As Expected, Bill Introduced To Outlaw Tiered Bandwidth Pricing

from the this-won't-go-far dept

Thu, Jun 18th 2009 3:11am — Mike Masnick

As was widely expected, Rep. Eric Massa has introduced a bill that would outlaw metered billing and create a bunch of other regulatory hoops ISPs need to jump through on pricing plans. We're no fans of metered broadband by any stretch of the imagination. It stifles innovation and limits the usefulness of the internet. Contrary to what some broadband providers will claim, it's not at all necessary and has nothing to do with preventing the network from being overrun or to stop part-time users from "subsidizing" everyone else. The Broadband Reports link above walks through how silly each of those arguments are. It also explains why this is a pure money grab. Flat-rate pricing has been quite profitable for the providers, but they want more. Note that nowhere in these usage plans do they talk about cheaper tiers. Beyond just being about a straight money grab, part of the desire is to use this to reduce competition for online video by making it more expensive for anyone other than the ISP to deliver video services.

That said... this bill seems laughable and is unlikely to go anywhere. The real issue here (as it has been all along) is the lack of meaningful competition in the broadband space. Get meaningful competition into the market, and this whole issue goes away. But that's not what Massa's bill does. It just adds regulatory burdens to ISPs without doing much to get at the root of the issue.

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Filed Under: broadband, broadband caps, eric massa, metered broadband

36 Comments

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Anonymous Coward, 18 Jun 2009 @ 3:55am

$5 says that if this goes through, the various ISPs will just stick everyone on a low tier.
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Anonymous Coward, 18 Jun 2009 @ 4:03am

One of thousands of bills that get introduced every year by savvy politicians looking to have some ammo for re-election time.

Look, I submitted the "Save yoUr Money More Interest Termination act" (SUMMIT act). I am good, I have your interests at heart.

There is more chance that Carlo actually reads and answers one of this posts than this thing passing - and Carlo has never done that before.
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CleverName, 18 Jun 2009 @ 5:29am

Walled Garden worked well for AOL
How soon is the past forgotten
~ or ~
Present day ISPs think they have a better recipe
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Dan, 18 Jun 2009 @ 5:37am

While I agree that "getting meaningful competition into the market and this whole issue goes away", it's not a good argument against this.

That kind of competition is a pipe dream. I challenge Mike to come up with one viable competition scenario that didn't require companies sharing the cable/telco infrastructure. Even Mike would have to admit, that would require government intervention. They won't give up their pipes to anybody [in any competitive way] without being forced to. So, you're trading this legislation for some other. It's six of one, half dozen of another.

With the ISP's current position, they will try and milk as much money as they can unless the government intervenes.
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CleverName, 18 Jun 2009 @ 5:45am

Re:
To whom do those pipes belong ? IIRC, the telcos did not pay for them all by themselves. Didn't they receive large subsidies, tax breaks and rights of way ? Now they want to squeeze those pipes for every drop possible.
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bob, 18 Jun 2009 @ 6:03am

Obama Will
National the communications network and then we can all enjoy rationed internet with the great fire wall of the USA to protect us.

Dan, I am confused here.

While I agree that "getting meaningful competition into the market and this whole issue goes away", it's not a good argument against this.

Oh and the saying is "six to one, half a dozen to the other."

Once the words Internet and Crisis come out of Obama's mouth, all of us well need to look out.
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hegemon13, 18 Jun 2009 @ 6:16am

In an ideal world
In an ideal world, I agree wholeheartedly that added competition is the ultimate solution. The problem is, I just don't think that is going to happen, unless the government decides to break up the existing players. Given the track record of businesses congealing into one massive corporate blob with the government's approval, I don't see that happening.

So, since this is not an ideal world, I think this bill at least puts a patch on the problem to protect consumers from their local collusive duopolies. I am definitely for it.
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CleverName, 18 Jun 2009 @ 6:17am

Re: Obama Will
Upon what do you base this allegation ?
Any facts ?
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Anonymous Coward, 18 Jun 2009 @ 6:19am

Re: Obama Will
No... It's "six of one, half a dozen of the other." Meaning it's all the same no matter how you say it.
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Anonymous, 18 Jun 2009 @ 6:19am

What I'm curious about is whether or not this will affect the people who live with 400MB / Day bandwith caps. These are the people who live in areas who can only get satellite internet. I agree that satellite internet sucks, but only getting 400MB a day whether you are a software pirate or a grandma seems pretty discriminatory to me.
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Rob, 18 Jun 2009 @ 6:39am

I would actually like to see metered broadband in a way -- then the telcos would have a reason to get as many bits and bytes to me as possible, and maybe even (gasp!) increase network speeds to be competitive with the rest of the world and usher in the next generation of 'net technology (better streaming video, etc.). Now, before you jump down my throat, I know that metered broadband will just result in astronomically high prices for those of use that actually use our Internet, but if the price was right, metered broadband would be the way to go for sure.
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Dan, 18 Jun 2009 @ 6:40am

Re: Obama Will
My point is simply that, in this situation of power that we allowed the duopoly to attain, it cannot be reversed with government intervention of some type. It could be by this bill, or forced [competitive] sharing of infrastructure with third parties, or whatever else.

I took Mike's argument to mean that real competition is possible without government getting involved. I disagree. I think we are past that point, regardless of how bad some well-intentioned legislation can be.

I do agree with CleverName that the government should have some say after giving all those concessions to companies that haven't delivered what they promised and pocketed the money instead.
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Scott, 18 Jun 2009 @ 7:00am

Re: Obama Will
"Six of one, half a dozen of the other"
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kirillian (profile), 18 Jun 2009 @ 7:31am

Re: Re: Obama Will
I don't think Mike intended to imply that competition could happen without government intervention. I do agree. Without the government, the big players will NEVER give up their stranglehold on the markets. And with the politicians in beds with the telcos and cable companies, we'll need to do some serious work to cause a divorce...
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Anonymous Coward, 18 Jun 2009 @ 7:32am

Re:
You are correct. Mike did this the other day as well suggesting that infrastructure be forced and nationalized in some ways. Yet, he goes on and on about less laws, less government interference, etc.

One of the things that makes the internet so resilient is that there are many providers, many ways to get a connection, many ways to get a route, and many ways to route around trouble. Let the government run it, and there would be a single backbone from one side of the US to the other and that would be it (remember MAE East and MAE West?). The current situation is better than it was 10 years ago.

For end user ISPs, the problem is cost of bandwidth versus usage. The connectivity providers sell it by the size of pipe, so pricing to the end user is in part dictated by this. Excessive usage means they need to buy more pipe, and more pipe costs money.

You can't have super low prices and super high bandwidth at the same time, at least not naturally.
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Scott, 18 Jun 2009 @ 7:46am

Re:
The fact that grandma gets the same treatment as a software pirate or even as a software pirate who is a grandma sounds like the exact opposite of discrimination.

They're not saying 'since you use more you must pay more' which is discriminatory.

I actually would support metered internet as long as it's truly neutral.
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snow, 18 Jun 2009 @ 7:54am

poop
Well, the government still thinks we can get by on 1.5m with all this digital content to stream and ads popping up everywhere, I cant stream jack at 1.5g.

Yeah I got a 20g connects.

With qwests workhorse dsl lines, rumors of 40g in a couple few, and triple plays on the rise with our providers, its anyones guess where we are headed in the next 5 years.

When asked what they would do with all that large bandwidth, many people said they have NO idea.

More of the same.

How bout a bill that makes it CHEAPER!!!
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Anonymous Coward, 18 Jun 2009 @ 9:22am

Mike, from my understanding, this bill does not outlaw "tiered bandwidth pricing" but instead simply requires the ISPs to justify the use of "tiered bandwidth pricing" to the FTC for approval.
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Mike Masnick (profile), 18 Jun 2009 @ 10:17am

Re:
That kind of competition is a pipe dream. I challenge Mike to come up with one viable competition scenario that didn't require companies sharing the cable/telco infrastructure. Even Mike would have to admit, that would require government intervention. They won't give up their pipes to anybody [in any competitive way] without being forced to. So, you're trading this legislation for some other. It's six of one, half dozen of another.

I never said without gov't intervention. I said the exact opposite. I said that *if* the gov't is going to get involved, it should only be to increase competition in an inefficient market.

This is an inefficient market *due* to the gov't subsidies and rights of way. So, yes, since this is a natural monopoly, it makes sense for the gov't to get involved and require line sharing in some way or another (there are good questions about exactly how that works, but there are some good examples to learn from -- including the "homes with tails" option and the idea of a local community owning its own infrastructure (not the gov't).
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Mike Masnick (profile), 18 Jun 2009 @ 10:20am

Re: Re:
You are correct. Mike did this the other day as well suggesting that infrastructure be forced and nationalized in some ways. Yet, he goes on and on about less laws, less government interference, etc.

Reading comps not your strong suit, I guess?

I did not say that the infrastructure should be nationalized. I just explained what a natural monopoly was and why, because of that, it made sense not to nationalize the infrastructure, but to look at ways to allow competition on the infrastructure layer. As I suggest in my other comment above, there are plenty of ways to do that that aren't "nationalizing." But why bother with details.

One of the things that makes the internet so resilient is that there are many providers, many ways to get a connection, many ways to get a route, and many ways to route around trouble. Let the government run it, and there would be a single backbone from one side of the US to the other and that would be it (remember MAE East and MAE West?). The current situation is better than it was 10 years ago.

Strawman alert! No one said create a single system and let the gov't run it. Why make that up?

For end user ISPs, the problem is cost of bandwidth versus usage. The connectivity providers sell it by the size of pipe, so pricing to the end user is in part dictated by this. Excessive usage means they need to buy more pipe, and more pipe costs money.

This is simply not supported by the actual numbers. ISPs are raking in the cash with the current system, and bandwidth usage growth is slowing dramatically.
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Derek Kerton (profile), 18 Jun 2009 @ 11:02am

ISPs Shouldn't Be Able To Offer Free Transport To Their Content
One relatively simple piece of legislation that I don't hear discussed too often is that ISPs that institute caps, tiers, or metered broadband (which I support) should be prohibited from offering *their* content with free transport that doesn't count against the allottment.

This may seem anti-consumer, but actually it is not. Mike is correct to point out that ISPs will use caps to make competing video services unattractive compared to their own. Their is a clear conflict of interest in a company that both operates the only transport AND offers a competitive content service. If carriers were required to compete for content on a even playing field, the content market would be competitive, not constricted. This would lead to lower prices, more selection for content.

There is ample precedent. Way back, a friend worked for Western Gas in Toronto. Her company owned the Trans Canada Pipeline, but they were forced to separate the two businesses - one that transported the gas, and one that sold the gas to municipalities and utilities. As a common carrier, the pipeline company was required to charge the same rates to Western Gas (it's subsidiary) as it charged to other wholesale competitors. The result was that people paid for transport based on how much transport they used, and there was only one (natural monopoly) infrastructure layer needed. The wholesale market for gas was competitive with Western Gas just one of many players.

Why is everybody acting like we need to figure this out for the first time?

Bandwidth, though plentiful, is not unlimited. As such, metering of some kind is appropriate. Competition on the retail side is very desireable. Without it, it is safe to assume that tiers of service will be used to screw the customer as much as offer choice. Regulations should separate the transport from the retail with something like the repealed UNE-P, which be briefly had 1996-2003. Remember when upstart CLEC companies like Covad were nipping at the telco's heels?

I repeat what I've posted before. Line sharing is needed. Does it work? Bouygues Telecom, a consulting client of mine and French ISP, offers triple play service for about $60 which includes high-speed Internet, a VoIP fixed phone line, and 30 channels of TV. They are just one of many competitors. Do this, and worries about tiered services go away.

Sixty dollar triple-plays sound like something consumers here would like? Despite how much US businesses makes fun of the French, they could teach us something about telecom competition.
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Kazi, 18 Jun 2009 @ 11:02am

I actually sort of agree with bandwidth caps - but provide it as an alternative. basicaly, you buy a SLA agreement and are guaranteed a certain bandwidth at all times of the day - that means the pipe is clean for you to use anytime.

I sort of hate cable where myself, my neighbors, and other share the same connection. When 5:00 p.m. comes around the internet crawls to a stop and othertimes its so slow becuase the neighbor's kid is doing his "excessive" file sharing.

People should realize that bandwidth is like a highway. You can fit only X cars on the road at a certain amount of time. If you pay for a HOV or premium lane you have much better service.

The same should apply for ISP's. People can buy the basic service where the bandwidth is allocated based on need in respect to the business model and where people pay based on a SLA where you are guaranteed X mbytes/sec or X gigabytes/sec.

Furthermorek, wouldn't such a bill require ISP's to invest more in infrastructure? Isn't that good - even if it is mandated by the government? Wouldn't it mean that something is being done right this time around?

Furthermore, there are so many ISP's that one doing metered pricing and not providing a quality service might actually make it competitively disadvantaged. Think AOL and a 200$ bill a month for 56k when doing metered pricing around 96-98. They clearly didn't see the market change from metered pricing to unlimited bandwidth usage pricing and lost a large user base to services such as Earthlink, etc.
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Anonymous Coward, 18 Jun 2009 @ 11:59am

Metered?
Hi Mike,

First, let me say that I really like Techdirt. Now, I've noticed that you seem to group various volume usage "plans" such as caps and tiers under the same umbrella as true metering and refer to them all as "metering", which I think is inaccurate. This seems to be like referring to Joe as "Joe and all the other pedophiles". Even though Joe isn't a pedophile, the reference and association still demonizes him.

But anyway, my question is this: If you're going to label all volume usage plans (caps, tiers, etc.) as "metered", then what are you going to call actual metered plans? I'm just wondering, so that I know what term to use around here to refer to "metering" if not "metering" (it's your blog, after all).

Thanks!
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chris (profile), 18 Jun 2009 @ 12:01pm

three sources of competition:
wireless providers *could* be a source of competition, if they were spun off from their wire line providing overlords (verizon and at&t). a evdo/3g/edge router is called a stompbox, you can buy them online. all you need to do is get the wireless companies to market their services as competitive replacements for DSL and cable, which means raising the caps and upping the speed. using the now unoccupied 700mhz spectrum could help these efforts significantly.

municipal wifi and fiber rollouts could also be a source of competition, if the cable and phone companies would stop fighting their deployments at every turn.

floundering technologies like BPL and wimax could work if they were invested in and marketed properly.

the truth is that video and voice are going to "over IP" and the only service consumers will want is internet access. when that happens, cable, satellite, and telephone companies will be in direct competition, offering comparative products.

this is why the cable and phone companies are doing everything in their power to slow down their network upgrades and lying about the coming bandwidth crisis.
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Anonymous Coward, 18 Jun 2009 @ 12:10pm

Re: Obama Will
National the communications network and then we can all enjoy rationed internet with the great fire wall of the USA to protect us.

Yeah, because the Bush administration was all about keeping gov't snoops out of "the communications network". For example, AT&T and the Bush admin would have never gotten together to conduct massive warrantless electronic eavesdropping on "the communications network". Oh, wait...
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Anonymous Coward, 18 Jun 2009 @ 12:24pm

Re: Re:
...there are many providers, many ways to get a connection...

Yeah, because one (maybe two) providers should be enough for anyone. And if that isn't enough for you, then you whiners are all welcome to move to another country. [/sarcasm]
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Anonymous Coward, 18 Jun 2009 @ 12:38pm

Re: Re:
You can't have super low prices and super high bandwidth at the same time, at least not naturally.

Oops, I think you meant "You can't have super low bandwidth and super high prices at the same time, at least not naturally."

No, not naturally. That usually requires a market distorted by things like unregulated gov't granted monopolies. See the US for a good example of that in action.
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Anonymous Coward, 18 Jun 2009 @ 12:46pm

The government has already paid for much of the existing infrastructure so they should just allow everyone access to provide broadband (whether or not the existing ISP's allow it). Then let the free market sort things out. One company may use a meter system but another may use a Tier system. Another company may use neither. Then every individual can decide what they want. I think this will provide for optimal overall bandwidth.
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Anonymous Coward, 18 Jun 2009 @ 2:17pm

Re: Metered?
Oops, I meant "what are you going to call actual metered service?" instead of "what are you going to call actual metered plans?", since "plan" usually implies a level of usage forecasting that "service" doesn't. I got sloppy with my terminology.
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Anonymous Coward, 18 Jun 2009 @ 2:22pm

Re: three sources of competition:
You left out carrier pigeons and smoke signals.
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Anonymous Coward, 18 Jun 2009 @ 2:32pm

Re:
When 5:00 p.m. comes around the internet crawls to a stop and othertimes its so slow becuase the neighbor's kid is doing his "excessive" file sharing.

Wow, you mean one subscriber can max-out your whole neighborhood? You've got one seriously oversubscribed ISP there!

By the way, how do you know the source anyway?
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Kazi, 18 Jun 2009 @ 5:13pm

//Wow, you mean one subscriber can max-out your whole //neighborhood? You've got one seriously oversubscribed ISP //there! //By the way, how do you know the source anyway? You can call up your cable provider / ISP and usually find out how they setup their networks. In my area about 7-12 "homes" share the same pipe. The pipe "bandwidth" they advertise is the "peak rate" when the shared pipe is underutilized. You can buy a whole pipe from the ISP but it's a bit more expensive though a lot better in certain circumstances.
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CleverName, 18 Jun 2009 @ 5:46pm

Re: ISPs Shouldn't Be Able To Offer Free Transport To Their Content
"ISPs Shouldn't Be Able To Offer Free Transport To Their Content"

This is espically true if they require a contract with early termination fee.
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Bettawrekonize, 19 Jun 2009 @ 1:21am

I just realized something. I think I voted for this not realizing what it meant at the time. I don't think the government should get involved in this issue and they shouldn't outlaw anything.
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Anonymous Coward, 19 Jun 2009 @ 1:21am

Re:
Of course what they should do is try to encourage more competition in the marketplace.
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Derek Kerton (profile), 23 Jun 2009 @ 7:34pm

Re: Re: Metered?
You'll probably find no precise nomenclature here. That's because one doesn't really exist. You seem to have very clear ideas of what "metered" represents: to you it means user pays based on a price/kb basis, much like a gas pump for your car.

But please understand that a capped, tiered, or other "flat-rate" service can also be considered to be "metered" in that there is a meter running, counting your bits. The difference is in the billing (service plan), not in whether the service is metered or not.

So, basically, sorry, you won't get agreement around a set terminology, at least not in the way you propose it. However, the use of "metered" will likely be easily understood contextually.
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