Bill would limit broadband fees based on use

Broadband providers would have to show volume-based fees to the FTC

A new bill in the U.S. House of Representatives would require large broadband providers to get permission from the U.S. Federal Trade Commission before rolling out broadband subscription fees based on bandwidth use.

The Broadband Internet Fairness Act, introduced Wednesday by Representative Eric Massa, would prohibit volume usage plans if the FTC determines that the fees are "unreasonable or discriminatory," and it would require public hearings when broadband providers plan to introduce volume-based pricing.

"This bill, frankly, is the result of very, very strong grass-roots movements that demanded a fair billing practice with respect to their Internet service providers," Massa, a New York Democrat, said during a press conference. "Volume-based pricing, frankly, is detrimental to our economy and to our Internet future."

The bill was prompted by Time Warner Cable's announcement in April that the provider would charging customers in upstate New York based on bandwidth use, Massa said. For some Time Warner customers, the monthly price for cable-based broadband would rise from US$50 to $150 a month under the plan, Massa said.

Massa received complaints from a group of doctors, who said they'd have to pass the broadband rate increases on to their patients, he said.

AT&T has also experimented with volume pricing.

"That's just not acceptable by anyone," Massa said of volume-based pricing.

The bill, written with the help of consumer rights groups StoptheCap.com and Free Press, would prevent broadband providers from "overcharging" and "gouging" customers, Massa said. StoptheCap.com launched in upstate New York to oppose the volume caps.

Ben Scott, policy director of Free Press, praised the bill. "This a really inspiring example where grass-roots activism in response to an unfair business practice by a big corporation led to direct intervention by a congressional leader," he said. "These kind of Internet overcharges will cripple [Internet-based] development and really set back communities by years if not more."

Massa introduced his bill the same day that the Pew Internet and American Life Project released a survey showing that home broadband rates are increasing in the U.S. The average home broadband bill in April was $39, up from $34.50 in May 2008, the survey said. Broadband users who said they had only one provider had an average monthly bill of $44.70, while those with four or more providers had an average monthly bill of $32.10, according to the survey.

An AT&T spokesman called the bill a "one-size-fits-all broadband pricing model." Almost half of all Internet traffic is generated by 5 percent of broadband customers, said the spokesman, who asked not to be named.

"There is no question that the Internet continues to experience extraordinary growth as it increasingly becomes a vehicle not just for e-mail and Web sites but also for photos, video, movie distribution, VoIP and video games," he said. "Just one of these high-traffic users consumes as much bandwidth as 19 typical households, and in so doing contributes disproportionately to the risk of network congestion; something all consumers experience as slower than normal Web surfing or even broken up and scratchy streaming videos."

High-volume users should pay more, he added. "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," the AT&T spokesman added. "In other words, Free Press prefers that grandma -- who simply wants to download their grandchildren's online photos a few times a month -- to pay for the heavy-using teenager who is downloading HD movies."

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Grant Gross

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