FCC Chairman Supports Usage-Based Broadband PricingBy: Shaylin Clark - May 23, 2012
You probably remember the early days of the internet’s growth and popularity in the 1990s, when more and more people were getting computers with dial-up modems and people were still figuring out the etiquette of email. Back then, a lot of us had limited internet plans. You paid a fee per month for a certain amount of internet time. Just as with cell phone plans nowadays, people with such plans worried about going over their internet minutes and being charged extra for it. Within a few years, though, unlimited plans were all the rage. Now you could spend as much time as you wanted on the internet without worrying about going over your minutes.
Then came broadband, and since unlimited dial-up plans were so popular, the service providers kept them in place as broadband proliferated. Now not only could we spend as much time as we wanted on the internet, we could do all the stuff we wanted a whole lot faster. In recent years, though, the advent of streaming video has made internet service providers wonder whether unlimited internet for all is really the best way to go. Companies like Comcast and Time Warner have recently begun experimenting with usage-based pricing and data caps. While such moves allow the providers to squeeze more revenue out of their broadband internet offerings, they are immensely unpopular with subscribers, who have gotten too accustomed to the all-you-can-eat internet buffet to be happy about having caps put on how much they can consume.
Now, though, it looks like usage-based pricing has a new ally. Speaking at the annual meeting of the National Cable & Telecommunications Association – “The Cable Show,” as the conference is called – FCC Chairman Julius Genachowski voiced support for usage-based internet pricing. Such a model, he said, would “help drive efficiency in the networks” while also promoting competition among providers and being more fair to users.
While Genachowski may be right about usage-based pricing and its potential to be fairer to users and drive competition, the adoption of limited internet plans raises potential issues for so-called cord cutters. People who have scaled back or eliminated their traditional cable television plans in favor of using services like Netflix, Hulu, and Amazon Instand Video to get the bulk of their television content. Cord cutters rely on their internet connection for entertainment more than most. With the cable companies (and other content providers) wary of cord cutters and what they represent, there is a very real possibility that the cable companies could use usage-based pricing as a means of squeezing extra money out of customers who have abandoned the companies’ traditional cable offerings.