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FCC chairman endorses capped broadband, tiered pricing

updated 06:33 pm EDT, Wed May 23, 2012

Remarks in response to prior chief at NCTA trade show

Federal Communications Commission chairman Julius Genachowski, speaking during Boston's The Cable Show, has voiced support for data caps on Internet plans. The chief feels that tiered pricing will "increase consumer choice and competition" and result in "lower prices for people who consume less broadband," though he did not clarify what mechanism would drive prices down. Consumer advocates and public-interest groups immediately responded, decrying the comments and urging the FCC to more closely examine the effect of broadband data caps on the market, pricing, and innovation.

Genachoswki was responding to a question asked by former FCC chair Michael Powell, the National Cable and Telecommunications Association president and chief executive officer, during a moderated question-and-answer session. The current FCC chief has previously expressed support for caps and usage-based pricing. In 2010, Genachowski stated that the FCC has "demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing."

In response to the declaration of support, Harold Feid, the legal director of Public Knowledge, was concerned about the logic behind the cap settings, and the methodology of the evaluation. Feid said "Until the FCC answers those questions ... it should not be endorsing any pricing scheme that has the potential to drive up costs for consumers as this does. Also unanswered is the question what counts against the cap and what doesn't. Companies should not be able to exempt their content from the cap while counting the same type of content supplied by others."

The remarks come just days after Comcast announced the newest revision to their own data threshold and fee structure, which they say "puts them out of the cap business." The new plan gives users at least 300GB per month, likely with an additional $10 per 50GB used. AT&T allows 150GB per month for DSL subscribers, and 250GB per month for U-Verse subscribers. These caps are being put in place when data usage is at an all time high with users subscribing to video-streaming services and assorted cloud-storage programs. Netflix claims that data costs should only be pennies per gigabyte.

By Electronista Staff
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