought to Be
- Consumer Group Asks Congress to Investigate Bandwidth Caps
