Free Press criticized FCC Chairman Julius Genachowski’s endorsement of usage-based...
Free Press criticized FCC Chairman Julius Genachowski’s endorsement of usage-based pricing. “While the rest of the world is moving away from this type of price-gouging, it is puzzling why the FCC chairman would endorse a practice that in the long…
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run will relegate the United States to an Internet backwater,” Research Director Derek Turner said Wednesday. Genachowski said the day before that usage caps such as those used by AT&T and Verizon “fundamentally” may “provide consumers more choice.” The FCC’s December net neutrality order contemplated usage-based pricing, but left it to “markets” to decide how to handle it. Turner said such pricing plans could help low-volume users “in theory. But the industry is not contemplating any such thing, because it runs counter to the fundamental network economics of their industry, and because doing so would not help them achieve their primary goal -- continued explosive growth of profits. They're simply not looking to charge low-volume users less -- over time, they want everyone to pay more.” USTelecom spokeswoman Anne Veigle said data usage has exploded, and usage-based pricing helps makes sure that those who benefit most, pay the most. “To keep up with this demand, the broadband industry invested an average of $66 billion per year from 2005-2010, with wireline companies contributing the lion’s share, $30 billion per year, compared to wireless at $23 billion and cable at $13 billion,” Veigle said. “Who should bear the cost of this investment? Given that the top 10 percent account for 60 percent of traffic, fundamental fairness dictates that those whose demands are less should not be required to subsidize those who are consuming the greater capacity, imposing the greater costs, and deriving the greater benefit."