WASHINGTON, DC — As the Federal Communications Commission wrapped up its investigation into complaints about internet service providers throttling the bandwidth available to heavy internet users, the second- and third-largest ISPs in the U.S. announced they are beginning trials of usage-based pricing.Comcast Corp. and Time Warner Cable on Wednesday said they may abandon current unlimited-usage pricing models in favor of tiered pricing that caps basic service at specified data-transfer limits but allows heavy users to pay more for faster service with more data-transfer capacity.
Both companies have been lambasted by consumers and watchdog groups for interfering with the flow of internet traffic. After the FCC began investigating Comcast over complaints about the practice, members of Congress began to suggest hearings about the matter too, especially after a German study found what has been called “authoritative” evidence that Comcast and Cox Communications, the nation’s fourth largest ISP, interfere specifically with BitTorrent and other peer-to-peer transfers that often are considered evidence of illegal file sharing. All the companies have denied they selectively filter traffic and maintain they have a responsibility to manage the flow of data on their networks in order to ensure bandwidth is available for all subscribers.
On Friday, Comcast intends to begin testing tiered pricing in Chambersburg, PA, and Warrenton, VA. The test protocol will delay traffic for all heavy users without discriminating against specific software applications, the company said. Comcast indicated it would cap usage at 250 gigabytes of data transfer monthly.
Comcast spokeswoman Sena Fitzmaurice acknowledged criticism that the new traffic management policy is merely a more politically correct way of accomplishing the same goals, commenting, “This says we won’t be looking at what type of traffic that there is, even though we still need to manage the network.”
Time Warner’s new policy went into effect Thursday in a test market in Beaumont, TX. New users in that area will pay for internet access based on speed and transfer volume. The company compared the billing structure to one used by many cell-phone companies. Users who exceed their allotted bandwidth will be charged for the overage by the gigabyte.
“Instead of raising prices across the board, consumers who are excessive users would pay,” Time Warner spokesman Alex Dudley told the Washington Post. “It is clearly the fairest way to fund the investment that is going to be required to support that use.”
Investment is a key issue for ISPs across the board. According to analysts, the real problem lies in service providers failing to expand the capacity of their networks to meet burgeoning consumer demand. They also warned that consumers may balk at tiered pricing structures after becoming accustomed to unlimited-use pricing models, which remain the standard for un-embattled phone-company ISPs.
“Flat rate and unlimited service is an endgame move,” said Roger Entner, a senior vice president at Nielsen IAG. “When you go to that kind of rate structure, you can’t go back.”
Tech Crunch writer Michael Arrington said he sees potential for the cable companies’ moves to stifle digital-media innovation by making consumer uptake of new technologies cost-prohibitive.
PC World writer Erik Larkin agreed.
“This type of metering would be a horrible move for business and consumers alike, and I feel sorry for the Texas guinea pigs who will be subject to this test come Thursday,” he wrote in a June 2nd article on the magazine’s website. “Here’s hoping it gets nipped in the bud.”
FCC Chairman Kevin J. Martin has promised to announce the results of the commission’s Comcast inquiry by the end of June.
