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Bill Could Kill Broadband Meters

Taking direct aim at earlier moves by Time Warner Cable Inc. (NYSE: TWC) and AT&T Inc. (NYSE: T), Congressman Eric Massa (D-NY) formally unveiled the Broadband Internet Fairness Act, introducing legislation that attempts to clamp down on metered bandwidth policies that are deemed unfair or anti-competitive.

The bill aims to authorize the Federal Trade Commission , in consultation with the Federal Communications Commission (FCC) , to review usage service plans of "major" broadband ISPs "to ensure that such plans are fairly based on cost."

Under the bill's definition, a major broadband ISP includes any that directly, or through an affiliate, provides broadband service to 2 million or more subscribers. (See Massa Intros 'Internet Fairness' Act.)

Any volume usage charges for broadband access found to be "substantially above cost… without sufficient competition constitute an unfair and unconscionable practice," according to the bill. (A copy of it in its entirety is available here.) Detractors of metered Internet billing also argue that such policies discourage the use of over-the-top Internet video services that compete with cable's traditional video services.

If any such policy is found to be discriminatory or monopolistic-sounding according to the bill's criteria, the offending ISP will be subject to an injunction requiring it to suspend, terminate, or revise the plan. On the civil end of the bill, violators will also be subject to a fine of "not more than $1,000,000."

Massa first came out against such policies and threatened to draft such legislation in April amid a public firestorm centered on TWC's original plan to extend metered Internet trials to Austin and San Antonio, Texas; Rochester, N.Y.; and Greensboro, N.C. The public pressure caused the MSO to suspend those plans "while the customer education process continues."

The MSO has also shelved its original metering trial in Beaumont, Texas, a TWC spokesman confirms. (See TWC Tees Up More Meters , TWC Dons Larger Consumption Caps, Congressman Mad About TWC's Internet Meter , and TWC Mothballs New Metering Trials .)

The National Cable & Telecommunications Association (NCTA) , which has recently taken the position that MSOs should have the right to experiment with Internet meters, had no comment on the intro of Massa's bill.

Massa has also been critical of similar trials AT&T has underway in Beaumont and Reno, Nev. (See AT&T, TWC Fit Beaumont for Caps.)

Massa, who says TWC's program, as originally proposed, would have raised the cost of the current unlimited Internet plan from $50 per month to $150 per month, stressed that his bill targets all broadband ISPs.

"I have malice towards no one, and that includes my friends at Time Warner," Massa wittily japed on a conference call this morning introducing the bill, but provided no expected timeline on when he expects it to pass. "We're here to enable competitiveness."

Although he's firmly against any usage-based Internet models considered unfair, Massa said he has no problems with broadband Internet tiers based on different speed thresholds: "I don't stand against that. I think there may be merit."

The bill doesn't appear to target hard consumption thresholds that don't charge based on consumption but instead aim to keep "excessive users" in check. Comcast Corp. (Nasdaq: CMCSA, CMCSK) installed a monthly 250 gigabyte cap last fall. (See Comcast Draws the Line at 250GB.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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Jeff Baumgartner 12/5/2012 | 4:02:37 PM
re: Bill Could Kill Broadband Meters

AT&T defended its use of metered Internet policies, telling Broadcasting & Cable that it believes such policies offer the fairest way to bill broadband subs, pointing to studies showing that almost half of Internet traffic is genereted by 5 percent of Internet users.


"We believe the fairest way may be to have the small number of users who generate massive amounts of traffic pay more than those who don't use as much," the statement to B&C continued, later lamenting that  a uniform all-you-can-eat pricing model would mean "grandma," who's downloading photos a few times per month, would be helping to foot the bill for the "heavy-using teenager" who's downloading hi-def movies.


The American Cable Association, which represents numerous smaller MSOs, opined in part that the bill would "have a chilling effect on broadband operators offering these types of consumer-friendly options."


 
 

OldPOTS 12/5/2012 | 4:02:36 PM
re: Bill Could Kill Broadband Meters

I wonder when/where AT&T measured the 5% of half of the internet traffic? How old is that study and how much video was available to subs? The question revolves around the growing changes in the internet where more and more video is increasingly transmitted daily by typical subs, even as attachments in emails.


I would contend that the subs are expecting to use the bandwidth that is being marketed to gain competitive advantage. Especially for those new video applications being promised.


 


OP

cfl-bulb 12/5/2012 | 4:02:35 PM
re: Bill Could Kill Broadband Meters

Metered services are the norm in any service we receive today, be it electricity, water, fixed phone and wireless phone. One could argue that metered electricity, fixed phone and wireless phone could harm the economy as much as metered internet services, if not more. I do understand that it is tough on customers who are used to all-you-can-eat model, but the metered service do allow differential billing based on low, medium and high usage threshold that could be beneficial to average subscriber. It will be interesting to conduct a study on whether ISPs are making money in the current all-you-can-eat model.  

Jeff Baumgartner 12/5/2012 | 4:02:32 PM
re: Bill Could Kill Broadband Meters

I think you make a good point...consumers, when it comes to broadband services, have grown up on the all-you-can-eat model, so they will certainly rebel if it's foisted on them no matter what arguments the ISPs present, even if they are already used to being metered for their use of water, electricity, etc.


Of course, now we'll have to see if the bill passes. Steve Effros, who used to run the Cable Telecommunications Association (CATA) (which merged with the NCTA in 1999), doesn't think the bill stands a chance.


 

paolo.franzoi 12/5/2012 | 4:02:31 PM
re: Bill Could Kill Broadband Meters

Wish I could edit.  I take that back with the exception of Charter....of course Charter's problems would not seem to have anything to do with their Internet service.


seven


 

paolo.franzoi 12/5/2012 | 4:02:31 PM
re: Bill Could Kill Broadband Meters

 


In a different blog post, the largest ISPs were listed.  All the ones impacted seem to be highly profitable as companies.  I think it would be impossible to separate out this business.


seven


 

rjmcmahon 12/5/2012 | 4:02:29 PM
re: Bill Could Kill Broadband Meters

An interesting side note on water.  I have a relative who serves as an elected official for a water board in a small town of 30,000.  A signficant portion of the population get their water from wells drilled on their property.  Some water they're pumping is 1000 years old and takes eons to recharge.  The water board would like to place meters but the citizens are rebelling like mad and argue that goverment has no rights over how they use their lands.  The goverment cannot get public support and instead have tried to limit consumption to 25,000 gallons per day by regulating the size of the pumps used for wells.  Enforcement is a nightmare.


Bottom line: self interests many times don't serve the larger interests (though we seem to be learning this lesson the hard way)

Jeff Baumgartner 12/5/2012 | 4:02:28 PM
re: Bill Could Kill Broadband Meters

I'll have to check to see how old or new that data is, but Insight CEO Michael Willner just weighed in as well on his blog, and tries to address it with the excuse that no one was thinking about Web video when all-you-can-eat policies were first implemented. 


He wrote:


"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."


 


 

paolo.franzoi 12/5/2012 | 4:02:27 PM
re: Bill Could Kill Broadband Meters

Jeff,


I see all this talk about downloading video crowding networks, and yet all the technical talk is about crowding via P2P.


The MSOs have a huge issue sitting right here - even more than the telcos.  Video is their number 1 business and they could be cut out (potentially) via downloaded video.  Imagine what their revenue streams are like if they no longer have video to bolster them.  On the other side of the coin, the number 1 MSO cost is content.  They would love to turn this around and make it a profit center not a cost center.


P2P is a different problem - it is an UPSTREAM problem where networks are now used for machine to machine interactions.  This breaks the massive oversubscription paradigm that was built into the system.  There are definitely cost and network performance issues here.  And no revenue. 


So with all due respect to Mr. Willner, I think this is an area that deserves some form of regulation.  At least to allow consumers to get an idea of what they are actually buying and paying for.  Open up the oversubscription models and make them public.  Set some standards and practices for building internet capabilities so that people can compare.


seven


 

rjmcmahon 12/5/2012 | 4:02:27 PM
re: Bill Could Kill Broadband Meters

Who cares what people were thinking about? What matters is an economic and regulatory system that rewards behaviors that increase capacity per an obvious increase in demand (an increase which will likley go on for decades.)  I've noticed that today even technological laggards have stopped watching broadcast tv and are choosing unicast video over the internet.  It's fairly obvious to anybody that on-demand video is much more desireable to end users.  It's also obvious that those selling broadcast video for living are conflicted w/respect to increasing capacity because it will erode their primary business.  Bring up local loop fiber (the only OSP technology that scales appropriately) and a cable operator sends in the lawyers and threatens law suits.

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