Powell: Data Rate Hike Will Hurt

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Washington -- Phone and cable companies in the process of raising retail
high-speed-data prices will likely see cuts in their growth rates, Federal
Communications Commission chairman Michael Powell said Monday.

Normally, Powell refrains from commenting on pricing activity, preferring to
let markets decide cost-value issues. But this time he made an exception.

'I don't know whether they are justified or not, but I think they are going
to hurt growth,' he said.

Powell also took a shot at cable and phone companies for raising prices at a
time when consumers, at least anecdotally, are complaining about the quality and
reliability of high-speed-data services.

'Anyone who has gotten DSL [digital subscriber line] or even cable modems a
lot of the time will tell you the same horror story about how it took forever,
how it didn't work, how they had to come back and now they want 10 bucks more a
month for that unbelievable quality service,' Powell said.

Powell -- speaking to investors and analysts attending a telecommunications
forum here sponsored by Forrester Research Inc. -- backtracked some by saying
that broadband providers were creating a new market in which clear consumer
trends remain to be established, with pricing a part of the sorting-out
process.

'One of the shoes that has yet to drop is really what do consumers want? What
value are they going to place on these new services?' Powell said. 'When you say
things like . price, I am not so sure yet I know what the right price for
broadband offerings is.'

In June, AT&T Broadband is planning to raise rates for 1 million data
subscribers. Modem owners will pay $35.95 per month, up 20 percent, and modem
renters will pay $45.95, up 15 percent. Charter Communications Inc. has similar
price increases in store.

Telephone companies, which provide DSL service, and some Internet-service
providers have also decided the time is right to raise their rates.

SBC Communications Inc. increased its basic rates 25 percent, or $10 per
month. The Baby Bell's data customers now pay $49.94 per month.

EarthLink Network Inc. -- the No. 2 ISP, with 4.3 million dial-up subscribers
-- said it plans to begin charging $10 more, or $49.95 per month, to its 288,000
high-speed subscribers.

Many high-speed-data providers have left the market due to lack of funding or
bankruptcy. Others are barely holding on, waiting for the Wall Street storm to
pass.

Powell said he didn't think consolidation in the market was driving
increasing data rates.

'I do think the business cycle is bigger part of it,' he
added.

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