FCC Panel: Wait & See On Usage-Based Pricing

NO RECOMMENDATIONS IN FIRST ADVISORY REPORT
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WASHINGTON — The Federal Communications Commission’s Open Internet Advisory Committee has released its first report, which makes no recommendations about usagebased pricing or data caps for high-speed Internet service beyond a pledge to keep monitoring the situation.

That’s good news for Comcast, which has taken some heat from network-neutrality advocates for its recently announced usage-based pricing plans in various markets.

When the FCC adopted its Open Internet Order in 2010, it created the committee to look into various issues it suggested might need to be revisited, depending on the findings. Those included usage-based pricing, specialized services, transparency and mobile broadband.

The order expressly allowed usage-based pricing, saying to prohibit the practice would “force lighter end users of the network to subsidize heavier end users. It would also foreclose practices that may appropriately align incentives to encourage efficient use of networks.”

Without that language in the order, it is unlikely cable operators would have bought in to the FCC’s compromise network-neutrality rules.

The committee, made up of consumer advocates; Internet engineers; content, application, and service providers; and others, did leave some wiggle room. “Although caps do not seem to be affecting a large number of U.S. users now, the situation may change in the future, as user habits, supplier experimentation, vendor policy and applications all change.”

The subcommittee that drilled down into usagebased pricing (UBP) included members supporting both sides of the argument over its effect on Internet video — over-the-top provider Netflix and cable operator Comcast. In fact, Netflix had two representatives on the Economic Impact working group that produced the section on UBP.

 While they did not weigh in separately, usage pricing critic and working group member Charles Slocum of the Writers Guild of America, West, did. In an appendix, Slocum said he remained concerned about the impact of UPB on online video. “[C]apping Internet usage or imposing additional costs for higher levels of consumption could deter consumers from adopting online video viewing,” he said, pointing to the report’s recognition of that as a possible outcome. “This could harm the positive progress that has been made by the introduction of online video services such as Netflix and Amazon Prime and could deter new entrants, to the detriment of competition and innovation.”

In his own addendum, Comcast senior vice president of network engineering Kevin McElearney, also a member of the working group, strongly defended the UBP strategy.

Among the report conclusions worth highlighting was that a “take it or leave it” cap has been replaced with products that offer flexibility, he said. McElearney said the reality was that most usage tiers only affect “extreme” users and are designed to: “1.) Ensure that the majority of end users are not forced to subsidize the highest extreme end users; 2.) Enable ISPs to create lower-cost broadband plans that spur adoption while also offering the highest end services for early adopters and innovators; and 3.) Ensure applications and Internet services have incentives to use network resources efficiently.”

Public Knowledge, a public advocacy group critical of usage-based pricing and its potential impact on over-the-top competitors to cable video, suggested the lack of conclusions in the report were because neither the FCC nor industry has provided sufficient data on data caps.

“Public Knowledge has urged the FCC for years to monitor how data caps were implemented and administered,” the group said following the report’s release. “We’ve also asked major ISPs to explain how and why they implement their data caps. As the report indicates, none of this resulted in either the FCC or the ISPs shedding any light on data caps.”

While McElearney’s conclusion was that the report showed a consensus on the conclusion that the Internet is “a complex, dynamic, and multiparty ecosystem,” Public Knowledge’s takeaway was that the FCC “has done nothing” to resolve the thorny Internet issues it raised and asked the committee to study.

TAKEAWAY

The first report of the FCC’s Open Internet Advisory Committee took a wait-and-see approach to the thorny issue of usage-based Internet pricing.

Advocacy Group Wants Action on Comcast Caps

WASHINGTON — Advocacy group Public Knowledge has asked the Federal Communications Commission to act on its year-old petition asserting that Comcast’s exemption of video service delivered over Xbox 360 (pictured) or TiVo devices from its Internet-usage caps violates conditions of the NBCUniversal merger.

Those voluntary merger conditions state that Comcast, if it offers high-speed Internet service “under a package that includes caps, tiers, metering, or other usage-based pricing,” will not “measure, count, or otherwise treat defendants’ affiliated network traffic differently from unaffiliated network traffic.”

In a letter to acting FCC chairwoman Mignon Clyburn, the group cited Comcast’s recent announcement that it was expanding usage-based or tiered pricing (Public Knowledge calls the practice “data caps”) to additional markets as an exclamation point on the need for FCC action.

Comcast had no comment, but it has argued that it is using non-public Internet IP delivery to serve up its cable service, which is distinct from a broadband Internet service, and that any XfinityTV service that is delivered over the public Internet, “including XfinityTV.com and our XfinityTV app on mobile devices,” counts toward data usage thresholds.

— John Eggerton

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