Congressman Files Bill to Stop Tiered Broadband Pricing

ericmassa1Updated: Rep. Eric Massa (D-Corning) today introduced legislation that would force Internet Service Providers that want to implement usage-based pricing plans to go through several regulatory hurdles, including public hearings, to determine if such pricing is anti-competitive. Such usage-based plans may involve tiered pricing or caps based on the amount of data downloaded.

Massa is one of the two New York congressmen who spoke out strongly against efforts by Time Warner Cable (s twc) to expand its tiered billing trials. Under its plan, announced March 31, residential customers in five cities would have paid a different price based on the amount of data downloaded each month. However, a little more than two weeks after it was proposed, the trials were canceled after the public and members of Congress protested. AT&T (s T) has a similar trial underway in Beaumont, Texas and in Reno, Nev.We have argued that such caps deter innovation by raising the cost of broadband, and are the result of a lack of real competition in many U.S. broadband markets. Massa’s legislation, known as the Broadband Internet Fairness Act (HR 2902), seeks to get public input and regulatory approval through the Federal Trade Commission before an ISP can implement a usage-based pricing plan. On a conference call with reporters today, Massa said he chose to funnel the process through the FTC rather than the Federal Communications Commission because the FTC has experience dealing with competitive issues.

Specifically, the bill:

  • Requires ISPs to submit plans to the 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.

Massa also said that if an ISP wants to charge extra fees on a per-gigabyte basis, they should have to undergo a process similar to that of utilities, which are required to get regulatory approval. Joining Massa on the call were Ben Scott, policy director at the Free Press, an Internet advocacy group, and Phillip Dampier, founder of the web site StoptheCap, which was founded last summer to protest usage-base pricing. I’ve reached out to major ISPs for their perspective on the bill, and will update the story as needed. So far Comcast (s cmcsa) has referred questions to the National Cable and Telecommunications Association, which has declined to comment.

Update: An AT&T spokesman said via email such a bill, “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.” In AT&T’s view, such a model forces those who don’t use the Internet often to subsidize heavy users who take up almost half of the capacity on AT&T’s network. “In their zeal to protect high-volume users Free Press is abandoning the vast majority of consumers who use the Internet in a more moderate fashion,” said AT&T’s statement.  We’ve heard this argument before.